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Crude Narrows

By Colin Twiggs
June 24, 2008 5:00 a.m. ET (7:00 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 broke above its bullish falling wedge pattern, signaling a test of resistance at $940/$950. The signal would be confirmed if price penetrates short-term resistance at $910, with the latest retracement respecting the upper border of the wedge pattern.

Spot gold daily chart

In the longer term, a rise above $940 would test $1000/$1030; while reversal below $850 would signal a primary down-trend.

Spot gold daily chart

Source: Netdania

Crude Oil

West Texas Intermediate Crude is consolidating in a narrow band between $131 and $139, a continuation pattern. Upward breakout is more likely, and would offer a target of $135+(135-122)=$148, while reversal below $131 would test support at $122.

Crude oil

In the longer term, failure of support at $122 would test the long-term trendline — at the $100 level.

Crude oil

Source: Netdania


Currencies

The euro is consolidating above short-term support at $1.5450; breakout above $1.5650 would test $1.5850, while failure of $1.5450 would re-visit primary support at $1.53.

Euro us dollar short-term

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.

Euro us dollar short-term

Source: Netdania

The greenback is retracing after testing resistance at 109 yen. Respect of support at 106 or breakout above $109 would signal an up-trend, but we need to be cautious: V-shaped bottoms are prone to failure.

US dollar yen

Source: Netdania

The Australian dollar respected support at $0.93 and the short-term consolidation at $0.95 is likely to resolve into a test of resistance at $0.9650. Reversal below $0.93 is not expected — and would test primary support at $0.88/$0.90.

Australian dollar compared to us dollar

Source: Netdania

The Aussie is edging up cautiously against the yen. Expect another retracement to test the new support level at 100. In the longer term, an advance to 108 is likely, while reversal below 100 is not expected — and would test long-term support at 88/90.

Australian dollar compared to yen

Source: Netdania



Let me now spell out how the new paradigm differs from the old one....... Instead of being always right, financial markets are always wrong. They have the ability, however, both to correct themselves and occasionally to make their mistakes come true.......

~ George Soros: The New Paradigm For Financial Markets

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