Gold Up-Trend Remains
By Colin Twiggs
November 13, 2007 3:00 a.m. ET (7:00 p.m. AET)
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Gold retraced sharply before finding support at $790. The metal remains above the rising (green) trendline, signaling that the up-trend is intact and the long-term target of $900 [725+(725-550)] remains. Breakout below the trendline would warn of a larger, secondary correction.
December Light Crude is retracing, in line with gold, as the dollar strengthens. Expect a test of support at $90/barrel. Breakout below the rising (green) trendline is not expected and would warn of a secondary correction.
The weekly chart shows a strong band of support between $75 and $78/barrel, coinciding with the rising long-term trendline.
The euro is retracing to test the rising (green) trendline. Respect would signal an advance to test the next target of $1.50 [1.47+(1.47-1.44)]. Breakout below the trendline is not expected — and would warn of a secondary correction.
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The dollar broke through support at 112 against the yen, signaling a further decline with a target of 100 [112-(124-112)].
The sharp rise of the yen can be attributed to the unwinding of large carry trades, effectively buying the yen and selling high-yielding currencies such as the Australian dollar. The monthly chart shows a large bearish descending triangle with support at 100. Failure would signal strong long-term appreciation of the yen.
The Australian dollar reflects a corresponding sharp fall, with penetration of the rising (green) trendline warning of a secondary correction. Failure of support at $0.8750 would confirm this. The long-term target of parity [0.8900+(0.8900-0.7800)] now appears remote and would only be revived by a rise above $0.9400.
We need only take our heads out of the sand to see clearly that
interventionism not only has failed to provide the promised
something-for-nothing, but has led to all sorts of undesirable
consequences. Indeed, many are just beginning to realize that
we are moving towards disaster even though we have been on a
wrong heading for decades.
~ Leonard Read.
To understand my approach, please read Technical Analysis & Predictions in About The Trading Diary.