We got our low... then we rallied

As is customary in the algo controlled gold futures market, we made our low as expected. The low did not show a whole lot of conviction however. We were stuck on 1614, the old low for what seemed like an eternity (it was probably about 5 seconds). When we broke, we only went down a dollar, to 1613, which now stands as the low. We are trading 1622.6 as I write. 1628 was supposed to be support on the way down, and will serve as resistance now. At these levels I continue to think that the risk remains to the downside. A few of the technicians I have talked to/ read feel that the 1575-85 range is the logical target to the downside. At this point stepping in on the long side seems to offer too little reward given the way this market can move lower on a dime, but only goes higher slowly.

One thing to keep in mind. Both the pit and the electronic market will be closed Friday. But we do get the ADP employment situation (one of the most important economic data points) Friday morning. It will be interesting to see how traders position themselves for a long weekend, which unlike all others, contains a critical number that they cannot trade off of. My guess is the number will not shock too much to either side, and it will all be forgotten by next Tuesday. Still, options could pick up a bid as investors look to protect themselves from any surprises that might lead to a big Monday move.