US Downgrade sends Gold throught he Roof and Crude Oil hits the Floor

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– The US Entering the era of the “US of AA+” as its credit rating is downgraded

– Dealers note the S&P downgrades of the US was probably has more political fallout than economic 

– G20 affirms commitment to take necessary initiatives to support financial stability 

– ECB in buying both Spanish and Italian bonds on European open

– Spot gold hits fresh all-time highs above $1,715/oz

– Crude Oil tumbles on lack of Global Demand after US Downgrade

– BoJ says will not sterilize currency intervention.

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Looking at the news this morning its pretty quite relative to the rest of the week.  Monday’s in the summer are expected to be slow, and without any major US news this morning all eyes and ears will be on the US to see if we get anything of value from the white house today to get this market moving in one direction or the other.  We will soon find out!

Expect volume to be slow after 1030am today so watch the clock, no Golden Lunch is expected for this Summer trading day.

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Looking at the Charts:

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The US Dollar Index is floundering around this morning searching for clues after news of its downgrade by the S&P.  The US Dollar is a very useful tool for gauging how the markets have reacted to certain events, and this morning we can see on a Monday morning with fear in Asia and Europe overnight we can see the dollar in a short term downtrend, but looking for clues as to where it will go next.  In this scenario we don’t have any strong directional bias, so use this as a big clue to look for buying and selling opportunities in both directions today on the markets we trade.  We will look for more defined trending on the 13range of the US Dollar Index as the day progresses, so keep an eye on this to see higher highs or lower lows in the near future.

Crude Oil Futures are testing new range lows this morning as fears of a US Slowdown will kill the demand for this ‘black gold’ across the globe.  We saw an incredible drop in price last week and we can see this strong bear price channel has some easy levels of support below and resistance overhead that we can use for trading opportunities today.  With the US Dollar moving higher this morning in a sideways range we will see lower prices on crude oil, however we dont know what to expect (yet) for when we make new lows.  Will the market push through these lows with strength?  If so, we will sell retracements.  Will the market slow down and bounce off this major support at 82.89 and 83.18?  If so, we will be looking for price reversal patterns at these lows and try to buy them.  One thing is for sure, if we make new lowers lows we need to get resourceful looking fro levels of support below us that can be used ahead of the move, so look for the AB=CD pattern and other extension opportunities to look for price targets for profit and reversals as price makes new lows.

Gold Futures made new all-time highs again over the weekend as the US Dollar Index got hit hard from the downgrade news about the US.  Just like last week, with these all-time highs we know there is way too much emotion involved with buying and selling the highs, and therefore smart day traders stay away from these levels.  The best trades in this type of environment is to wait for slower timeframe (major) pullbacks with wave patterns to buy, and then look for price to fail at support and sell those failures.  I will stay away from the highs both long and short and wait to buy the channel lows, and Wave patterns from the 89/55/34/21 range charts to make certain I give myself all the help I can get trading this market at support.

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