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Crude Spike

By Colin Twiggs
June 10, 2008 4:00 a.m. ET (6:00 p.m. AET)

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Gold

Spot gold formed a megaphone-shaped broadening bottom, similar to the pattern in May. A partial decline (failed swing) would signal a test of resistance at $950, otherwise we will see a test of support at $850.

Spot gold daily chart

In the longer term, breakout below $850 would signal a primary down-trend but, considering the weakness of the dollar and the strength of oil, this remains unlikely. Breakout above resistance at $950, on the other hand, would signal a test of $1000. What we are most likely witnessing is a large consolidation similar to 2006. Respect of support at $850 would confirm this.

Spot gold daily chart

Source: Netdania

Crude Oil

West Texas Intermediate Crude broke through resistance at $135 before retracing to test the new support level. Failure (reversal below yesterday's low of $133) would warn of another test of support at $122; respect would signal another rally with a target of $135+(135-122)=$148

Crude oil

In the longer term, failure of support at $122 would test $100.

Crude oil

Currencies

The euro encountered short-term resistance at $1.58, retracing to test primary support at $1.53. Respect of $1.55 (60% retracement) would indicate an upward breakout.

Euro us dollar short-term

In the longer term, failure of support at $1.53 would test $1.43; breakout above $1.60 would offer a target of $1.67; but further consolidation between $1.60 and $1.53 is most likely. Central banks are expected to intervene to prevent further appreciation of the euro above $1.60, while the US economy is expected to weaken, making further depreciation of the euro less likely.

Euro us dollar short-term

Source: Netdania

The greenback broke out above 106 yen, ending its recent consolidation. Breakout from the trend channel indicates that the down-trend is weakening. Expect a retracement to test the new support level.

US dollar yen

Source: Netdania

The Australian dollar is testing support at $0.95. Downward breakout would test short-term support at $0.93, while recovery above $0.95 would test $0.9650. In the longer term, breakout above $0.9650 would test parity; failure of $0.93 is less likely and would warn of a test of $0.90.

Australian dollar compared to us dollar

Source: Netdania

The Aussie respected support at 99 yen before recovering above the previous high. Expect a retracement to test the new support level at 100. In the long term, expect a rally to test 108; reversal below 99 would test 96 and possibly long-term support at 88.

Australian dollar compared to yen

Source: Netdania



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