Gold Tests $850
By Colin Twiggs
June 17, 2008 5:00 a.m. ET (7:00 p.m. AET)
Spot gold is likely to respect support at $850. Upward breakout from the bullish falling wedge pattern would test resistance at $950 — and possibly $1000.
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.
West Texas Intermediate Crude made a false break above its pennant continuation pattern, establishing short-term resistance at $140. Upward breakout is likely, and would offer a target of $135+(135-122)=$148, while reversal below the lower pennant border would test support at $122.
In the longer term, failure of support at $122 would test the long-term trendline — at the $100 level.
The euro successfully tested primary support at $1.53, but the pattern remains bearish unless there is a breakout above $1.5850. A rally that fails to reach the resistance level would strengthen the bear signal.
In the longer term, failure of support at $1.53 would test the rising trendline at $1.43, while breakout above $1.60 would offer a target of $1.67. Further consolidation between $1.60 and $1.53, however, remains the most likely option.
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The greenback rallied to 109 yen. Expect a retracement to test the new support level at 106. Respect would confirm the primary up-trend.
The Australian dollar broke through $0.95 to test short-term support at $0.93. Recovery above $0.95 would again encounter resistance at $0.9650, while failure of $0.93 would test primary support at $0.90.
The Aussie is strengthening against the yen, forming a narrow consolidation above support at 100. In the long term, expect an advance to 108. Reversal below 99 is now unlikely — and would test long-term support at 88/90.
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