Commodity weakness strengthens the greenback
By Colin Twiggs
May 11th, 2011 8:00 p.m. ET (10:00 a:m AET)
The CRB Commodities Index is testing primary support at 335 after breaking out of its trend channel. Failure would signal a primary down-trend. The Australian Dollar is weakening in response.
Gold established short-term support at $1460, near the rising trendline. Failure of support would signal a correction; confirming the warning from declining Twiggs Momentum.
* Target calculation: 1430 + ( 1430 - 1310 ) = 1550
The Gold Miners ETF is already undergoing a correction. Bearish divergence on 13-week Twiggs Money Flow followed by a retreat below zero warns of reversal to a primary down-trend. Breach of support at 53.00 would confirm. Gold miners often lead trend changes on the physical metal.
Silver is testing short-term support at $34. Failure would signal a test of primary support around $26.
The Dollar index rallied but remains in a strong down-trend, headed for a test of long-term support at 71*. Expect resistance at 76.
* Target calculation: 76 - ( 81 - 76 ) = 71
Brent crude is testing support at $110/barrel. Failure would indicate a test of the long-term trendline around $100/barrel.
The euro is testing support at $1.42. Failure would warn of a correction to the long-term trendline.
* Target calculation: 1.40 + ( 1.40 - 1.30 ) = 1.50
The pound broke is testing the new support level at $1.63. The tall shadow on today's candle warns of short-term selling pressure. Failure of support would test $1.60, while respect would confirm an advance to the 2009 high at $1.70*. Another Twiggs Momentum trough above zero would indicate trend strength.
* Target calculation: 1.63 + ( 1.63 - 1.53 ) = 1.73
The dollar is testing long-term support between ¥79 and ¥80. Respect would indicate another test of resistance at ¥85 to ¥86, while failure of support would warn of a decline to ¥75*.
* Target calculation: 80 - ( 85 - 80 ) = 75;
The Australian dollar remains in an up-trend against its kiwi counterpart, but long-term resistance (from the high in 2000) at $1.3500/$1.3550 impedes progress. Failure of support at $1.3200 would warn of a reversal, while breakout above $1.3800 would confirm another primary advance.
The Aussie dollar is testing support at $1.06. Failure would signal a correction, with a target of $1.02.
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~ Lao Tzu: Tao Te Ching