Gold and Crude Oil Strengthen
By Colin Twiggs
April 8, 2010 5:30 a.m. ET (7:30 p:m AET)
The US Dollar Index found short-term support at 80.5. Bearish divergence on Twiggs Momentum (21-day) indicates that the up-trend is losing impetus. Reversal below 80.5 would confirm a correction. Recovery above 82.5, however, would signal an advance to 84.5*.
* Target calculation: 82.5 + ( 82.5 - 80.5 ) = 84.5
Rising Momentum (21-day) and spot gold recovery above $1140 indicate the start of an up-trend. Breakout above $1160 would confirm, offering a target of 1220*.
* Target calculation: 1140 + ( 1140 - 1060 ) = 1220
Crude broke through the upper border of a large broadening wedge formation, offering a target of $96/barrel. A large Momentum trough that respects the zero line would confirm the advance. Reversal below the rising trendline is unlikely, but would indicate a false signal.
Bearish divergence on Twiggs Money Flow (21-day) and penetration of the rising trendline indicate a Dow retracement to test support at 10700. Respect of support would confirm the primary advance to 11500*. Failure is less likely, but would warn of a correction.
* Target calculation: 10700 + ( 10700 - 9900 ) = 11500
The euro respected the declining trendline and is testing support at $1.33. Bullish divergence on Twiggs Momentum (21-day) indicates buyer interest. Respect of support would indicate another test of resistance at $1.36 (and potential double-bottom), while breakout below $1.33 would signal a test of $1.30*.
* Target calculations: 1.33 - ( 1.36 - 1.33 ) = 1.30
The pound is consolidating below resistance at $1.53, while rising Twiggs Momentum (21-day) indicates reversal to an up-trend. Breakout above $1.54 would confirm the signal, offering a target of $1.58*.
* Target calculation: 1.53 + ( 1.53 - 1.48 ) = 1.58
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The greenback's breakout against the yen was short-lived, with the dollar retreating below ¥93.50 to warn of a bull trap. Failure of short-term support at ¥92 would confirm, signaling a test of primary support at ¥88.50. Recovery above ¥93.50, however, would signal a primary advance to ¥98.50*. The higher trough on Twiggs Momentum (21-day) continues to indicate buyer interest — and a large trough above zero would further strengthen the signal.
* Target calculation: 93.50 + ( 93.50 - 88.50 ) = 98.50
The Aussie dollar is consolidating in a narrow range below $0.93, indicating an upward breakout. Twiggs Momentum respect of the rising trendline would strengthen the signal. Reversal below $0.9150 is less likely, but would warn of another down-swing. In the long term, breakout above $0.93 would offer a target of parity*; reversal below $0.86 is unlikely but would give a target of $0.79*.
* Target calculations: 0.93 + ( 0.93 - 0.86 ) = 1.00 and 0.86 - ( 0.93 - 0.86 ) = 0.79
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