Dollar Sinks But Gold Hesitates
By Colin Twiggs
September 9, 2009 9:00 p.m. ET (11:00 a:m AET)
The US Dollar Index broke through short-term support at 77.50 to continue its primary down-trend. The target for the current down-swing is 74*. Reversal above 79.50 is unlikely, but would warn of a trend reversal.
* Target calculation: 78.50 - ( 83 - 78.50) = 74
Spot gold retreated after briefly penetrating resistance at the key $1000 level. Narrow consolidation would be a bullish sign, signaling continued buying support, while sharp retracement, below say $970, would warn that profit-taking has overwhelmed buyers. Penetration of the rising trendline would indicate another secondary correction. In the long term, the weakening dollar suggests that upward breakout is more likely. Breakout above $1000 would offer a target of $1300*; failure of support at $900, however, would signal a test of the November 2008 low of $700.
* Target calculation: 1000 + ( 1000 - 700 ) = 1300
The euro broke through resistance at $1.44, signaling a primary advance to $1.50*. Reversal below $1.44 is unlikely, but would warn of trend weakness, while penetration of the rising trendline would signal a secondary correction.
* Target calculation: 1.44 + ( 1.44 - 1.38 ) = 1.50
The dollar continues its primary down-trend against the yen; penetration of support at ¥92.50 indicating a test of the lower channel. Reversal above ¥94 is unlikely, but would warn of trend weakness. Upward breakout from the trend channel is again unlikely, but would suggest a primary trend reversal.
The Aussie dollar continues its ascent against the greenback despite weaker commodity prices. Expect a test of the upper trend channel around $0.90*, with short-term resistance levels at $0.86 and $0.88. Reversal below the lower trend channel is most unlikely, but would warn that the primary up-trend is weakening.
* Target calculation: 0.80 + ( 0.80 - 0.70 ) = 0.90
An imbalance between rich and poor is the oldest and most fatal ailment of all Republics.
~ Plutarch (circa 45 - 125 A.D.)