Gold & Platinum Triangles
By Colin Twiggs
September 1, 2009 3:30 a.m. ET (5:30 p.m. AET)
The US Dollar Index is consolidating around the former primary support level at 78.50. Downward breakout is likely and would signal a down-swing with a target of 74* — indicating higher gold and oil prices. Recovery above 79.50 is unlikely, but would warn of reversal to a primary up-trend.
* Target calculation: 78.5 - ( 83 - 78.5 ) = 74
Spot gold is entering the apex of the triangular pattern, where breakouts are less reliable. A rise above resistance at $970, however, would test $1000; while failure of support at $925 would test primary support at $900. In the long term, breakout above $1000 would signal an advance to $1100*, while breakout below support at $900 would test the November low of $700.
* Target calculation: 1000 + ( 1000 - 900 ) = 1100
The Market Vectors Gold Miners Index [GDX] is testing resistance at $40; breakout would signal an advance to the upper trend channel — a positive sign for spot gold prices. Twiggs Money Flow (21-day) breakout above zero and the declining trendline would reinforce the signal. Until then, reversal below $37 remains as likely and would warn that the primary up-trend is weakening.
Spot silver is testing resistance at $15. Breakout would signal a test of $16, while reversal below $14 would warn of another secondary correction. In the long term, a fall below $12.50 would signal a primary trend reversal; while breakout above $16 would indicate a primary advance with a target of $19 — a positive sign for gold.
Platinum is affected by declining commodity prices. Failure of the CRB Commodities Index short-term support level (at 253) would be a strong bear signal for platinum. The descending triangle warns of selling pressure; and breakout below 1220 would signal a test of $1100. Recovery above $1300 is unlikely, but would indicate an advance to $1500*. Reversal below $1100 remains unlikely as well, but would signal a primary trend change.
* Target calculation: 1300 + ( 1300 - 1100 ) = 1500
Crude oil is testing support at $70/barrel; breakout would warn of a secondary correction. Penetration of the rising trendline would strengthen the signal. Reversal above $75, however, would indicate an advance with a target of $80*.
* Target calculation: 70 + ( 70 - 60 ) = 80
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