FX: Last week USDCHF touched a serises of key technical support levels at 1.2810 presenting a low risk trade setup for those (like us) who are bullish. We said then that "Traders may look to go long today (Thursday) with risk limited to just below the overnight lows."

The dollar added to those gains on Friday and the wave count appears to be a "double zig zag" correctinve formation of "XYZ." Since the advance from the January lows was not violated, and the wave count conforming to conventional counts, we feel that the dollar is set for a sharp rise in "wave 3" if we can overcome 89.50 and the 90.30 highs this week. Only a move below 88.20 and then 87.80 would prove us wrong.

Gold: No change from last week when we wrote, "Gold is on its way to $600 where we see a top from the triangle breakout before a correction back to $540. Longtime readers know that we are looking for gold at $800 but still favor a steep correction given the extreme froth in the metals market (especially in silver)."

Stocks:  The "wave v" high appears to have ended and aggressive traders may look to go short with risk limited to Friday's highs. A more pragmatic approach would be to wait for sure signs of a confirmation of a reversal -- for a completed "five wave" move below 1270 and then 1245 to confirm a top.

Bonds:  Last week we said to look for a reversal higher from the 105/106 level which might carry us back to 108. We suggested then to lighten up positions if we begin to move higher and in this weekend's report we suggested that a "five wave" move down from the 110 highs appears to suggest that a reversal will come in the 106/104 area this week.

Crude Oil:  Oil is now testing the previous “wave C” high of our “ABCDE” triangle pattern. As we said last week, key triangle trendline resistance at $68 is approaching and may repel the market for a decline in “wave E” before this long consolidation in “wave IV” is finished. We were very confident that traders should buy in the $55/$65 area for a final move to $80 and above before this bull market takes a needed rest. If we surpass the $68 level next week it may mean the consolidation pattern is over and we are running higher.

NatGas broke down last week, but marginal new lows would only create even more attractive bullish momentum divergences. We feel the market is wrong on NatGas and the headlines today suggesting that the US may threaten to attack Iran only solidifies our view from two months ago that NatGas stands to rally back to $10.

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