By Colin Twiggs
April 22, 2008 10:30 p.m. ET (12:30 p.m. AET)
Spot gold twice respected support at $900. Recovery above recent highs at $950 would complete an inverted head and shoulders pattern with a target of $1000. Reversal below $870 is less likely — and would signal a test of primary support at $800/$775.
Gold and the euro have moved in sync since 2006. Further weakness in the dollar would ensure that gold resumes its upward path — in line with the euro.
May 2008 Light Crude is testing resistance at its target of $120 per barrel. Expect a retracement to test the new support level at $110.
The euro broke out of its bullish ascending triangle, offering a medium-term target of 1.59+(1.59-1.53)=$1.65. Expect short-term retracement to test the new support level at $1.59.
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The greenback respected support at 100 yen and rallied to the first line of resistance at 105. Breakout would indicate a test of the upper trend channel, while reversal would find support at 96. In the longer term, a break below 96 would offer a target of 90.
The Australian dollar is testing resistance at $0.95. Breakout would offer a target of 0.95+(0.95-0.90)=1.00 (parity). Penetration of the short-term rising trendline is not expected and would warn of another test of support at $0.90.
The Aussie continues in a descending right-angled broadening pattern against the yen, headed for a test of resistance at 100. Watch for a failed swing (that does not reach the opposite border) which would signal future breakout direction.
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