Gold Rising Wedge
By Colin Twiggs
February 12, 2008 4:00 a.m. ET (8:00 p.m. AET)
Spot gold displays a bearish rising wedge pattern, but I would not place much reliance on this — unless the euro or crude showed similar bearish signs. While the formation has a fairly high failure rate, reversal below $900 would warn of a test of long-term support at $850.
The short-term chart shows gold consolidating in the same band of $920 to $930 as at the end of January. Breakout above $930 would signal a test of the upper wedge border; while reversal below $920/$915 would be bearish.
March 2008 Light Crude respected primary support and is headed for another test of $100 after breaking through $92.50. Failure of support at $86 is unlikely — and would warn that crude has started a primary down-trend.
The euro is consolidating (short-term) between $1.4450
and $1.4600. Upward breakout would signal another test of
resistance at $1.49, while downward breakout would test primary
support at $1.43.
In the longer term, breakout above $1.49 (and the key psychogical level of $1.50) would offer a target of 1.50+(1.50-1.43)=$1.57; while reversal below $1.43, though unlikely in the present circumstances, would signal a primary down-trend.
The dollar continues in a downward trend against the yen, with a long term target of 100. Short-term consolidation favors another decline — to test the lower border of the trend channel. Reversal above 108 is not expected, but would signal a test of the upper channel; while a fall below 105 would confirm the down-swing.
The Australian dollar respected support at $0.89 against the greenback, a strong bull signal for the broadening bottom formation. Breakout above $0.91 would signal a test of $0.94. Reversal below $0.89 is unlikely — and would warn of a test of $0.85.
The Aussie continues in a down-trend against the yen and only a break above 100 would signal reversal. In the short-term, a rise above 97.50 would be bullish, while a fall below 94 would warn of another test of 90.
Every age in the stock market reinvents the wheel, convinced it
has created something new and quite wonderful while completely
ignoring what happened to the old wheel.
~ Mihir Bose
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