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Dollar Traps Bears

By Colin Twiggs
April 29, 2008 3:00 a.m. ET (5:00 p.m. AET)

These extracts from my trading diary are for educational purposes and should not be interpreted as investment or trading advice. Full terms and conditions can be found at Terms of Use.

Gold

Spot gold has penetrated support at $900 and is headed for a test of medium-term support at $870. Failure would signal a test of primary support at $775. Recovery above the recent highs at $950 would complete a double bottom reversal with a target of $1020.

spot gold hourly chart

Source: Netdania

Gold and the euro have moved in sync since 2006. Failure of support at $870 would signal dollar strength against the euro and other currencies.

Crude Oil

June 2008 Light Crude is consolidating below $120 per barrel. Expect a retracement to test support at $108. Continued narrow consolidation below $120, however, would warn of an upward breakout.

crude oil

Currencies

The euro caught many bulls off-guard, with a second failed break above $1.59 followed by reversal to test support at $1.55. Failure of support would signal a test of $1.50. Reversal above $1.60, while not expected, would offer a target of 1.60+(1.60-1.55)=$1.65.

euro us dollar short-term

Source: Netdania

The greenback is testing resistance at 105 yen. The short retracement to 103 is a bullish sign and breakout would indicate a test of the upper trend channel at 108. Reversal below 103 is less likely and would signal a test of 99, at the lower channel border.

us dollar yen

Source: Netdania

The Australian dollar made a failed break above resistance at $0.95, falling to support at $0.93. Failure of support would test the lower border of the ascending triangle. Downward breakout from the triangle (below $0.92) would warn of a secondary correction. Reversal above $0.9550, while not expected, would offer a target of 0.95+(0.95-0.90)=1.00 (parity).

australian dollar compared to us dollar

Source: Netdania

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.

australian dollar compared to yen

Source: Netdania



My first advice to anyone is to look to yourself as the source of everything that happens in your life. What are the common patterns and how can you fix them. When you do this, your chances of success go up dramatically.

~ Van Tharp: Trade Your Way To Financial Freedom

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