Gold, Crude Test Support
By Colin Twiggs
August 5, 2008 3:30 a.m. ET (5:30 p.m. AET)
Spot gold broke through medium-term support at $910 and is headed for a test of primary support at $850. Recovery above $910 is unlikely — and would warn of a bear trap.
In the long term, gold remains in a strong primary up-trend. Failure of support at $850 is not expected — and would signal a primary down-trend.
West Texas Intermediate Crude is testing medium-term support between $122 and $120/barrel. Recovery above the recent high of $128 would warn of another test of $150, while failure of support at $120 would offer a target of $100.
In the long term, penetration of the long-term trendline remains unlikely.
The euro broke through medium-term support at $1.56 and, similar to gold, is headed for a test of primary support at $1.53. Penetration of short-term support at $1.55 would add further confirmation.
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The dollar has started a bullish narrow consolidation below 108.50/109.00 against the yen. Upward breakout would signal a primary up-trend. Reversal below 107 is less likely — and warn of another test of 104.
The Australian stock market is falling, bond prices are rising, and the Australian dollar is weakening. The Aussie fell sharply to below $0.9300 against the greenback, signaling a primary trend change. Expect support at $0.9000. Recovery above $0.9300 in the next few days is unlikely — and would warn of a bear trap.
The Aussie is also testing support at 100 against the yen. Failure would warn of a test of support at 96, while primary support remains a long way off at 88.
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