August 7, 2006
Spot gold has formed a small pennant at $640 to $660, normally a continuation pattern. An upward breakout would signal a test of resistance at $680. A (less likely) downward breakout would test primary support at $600.
The US Dollar Index is weakening ahead of the Fed's Tuesday meeting, with the market anticipating a pause in rate hikes. In my opinion a rate hike is in the balance: the Fed may still be concerned with recent inflation figures and opt for one last hike before the much-anticipated pause. The dollar is weakening, along with long-term yields.
The index completed a double top and is now headed for a test of major support at 83.50. Expect gold to rally.
The FTSE 100 dipped below initial support at 5900. Twiggs Money Flow (21-day) is trending upwards, signaling accumulation, so watch for a close back above 5900 to complete a bullish false break. A fall below 5650, on the other hand, would signal a test of primary support at 5500.
The Nikkei 225 encountered strong resistance at 15500. A down-turn that respects the 100-day exponential moving average would be bearish, but a fall below the recent low of 14500 would confirm the primary down-trend. A rise above 15500, on the other hand, would be a strong bull signal.
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The All Ordinaries continues to show uncertainty, consolidating mid-way between the recent high and low, with Twiggs Money Flow (21-day) whipsawing around the zero line. A close above 4980 would be bullish, while a close below 4880 would mean a test of primary support at 4800.