Gold Tests $900
By Colin Twiggs
April 14, 2009 10:30 p.m. (12:30 p.m. AET)
Spot gold is testing the new resistance level at $900, after earlier breaking through support at that level. Reversal below yesterday's low of $886 would indicate that resistance has been respected, confirming the down-trend with a target of primary support at $700. Penetration of resistance would mean a test of the upper trend channel — and a weaker down-trend.
Spot silver penetration of support at $12 would add further confirmation of the down-trend.
West Texas Crude is consolidating in a pennant continuation pattern around $50 per barrel. Breakout above $55 would confirm the up-trend, offering a target of $65 (calculated as 50 + [ 50 - 35 ]). Reversal below $47, while less likely, would signal a test of support at $35.
The US Dollar Index displays a tentative large rising wedge pattern, which would warn of a reversal. Breakout above 86 would signal a swing to the upper border, completing the wedge formation, while reversal below 83.50 would test primary support at 78. Downward breakout from the wedge would signal a weak dollar — causing upward pressure on oil and gold.
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