Dow at 8000
By Colin Twiggs
January 22, 2009 7:00 p.m. ET (11:00 a.m. AET)
The Dow is testing support at 8000, with rising volume indicating buying pressure. Respect would signal another test of 9000, while failure would warn of a primary down-swing. In the longer term, expect further support at the November low of 7500; but the target is 6000: 7500 - ( 9000 - 7500 ).
Spot gold is headed for another test of $900, close to the upper border of the long-term descending wedge formation, and resistance is likey to be stronger. Breakout would signal the start of a new (primary) up-trend — but wait for confirmation from a retracement that respects the new support level ($900). Failure to breach resistance remains as likely, however, and would signal another test of support at $800.
West Texas Crude is headed for another test of resistance at $50/barrel. Shrinking global demand is likely to lead to retracement to test support at $35. Failure of support would offer a target of the 2003 low of $20/$25, calculated as 35 - (50 - 35).
The euro is retracing to test support at $1.25. Failure would offer a target of $1.00 as shown on the monthly chart below, and calculated as 1.25 - ( 1.50 - 1.25 ). The primary trend is uncertain and respect of support would signal another test of $1.45/$1.50.
The dollar continues in a primary down-trend against the yen, headed for a test of the 1995 low of 80.
The Australian dollar is retracing for another test of support at $0.60. Failure would offer a target of $0.50, while respect of $0.60 would be a bullish sign.
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