Crude Breaks $80/Barrel
By Colin Twiggs
August 5, 2010 3:30 a.m. EDT (5:30 p:m AET)
The US Dollar Index is testing support at 80. Expect retracement to the new resistance level at 85, but respect of resistance would signal a primary down-trend. Penetration of support at 80 would also warn of a primary down-trend. A 63-day Twiggs Momentum cross below the zero line would strengthen the signal.
Gold found short-term support at $1160 and is rallying to test resistance at $1220. Respect would indicate another test of primary support at $1060, while breakout would signal a primary advance with a target of $1380*. Large bearish divergence on 63-day Twiggs Momentum warns of reversal to a primary down-trend; a fall below the zero line would strengthen the signal.
* Target calculation: 1220 + ( 1220 - 1060 ) = 1380
Crude broke through resistance at $80, signaling an advance with an initial target of $90*. Reversal below the rising trendline, however, would warn of a bull trap. A 21-day Twiggs Momentum trough that respects the zero line from above would confirm the up-trend.
* Target calculation: 80 + ( 80 - 70 ) = 90
The euro continues to rise steeply. Expect retracement to test the new support level at $1.25. Respect would signal a primary up-trend, while failure would warn of another test of primary support at $1.19. Twiggs Momentum (63-day) crossing above the zero line would indicate an up-trend.
The pound is also strengthening against the dollar, breakout above $1.55 confirming the bullish divergence on 21-day Twiggs Momentum . Reversal below the rising trendline would warn of another correction. A successful test of support at $1.48, however, would further strengthen the bull signal.
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The dollar is headed for a test of primary support at ¥85. Failure of primary support would offer a target of ¥75*, but bullish divergence on Twiggs Momentum indicates a medium-term rally. Expect retracement to test support at ¥89.
* Target calculations: 85 - ( 95 - 85 ) = 75
The Aussie dollar is advancing toward resistance at $0.9350. Twiggs Momentum (63-day) rising above the zero line indicates a primary up-trend. Breakout above $0.9350 would confirm — and offer a target of parity. Reversal below the rising trendline is unlikely, but would warn of another test of primary support.
* Target calculation: 0.93 + ( 0.93 - 0.81 ) = 1.05
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