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Australian dollar encounters selling pressure

By Colin Twiggs
February 10th, 2011 12:30 a.m. ET (4:30 p:m AEDT)

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 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.

US Dollar Index

* Target calculation: 76 - ( 81 - 76 ) = 71

Gold

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.

Spot Gold

* 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.

Spot Gold GLD

Silver

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.

Silver

* Target calculation: 31 + ( 31 - 27 ) = 35

Crude Oil & Commodities

Brent Crude is in an accelerating up-trend. Twiggs Momentum (21-day) oscillating above zero confirms a strong trend. The target is $110/barrel*.

Crude Oil

* Target calculation: 90 + ( 90 - 70 ) = 110

Euro

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.

Euro US Dollar

* Target calculation: 1.40 + ( 1.40 - 1.30 ) = 1.50

UK Pound Sterling

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.

Pound Sterling

* Target calculation: 1.62 + ( 1.62 - 1.53 ) = 1.71

Japanese Yen

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.

US Dollar Yen

* Target calculation: 123 + ( 123 - 117 ) = 129

Australian Dollar

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.

Australian Dollar US Dollar

* Target calculation: 1.02 + ( 1.02 - 0.96 ) = 1.08



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To think and not study is dangerous.

~ The Analects of Confucius

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