Dollar Weakens Against Euro
By Colin Twiggs
April 1, 2010 2:00 a.m. ET (5:00 p:m AET)
The US Dollar Index retraced to test short-term support at 81. Bearish divergence on Twiggs Momentum (21-day) indicates that the up-trend is losing impetus. Breakout below 81 and the rising trendline would reinforce the bear signal, warning of a correction— while reversal below 79.5 would confirm. Respect of support at 81, however, would signal an advance to 84.5*.
* Target calculation: 81.5 + ( 81.5 - 78.5 ) = 84.5
Gold is edging lower and failure of short-term support at $1085 would signal a test of the band of primary support between $1050 and $1060. Twiggs Momentum (21-day) oscillating in a narrow range around zero indicates uncertainty and the absence of a clear trend.
Crude is headed for a test of the upper border of a large broadening wedge formation. Twiggs Momentum breakout above the declining trendline favors continuation of the primary up-trend; confirmed if a large trough respects the zero line. Reversal below the rising trendline is unlikely, but would indicate a failed up-swing and downward breakout from the wedge formation.
The Dow is retracing to test the new support level at 10700. Bearish divergence on Twiggs Money Flow (21-day) indicates selling pressure. Failure of support would warn of a correction. Respect, however, would suggest an advance to 11500*.
* Target calculation: 10700 + ( 10700 - 9900 ) = 11500
The euro recovered above its former support level at $1.3450, headed for a test of the declining trendline. Bullish divergence on Twiggs Momentum (21-day) indicates buyer interest. Breakout above the trendline would indicate that the down-trend has weakened, while recovery above $1.38 would confirm that it has ended. Reversal below $1.33 is less likely, but would signal a test of $1.30* and possibly the 2009 low of $1.25*.
* Target calculations: 1.34 - ( 1.38 - 1.34 ) = 1.30 and 1.34 - ( 1.42 - 1.34 ) = 1.26
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The greenback's correction against the yen has ended and breakout above ¥93.50 would confirm an advance to ¥ 100*. The higher trough on Twiggs Momentum (21-day) indicates buyer interest; a large trough above zero would further strengthen the signal. Reversal below ¥ 92 is unlikely, but would test primary support at ¥ 88.50.
* Target calculation: 94 + ( 94 - 88 ) = 100
The Aussie dollar is losing upward momentum, highlighted by a break below the rising trendline and a bearish lower peak on Twiggs Momentum. Reversal below $0.90 would confirm that the up-swing is over, warning of a test of primary support at $0.86. Twiggs Momentum Oscillator (21-day) reversal below zero would strengthen the bear signal, while a large trough above zero would suggest another primary advance.
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