Over the last week or so, trade has been dominated by the declining euro, which has led to a dollar rally. Yesterday, the dollar broke a week long plus uptrend (a) at point (b). Remember a trend break does not mean a reversal. Instead it means the trend is changing.
The daily chart is still strong. Prices are in a strong uptrend, the EMAs are in a bullish orientation (shorter are above the longer, all are moving higher and prices are above all EMAs). in addition, momentum is positive (b) and money is flowing into the security (c) although the A/D line has topped a bit over the last few days.
Gold caught a safety bid with the euro situation, but that bid might be going away. First, prices formed a downward sloping channel (a) starting last Thursday. yesterday prices gapped down in a big way (b) on heavy volume (c).
The daily chart shows weakening as well. The 10 and the 20 day EMA have dipped lower, although the EMAs are still in a bullish orientation. However, the MACD has given a sell signal (b) and the A/D line is dropping as well (c).
The main issue with gold prices is they went parabolic on very high volume. As I noted last week:
The only drawback to this chart is it is parabolic -- th erate of ascent is incredibly steep which no price chart usually maintains for long. In addition, the heavy volume could be a buying climax with the addition of an exhaustion gap. However, that's one possible technical interpretation. The fundamental picture is gold bullish as traders express their concern with the EU situation by purchasing safe assets -- here, gold.
The key for this chart will be holding support at the upward sloping trend line
The SPY chart has a lot of technical weakness right now.
First, we had the big fat finger sell-off from a few weeks ago (a). While this was followed by a nice rally (b), prices fell on high volume at the open last Friday (c). This was followed by further sell-offs at (d) and (e). Simply put, there is a lot of nervousness right now.
Finally, consider this chart, which compares the 5-minute TLT to the 5-minute SPY
The TLTs are catching a safety bid from the SPYs sell-off.
