Gold Looks For Support
By Colin Twiggs
April 8, 2008 11:00 p.m. ET (3:00 p.m. AET)
Spot gold broke support at $900, signaling the start of a secondary correction. The primary trend remains intact and would only reverse if support at $775 is penetrated. Expect medium-term support at $850.
Gold and the euro have moved in sync since 2006. Precious metals were affected by across-the board profit-taking in commodities, while the euro has been relatively unscathed. Further weakness in the dollar should ensure that gold resumes its upward path — in line with the euro.
June 2008 Light Crude is testing resistance at the previous high of $108. Strong volume signals selling pressure and a likely reversal to test support at $99/100. A rise above $108.50, while not expected, would indicate a strong up-trend.
The euro shows a bullish ascending triangle below resistance at $1.59. Breakout would offer a short-term target of 1.59+(1.59-1.53)=$1.65. A failed swing, where price reverses without testing the upper border of the formation, while not expected, would warn of a downward breakout and a test of $1.50.
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The greenback formed a narrow rectangle below 103 yen. Upward breakout would test the upper border of the main trend channel, while reversal would test 95 — with a likely downward break to test the all-time low of 80.
The Australian dollar respected support at $0.90 and is headed for a test of resistance at $0.95. The higher low confirms that the up-trend is intact; breakout above $0.95 would offer a target of parity — 0.95+(0.95-0.90)=1.00.
The Aussie continues to display a descending right-angled broadening pattern against the yen. Expect strong resistance at 100. A failed up-swing would warn of a downward breakout — and a long-term target of 86-(108-86)=64.
The presence of politicians at the inauguration of the Olympics seems inappropriate.
I do not intend to take part.
~ Polish Prime Minister Donald Tusk — a view subsequently endorsed by German chancellor Angela Merkel: March 29, 2008.
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