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