Yen Headed For 80
By Colin Twiggs
August 26, 2010 7:30 a.m. EDT (9:30 p:m AET)
The US Dollar Index continues to encounter resistance around 83.5. Expect retracement to test support at 80. Failure of support would signal a decline to 76.5*, while respect of support would indicate a rally to test 89. The (bull) signal would be strengthened if 63-day Twiggs Momentum forms another trough above zero.
* Target calculation: 80 - ( 83.5 - 80 ) = 76.5
Gold is advancing towards $1260. Breakout above $1260 would offer a target of $1360*. Bearish divergence on 63-day Twiggs Momentum, however, warns of weakness and respect of resistance would indicate another test of primary support at $1160.
* Target calculation: 1260 + ( 1260 - 1060 ) = 1360
Crude is headed for a test of primary support at $70. Bearish divergence on 63-day Twiggs Momentum warns of further weakness. Failure of support would offer a target of $60/barrel*.
* Target calculation: 70 - ( 80 - 70 ) = 60
The euro penetrated its rising trendline, indicating that the rally has weakened. Reversal below $1.25 would signal another test of primary support at $1.19. Respect of support, however, would indicate the start of a primary up-trend. Twiggs Momentum (63-day) is also moving sideways and a rise above zero would strengthen the bull signal.
The pound found support at $1.54. Respect of this level would confirm the advance, with a target of $1.66*. Twiggs Momentum (63-day) respect of the zero line (from above) suggests a primary advance.
* Target calculation: 1.54 + ( 1.60 - 1.54 ) = 1.66
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The dollar broke through primary support at ¥85 and is headed for a test of support at the 1995 low of ¥80. Bank of Japan intervention grows increasingly likely as the yen strengthens and should prevent any further appreciation below ¥80.
* Target calculations: 85 - ( 95 - 85 ) = 75
The Aussie dollar is testing short-term support around $0.88/$0.8750. Reversal below the rising trendline would warn that the advance is weakening. 63-day Twiggs Momentum oscillating around the zero line indicates hesitancy. In the long term, breakout above $0.9350 would offer a target of parity, while reversal below $0.87 would test primary support at $0.81.
* Target calculation: 0.93 + ( 0.93 - 0.81 ) = 1.05
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