By Colin Twiggs
April 1, 2008 4:00 a.m. ET (8:00 p.m. AET)
Spot gold is again testing support at $900. Gold and the euro have been moving in sync since 2006 and the relationship is expected to continue — with gold resuming its strong up-trend. Breakout below $900, however, would breach the rising trendline and signal weakness in the primary trend.
May 2008 Light Crude shows a series of descending (lower) tops — a bearish sign during a consolidation. Breakout below $99 would signal a test of primary support at $86, while respect of support would need to rally above the previous high at $108 before it could be interpreted as a longer term positive sign.
The strong primary up-trend on the weekly chart continues. A break of the rising green trendline, while not expected, would signal that the up-trend is weakening.
The euro is forming a bullish narrow rectangle below resistance at $1.59. Breakout would offer a short-term target of 1.59+(1.59-1.53)=$1.65. The space between short-term support at 1.53 and longer term support at the previous high of 1.50 signals a strong up-trend.
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Further narrow consolidation of the dollar below short-term resistance at 101 yen would be a bullish sign, promising a test of the upper border of the trend channel. The strong primary down-trend continues, however, with a target of the all-time low at 80.
Breakout of the Australian dollar below $0.90 would confirm the secondary correction and a test of primary support at $0.85. Respect of $0.85 would confirm the primary up-trend, while failure would signal a test of $0.77.
The Aussie continues to display a descending broadening pattern against the yen, with strong resistance at 100. Reversal below 88 would complete a failed up-swing, signaling long-term weakness. Breakout below key support at 86 would offer a long-term target of 86-(108-86)=64.
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