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The Euro spiked higher in US trading following the data releases with a peak just above 1.28. The Euro then dipped sharply again to lows below 1.2550 as Wall Street weakened again with the main US indices testing five-year lows.
Headline US consumer prices fell a larger than expected 1.0% for October as energy costs dipped sharply and this was the largest monthly decline for over 40 years. There was also a 0.1% reduction in core prices which cut the annual increase to 2.2%.
Prices closed nearer the session low yesterday. Gold bears still have the overall near-term technical advantage. However, prices have been in a sideways trading range for four weeks. Bears' next downside price objective is closing prices below solid technical support at last week's low of $698.20. Gold bulls' next upside price objective is to produce a close above solid technical resistance at $778.30.
The Dow Theory reconfirmed a Primary Tide Bear Market on Wednesday when both the Dow-Jones Industrial Average and the Dow-Jones Transportation Average closed below their previous lowest closing prices of 2005-2008. These two Averages originally signaled a Primary Tide Bear Market on 11/21/07, when both closed below their closing price lows of August, 2007.
New low prices for crude oil, commodities, and TIPS indicate rising expectations of deflation.
We argued (and argued) that the U.S. dollar was going to resolve higher and have been using a level of around 93 for the U.S. Dollar Index as our first target point.
Then we argued that the markets are driven by four combinations of the trends for the dollar and U.S. 30-year T-Bond futures. When the dollar and the bond market are weaker- buy the commodity sector. When the dollar is weaker and bonds are stronger- buy gold.
Chart of the Day There is still very little showing from the Bulls although downside momentum has slowed somewhat. We are expecting a move soon though as our Trend Resistance line is now in play at 55.10 for today’s action.
Important Rules of Technical Trading
"Here are some rules that are designed to help explain the whole idea of technical trading for the beginner and to streamline the trading methodology for the more experienced practitioner."
VantagePoint: Success With Consistency and Discipline
Presenter: Bernadette Addison, VantagePoint User
Bernadette Addison shows you her approach to trading FOREX with VantagePoint with a focus on exercising consistency and discipline in trading decisions.
November
20,
2008- Content Updated Daily 
