Australian dollar encounters selling pressure
By Colin Twiggs
February 10th, 2011 12:30 a.m. ET (4:30 p:m AEDT)
The Dollar Index is headed for a test of short-term support at 77 after encountering resistance at 78.50. Twiggs Momentum (21-day) below zero indicates a down-trend, and failure of 77 would test primary support at 76. In the long term, breach of primary support would signal a down-trend, with a target of 71*, while respect would suggest that a bottom is forming.
* Target calculation: 76 - ( 81 - 76 ) = 71
The weakening dollar is likely to strengthen precious metals and commodities. Gold recovered above medium-term resistance at $1350, but Twiggs Momentum (21-day) remains below zero. A TMO peak below the zero line would warn of a down-trend — as would reversal below $1350. Respect of the rising trendline, however, would indicate another rally.
* Target calculation: 1320 - ( 1420 - 1320 ) = 1220; 1420 + ( 1420 - 1320 ) = 1520
Twiggs Money Flow (13-week) recovered above zero, indicating buying support on GLD. But reversal below zero would be a strong bear signal.
Silver is headed for another test of resistance at $31/ounce. Breakout would signal an advance to $35 — and further bullishness for gold. A trough above zero on Twiggs Momentum (21-day) would strengthen the signal.
* Target calculation: 31 + ( 31 - 27 ) = 35
Brent Crude is in an accelerating up-trend. Twiggs Momentum (21-day) oscillating above zero confirms a strong trend. The target is $110/barrel*.
* Target calculation: 90 + ( 90 - 70 ) = 110
The euro respected support at $1.35; recovery above $1.38 would signal another test of $1.42*. A Twiggs Momentum trough above zero would strengthen the bull signal.
* Target calculation: 1.40 + ( 1.40 - 1.30 ) = 1.50
The pound is headed for another test of resistance at $1.62. Rising Twiggs Money Flow signals buying pressure. Breakout above $1.62 would test the 2009 high of $1.70*. Failure of primary support at $1.53 is now unlikely.
* Target calculation: 1.62 + ( 1.62 - 1.53 ) = 1.71
The yen is edging towards its 1995 high of $0.0123 against the dollar (¥81/dollar). A higher trough would be a bullish sign, but Twiggs Money Flow reversed below zero, warning of selling pressure. Breach of the rising trendline would signal a loss of momentum, suggesting another test of primary support.
* Target calculation: 123 + ( 123 - 117 ) = 129
The Aussie dollar is testing resistance at $1.02 against the greenback, forming a large bullish ascending triangle. A sharp dip below zero on Twiggs Money Flow (21-day), however, warns of selling pressure. Breakout above $1.02 would offer a target of $1.08*, but reversal below parity would test primary support at $0.96.
* Target calculation: 1.02 + ( 1.02 - 0.96 ) = 1.08
To study and not think is a waste.
To think and not study is dangerous.
~ The Analects of Confucius