Gold & Crude Strengthen As The Dollar Weakens
By Colin Twiggs
May 12, 2009 0:30 a.m. (2:30 p.m. AET)
Spot gold is testing resistance at $920. Breakout would confirm the correction has ended — and signal another test of $1000. Reversal below $880, on the other hand, would warn that the decline is likely to continue. And penetration of $865 would confirm.
Spot silver is testing resistance at $14.00 after ending its recent correction. Breakout above $14.75 would confirm the primary up-trend — and add weight to the likelihood of a gold recovery. Reversal below support at $12.00 is unlikely, but would signal a test of $9.00.
West Texas Crude is in a primary up-trend, having completed a flag continuation pattern. The target of $65 is calculated as 50 + [50 - 35]. Reversal below $50 is unlikely, but would test primary support at $35.
The US Dollar Index indicates that both gold and crude oil are likely to strengthen. Having penetrated the lower border of a large rising wedge reversal pattern, the index is now testing support at 82.50. Breakout would confirm the primary down-trend; with a target of 75, calculated as 85 - [88 - 78]. Recovery above the declining (brown) trendline is unlikely, but would warn of a false signal.
The American Republic will endure until the day Congress discovers that it can bribe the public with their own money.
~ Alexis de Tocqueville (1805 - 1859)