Review on USD

PGS of the flying pigs are in trouble. $ got boost.
$dxy completed a break-out then pull back pattern. now 76 could be a support. it might go to 76.8

The key line is at 77.69. Before we get there, I will still call it a correction, but rather an impulsive.

Interesting Chart Comparison

On Nov 27, Gold opened at 1194, then moved up a little bit and recorded a new history high at 1197. Upon the Dubai news, Gold dived to 1138.4, then end up managed to close at 1179, leaving a shadow of more than 40 points.  It is a strange pattern, 60 point candle with 20 point body and 40 point shadow. How is the market going to interpret the strange candle?

Reading:

1. The dip on 11/27 measured 61.8% of the rally started from 1100 level, then hit 1197.

2. Gold resumed rally and marked a new history high at 1227.5 4 days later on 12/2.

3. Crashed since 12/2.

Gold Chart:

With help from my Chinaman, I noted similar situation happened in Shanghai before.

1. SSEC started from the previous swing low at 3060 and peaked at 3450 on 7/29. Then on 7/29 after made a new high, the index dip to 3215, which is also 61.8%.

2. Rally resumed and marked a new high 4 trading days later to 3485 on 8/4.

3. SSEC made significant retracement since then to 2640, which is 50% of a larger pattern, and spent 3 months consolidation.

Guestimation:

Gold will follow SSEC to go down for the next 3 months, first struggle around 38% at 1105 then find support at 50% retracement at 1065 level.

 

Epic Rally Over

Friday, the U.S. Labor Department said nonfarm payrolls fell by just 11,000 last month, slowing down from a downwardly revised 111,000 drop seen in October. In addition, the unemployment rate edged lower to 10% in November from 10.2%. Given the interest-rate implications, the jobs report was a boon for the dollar, with a stronger dollar weighing on commodities prices, including gold and oil, as well as commodities producers. Market got confused after the release, with the dollar and equity rose, followed by the stock pulled back a little bit. In recent months, whenever the positive economic data, the dollar will go down. It can be explained by carry trade: investors borrow U.S. dollars to buy stocks, commodities and other higher-risk assets; the dollar falls and the riskier asset price rises. Recently FED continues to keep low interest rates in the sign of economy recovery, for the reason of high unemployment rate. Therefore, the positive employment data naturally lead to an expectation of tighten monetary policy.
The current market sentiment is no longer standing on solid long side. Gold is in serious overbought condition for a while. A correction is due on the sharp rise of dollar.
The two main reasons that are supporting the surge of gold are questioned.
1.    Rate. Expectations of long-term the dollar will continue to depreciate.
2.    China. Senior officer of the People's Bank of China made a public statements to be alert the gold bubble.
 However, the medium and long term, we do not believe that gold's bull market to an end. Even if the U.S. unemployment rate fell to 10.0%, figures are still very bad. Any tighten monetary policy and a stronger dollar will hurt the U.S. economic recovery. To protect against the weak U.S. dollar, the Chinese still need to buy more gold to diversify their foreign currency reserves. The key is timing and price.  Fundamentals, the market still need to restore confidence in the following few trading days, gold prices will continue to rise later.

Technical analysis:
Daily: I believe 34 ema is the key supporting line, which is currently around 1135. If the rally is over, how deep can the retracement be? The start of this run can be identified as 957 in early Sept (refer to my previous chart).

From 957 to 1226, we see a fib support at 1125 area. I believe we have good support here.

Weekly: sma  4/9/30 are important, and they happen to be around  1150 1100 1000.
Monthly, if this month we closed below 1140, then it will look like top.