Gold: Gold made a low of $1672.90 last week, a little above its 200 DMA, which was then positioned at $1662, to close the week at just under its 50 DMA at $ 1730.30. The pullback from the recent low of $1672.90 is reactive in nature. Gold could to above $1700 but below its 50 DMA for the next week or two before retesting, and possibly breaching its recent low. The long-term correction in gold from its $1920 peak is not yet over.
Silver: Silver, like gold, bounced back from its 200 DMA closing the week at $32.56 after having made a low of $30.67. The pullback appears reactive in nature and may not top the 50 DMA significantly. Expect a retest of $26 area before a tradable rally ensues.
WTI Crude: WTI Crude made a low of $84.05 during the week before staging a pullback and closing the week at $86.07. The weekly crude chart above shows crude to be in a terminating C with a target $76. It will take 2 to 3 weeks to get to the target.
US Dollar: Reproducing last week's chart for the US dollar that showed the Dollar Index headed up towards 81.20. DXY closed the week at 81.09 after having made a high of 81.175. The DXY has a very strong overhead resistance at 81.50 following the immediate one at 81.20. I expect the Dollar to turn down from the 81.50 region as the correction from recent top of 84 is not yet complete.
Minor reactive pullbacks could see the Euro$ retest the overhead resistance at 1.2800 over the next week before proceeding towards 1.26. A fall to 1.26 from current levels before a rally can't be ruled out either. Note, 1.26 is just a support.
With this rally in place, my preferred wave count is shown in the chart above. Clearly, this wave count indicates a retest of the INR 57 level in due course. Note, the $ has a strong resistance overhead at 55.75. Should the $ pierce through this level, the probability of a retest of 57 region becomes most likely.
However, a higher high from this rally will not negate a deeper correction to follow sometime in December. Terminating C waves can be very violent and erratic and there is nothing to indicate that we are not in one so far.
NB: These notes are just personal musings on the world market trends as a sort of reminder to me on what I thought of them at a particular point in time. They are not predictions and none should rely on them for any investment decisions.
Sonali Ranade is a trader in the international markets
Market correction to continue
Sensex gains 44 points in early trade
The much anticipated correction is here!
Is crack in Nasdaq Comp index enough to reverse rally?
There may be another leg up to the rally in US equities