Gold Ascending Triangle

By Colin Twiggs
June 17, 2010 10:00 p.m. ET (12:00 p:m AET)

These extracts from my trading diary are for educational purposes and should not be interpreted as investment or trading advice. Full terms and conditions can be found at Terms of Use.

US Dollar Index

The US Dollar Index retreated below support at 87.5, indicating weakness. Recovery above 87.5 would signal that the advance to 95* will continue, while failure of support at 85 would warn of a secondary correction. Declining Twiggs Momentum favors a correction — strengthened if the indicator crosses to below zero.

* Target calculation: 87.5 + ( 87.5 - 80 ) = 95

Gold

A weakening dollar strengthens gold, currently forming a bullish ascending triangle. Breakout above $1250 would confirm a primary advance to $1380*. Reversal below $1220 is less likely, but would warn of another test of $1170. Twiggs Momentum is uncertain at present: recovery above 8% would favor a breakout, while reversal below 4% would indicate weakness.

* Target calculation: 1220 + ( 1220 - 1060 ) = 1380

Crude Oil

Crude is testing resistance at $80 per barrel. Breakout would signal a test of the upper border of the broadening wedge, while respect would warn of a primary down-trend — confirmed if support at $70 is broken. A lower peak on Twiggs Momentum would favor a primary down-swing with a target of 60*.

* Target calculation: 70 - ( 80 - 70 ) = 60

Euro

The euro is testing its new resistance level at $1.25. Respect of $1.25 would confirm the long-term target of parity*, while breakout above the descending trendline would indicate that the down-trend is weakening. Twiggs Momentum holding below zero continues to warn of a strong primary down-trend.

* Target calculation: 1.25 - ( 1.50 - 1.25 ) = 1.00

UK Pound Sterling

The pound is testing the new resistance level at $1.48. Respect would confirm the medium-term target of $1.38, but bullish divergence on Twiggs Momentum (21-day) favors a reversal; recovery above zero would strengthen the signal.

* Target calculation: 1.48 + ( 1.58 - 1.48 ) = 1.38

Japanese Yen

The dollar is weakening against the yen. Reversal below support at ¥88 or Twiggs Momentum penetration of its rising trendline would strengthen the signal. In the long term, failure of primary support at ¥85 would offer a target of ¥75, while breakout above ¥95 would offer a target of ¥100.

* Target calculations: 85 - ( 95 - 85 ) = 75 and 95 + ( 95 - 90 ) = 100

Australian Dollar

The Aussie dollar recovered above resistance at $0.86, but Twiggs Momentum remains weak and a rally that respects the zero line (from below) would warn of a strong bear trend. Failure of short-term support at $0.86 would warn of another test of $0.81. Respect of support is unlikely, but would confirm a bear trap.

* Target calculation: 0.81 - ( 0.86 - 0.81 ) = 0.76

A chief is a man who assumes responsibility. He says "I was beaten," he does not say "My men were beaten".

~ Antoine de Saint-Exupery