Crude Finds Support
By Colin Twiggs
July 29, 2008 4:00 a.m. ET (6:00 p.m. AET)
Spot gold reversed below $950 and is consolidating between $910 and $935. Failure of $910 would signal a test of primary support at $850, while reversal above $935 would indicate another attempt at $1000. Expect strong profit-taking at this important psychological barrier.
West Texas Intermediate Crude is consolidating above medium-term support at $122/barrel. Continued narrow consolidation above the support level would be a bearish sign, threatening a test of primary support at $100. Recovery above $133 is less likely and would signal the end of the correction.
Penetration of primary support at $100/barrel, and the long-term trendline, remain unlikely.
The euro shows similar medium-term behavior to gold, retreating from a failed breakout above $1.60 to test medium-term support at $1.56. Failure of $1.56 would warn of a test of primary support at $1.53.
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The dollar remains above the long-term descending trendline against the yen. Respect of support at 103 is a bullish sign — and breakout above 109 would signal a primary up-trend. Reversal below 103 is now unlikely and would warn of a test of 96 yen.
The Australian dollar reversed below $0.9700 and is testing medium-term support at $0.9500. Recovery above $0.9700 would indicate another attempt at parity, while failure of support would warn that the up-trend is weakening. A fall below $0.9300 remains unlikely — and would signal a primary trend change.
The Aussie formed a bearish rising wedge formation against the yen. Reversal below 102 would offer a target of 96, but this may not be achieved given strong support at 100. In the long term, the target for the broadening wedge pattern remains at 108 — with primary support at 88.
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