Gold, Oil, Currencies & Interest Rates
By Colin Twiggs
July 10, 2007 3:00 a.m. EST (5:00 p.m. AEST)
Spot gold broke through the upper border of the trend channel, completing a small inverted head and shoulders reversal. A rally to test resistance at $695 is now likely, while reversal below $645 would signal a test of primary support above $630. The weak dollar and rising crude prices should boost demand for gold.
December Light Crude rallied strongly after breaking through resistance at $71/barrel. I have revised the target downwards to $75 (71+[71-67]). Retracement to test the new support level of $71 remains a possibility.
The euro is testing major resistance at $1.37. Breakout or a narrow consolidation would be a bullish sign, while a fall below $1.33, though not expected at present, would signal weakness. A rise above $1.37 would give a medium term target of $1.41 (1.37+[1.37-1.33]).
The dollar is consolidating above support at 122 against the
yen. Breakout above 124 would indicate a medium-term
target of 129 (122+[122-115]), while reversal below 122 would
The primary trend is up and the long-term target is the 2002 high of 135 (122+[122-109]).
The Australian dollar is approaching its medium term target of 0.8650 (0.8400+[0.8400-0.8150]). The long-term target is 0.92 (0.80+[0.80-0.68]), but we can expect a retracement to establish a new support level before then.
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The ten-year treasury yield is consolidating between 5.00% and 5.25%. Breakout would indicate future direction. The yield differential (10-year minus 13-week treasury yields) remains positive.
Short-term (13-week) treasury yields are testing resistance at 4.80%. Respect of resistance would warn that the down-trend is intact, while failure would signal that the recent equilibrium is likely to be restored.
The Shanghai index [^SSEC] displays a bullish key
reversal [R2] above support at 3400, indicating another
test of 4350. The Hang Seng is in a strong up-trend, headed for
a test of 23000, while the Nikkei 225 remains bullish, testing
its 2007 high of 18300.
The FTSE 100 and the DAX appear bullish, while the Dow and S&P 500 are recovering.
Probability of recession in the next four quarters retreated to 33 per cent according to the Wright Model.
Soon the ice will melt, and the blackbirds sing along the river
which he frequented, as pleasantly as ever. The same
everlasting serenity will appear in this face of God, and we
will not be sorrowful, if he is not.
~ Henry David Thoreau, in a letter to Lucy Brown following the death of his brother.
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