Dollar Weak, Gold Strong
By Colin Twiggs
January 15, 2008 4:00 a.m. ET (8:00 p.m. AET)
Gold and the euro continue to strengthen against the greenback as the Fed contemplates further rate cuts.
Spot gold reached its medium-term target of $900, but the rally shows no signs of slowing. Primary support at $775 is unlikely to be tested.
Crude is likely to lag gold and the euro as it is more susceptible to falling demand from a slowing US economy.
June 2008 Light Crude has been testing resistance at the key psychological level of $100/barrel. Reversal below $90 would signal weakness, while a fall below $86 would warn that the primary trend has reversed.
The euro is headed for another attempt at $1.50. Expect major resistance, while narrow consolidation below this level would be a strong bull signal. Primary support remains at $1.43.
The (dollar) down-trend against the yen continues. Breakout below suport at 107 would signal a test of key long-term support at 100. The target is calculated as: 107 - (114 - 107) = 100.
The Australian dollar broke through resistance at $0.8900, signaling a test of the previous high of $0.9400. Consolidation above the new support level (0.8900) is a bullish sign; reversal below $0.8900 is not expected and would indicate weakness.
The more hawkish stance of the RBA should see the Aussie continue to strengthen against the greenback.
No speculator can be right all the time. In fact, if a
speculator is correct half of the time he is hitting a good
average. Even being right three or four times out of ten should
yield a person a fortune if he has the sense to cut his losses
quickly on the ventures where he has been wrong.
~ Bernard Baruch: My Own Story
To understand my approach, please read Technical Analysis & Predictions in About The Trading Diary.