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Gold Rises As Dollar Weakens

By Colin Twiggs
July 15, 2008 1:00 a.m. ET (3:00 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 through resistance at $950, signaling a test of $1000. Expect a retracement to test the new support level. Reversal below $910 is unlikely — and would warn of a test of primary support at $850.

Spot gold daily chart

Source: Netdania

Crude Oil

West Texas Intermediate Crude is consolidating below short-term resistance at $145/barrel. Narrow consolidation would be a bullish sign. Breakout would offer a target of $155 [135+(145-135)], but expect strong resistance at $150. Reversal below $135 is unlikely and would warn of a secondary correction. Primary support remains at $100/barrel.

Crude oil

Source: Netdania


Currencies

The euro has made a narrow bullish consolidation after breaking through $1.5850. Expect strong resistance at $1.60 — as well as the possibility of ECB intervention if the euro threatens to rise above this level.

Euro us dollar short-term

Source: Netdania

The dollar threatens to fall below 105 yen, which would signal another test of 100 — and possibly primary support at 96. V-shaped bottoms are prone to failure and generally end up as double bottoms or even inverted head and shoulders patterns.

US dollar yen

Source: Netdania

The Australian dollar broke through resistance at $0.9700, signaling a test of parity. Expect retracement to test the new support level in the short-term. Reversal below $0.95 is unlikely at present — and would warn of a test of primary support at $0.90. Breakout below the rising trendline would also warn of a primary trend change.

Australian dollar - US dollar

Source: Netdania

The Aussie is headed for a test of resistance at 104 yen. Breakout would signal an advance to 108. Reversal below 100 is unlikely — and would test primary support at 88.

Australian dollar compared to Yen

Source: Netdania



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