Gold Breaks Support
By Colin Twiggs
June 15, 2009 7:00 p.m. (9:00 a.m. AET)
I will be in Cape Town, South Africa for the next two weeks and will skip some newsletters because of travel/time differences.
Spot gold broke interim support at $940, warning of a test of primary support at $870. Retracement that respects the new resistance level would offer added confirmation. Reversal above $940 is most unlikely, but would warn of a bear trap.
Spot silver made a similar break below interim support at $14.50/$14.75, signaling a secondary correction with a target of primary support at $12.00. Respect of the 61.8% retracement level at $13.50 is unlikely, but would indicate a healthy up-trend.
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West Texas Crude continues its strong primary advance. Penetration of the rising trendline would indicate a secondary correction, with a target of $63 — calculated as 73 - [ 55 - 45 ].
A weakening dollar increases demand for gold — and a falling gold price signals dollar strength. The US Dollar Index continues to test resistance at 81; breakout would test the stronger level at 83. Respect of 81 is unlikely, given the fall in gold and silver, but would signal another down-swing with a target of 73 — calculated as 78 - [ 83 - 78 ] .
Any fool can make things bigger, more complex, and more violent.
It takes a touch of genius — and a lot of courage — to move in the opposite direction.
~ Albert Einstein