By Colin Twiggs
March 5, 2009 9:00 p.m. ET (1:00 p.m. AET)
Spot gold respected support at $900, rallying above short-term resistance at $920 and breaking out of its trend channel to signal reversal of the recent down-trend. The short-term target is $940; calculated as 920 + ( 920 - 900 ). Retracement that respects the new support level at $920 would confirm the up-trend, offering a medium-term target of $1000. Failure of support at $900 is now unlikely, but would warn of a test of $700. In the long term, breakout above $1000 would offer a target of $1200; calculated as 900 + ( 1000 - 700 ) from the large descending broadening wedge over the last 12 months.
West Texas Crude is headed for a test of resistance at $50 per barrel. The primary trend is down and likely to remain so, given the contraction in the global economy. Expect resistance to hold and, in the long term, reversal below $33 would warn of a down-swing to test the 2003 low of $20. The target is calculated as 35 - (50 - 35).
Wisdom consists not so much in knowing what to do in the ultimate as knowing what to do next.
~ Herbert Hoover