Australian Dollar surge

By Colin Twiggs
April 14th, 2011 5:00 a.m. ET (7:00 p:m AET)

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.

The Aussie dollar surged ahead on the back of strong commodity prices, respecting short-term support at $1.04. The short retracement indicates a strong up-trend; expect an advance to $1.08*.

* Target calculation: 1.06 + ( 1.06 - 1.04 ) = 1.08

Gold

Gold respected support at $1450, confirming the breakout and (medium-term) advance to $1500*. The long-term target is 1550*. Twiggs Momentum (21-day) holding above zero indicates trend strength.

* Target calculation: 1440 + ( 1440 - 1380 ) = 1500; 1430 + ( 1430 - 1310 ) = 1550

My only concern is that 13-week Twiggs Money Flow is not rising strongly, indicating a lack of buying support. Retreat below zero would warn of a reversal.

Silver

Silver continues upward in a strong trend channel, leading gold upward. Twiggs Momentum high above zero confirms trend strength.

US Dollar Index

The US Dollar Index is testing the band of long-term support between 74 and 76. Failure would warn of another down-swing. Twiggs Momentum holding below zero indicates a strong down-trend.

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

Crude Oil

Nymex WTI crude retraced to test support at $105/barrel; respect would continue the steep rally, while failure would warn of a sharp correction back to the long-term trend line. We should be aware that there is massive speculative interest driving the current price surge and at some point we are likely to experience a blow-off.

* Target calculation: 105 + ( 105 - 97 ) = 113

Commodities

The CRB Commodities Index continues in its upward trend channel. The Australian Dollar broke through resistance and is surging ahead, lifted by strong commodity prices.

Euro

The euro is advancing to $1.50 after breaking through resistance at $1.42. First, expect retracement to test the new support level.

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

UK Pound Sterling

The pound is testing resistance at $1.64; breakout would offer a long-term target of the 2009 high at $1.70*. Completion of a Twiggs Momentum trough above zero (by a rise above 2%) would confirm trend strength.

* Target calculation: 1.63 + ( 1.63 - 1.53 ) = 1.73

Japanese Yen

The dollar encountered a band of resistance between ¥85 and ¥86 and is retreating to test support at ¥80.

We are not going to stop pursuing these policies until someone takes the printing press away from the Federal Reserve. That will have to be the bond market or the currency market.... and when that happens it's going to be ugly.

~ Bill Fleckenstein on Inflation