Commodities weak but dollar trend remains down
By Colin Twiggs
May 19th, 2011 4:30 a.m. ET (6:30 p:m AET)
The CRB Commodities Index has twice respected primary support at 335 and is rallying for a test of resistance at 350. Breakout would signal another test of 370.
Some top-performers like copper and tin have broken primary support to indicate a down-trend. Penetration of copper's long-term trendline at 8000, however, would strengthen the signal.
These should be considered exceptions, however, until the dollar warns that it will reverse its primary down-trend
The Dollar index rallied to test resistance at 76, but the primary down-trend remains intact. Breach of support at 73 would test 71, while breakout above 76 would confirm that momentum is slowing.
* Target calculation: 76 - ( 81 - 76 ) = 71
Gold established medium-term support between $1460 and $1475. Recovery above $1520 would test the earlier high at $1550, while failure of support would indicate a correction to the long-term trendline around $1400. Again, the behavior of the dollar will be a major influence.
* Target calculation: 1430 + ( 1430 - 1310 ) = 1550
Silver is testing medium-term support at $33. Failure would test primary support around $26 — penetration of the long-term trendline warning that the up-trend is coming to an end. Recovery above $40, however, would indicate another advance to $50.
The euro is testing support at $1.42. Failure would confirm a correction to the long-term trendline.
* Target calculation: 1.40 + ( 1.40 - 1.30 ) = 1.50
The pound retreated below its new support level, signaling trend weakness. Twiggs Momentum oscillating above zero continues to indicate an up-trend, but failure of support at $1.60 would override — warning of a test of primary support at $1.53.
* Target calculation: 1.63 + ( 1.63 - 1.53 ) = 1.73
Improve Your Market Timing
Colin Twiggs' weekly review of macro-economic and technical indicators will help you identify market risk & improve your timing.
Join our free Trading Diary mailing list with over 140,000 subscribers.
The dollar continues to test long-term support at ¥79 to ¥80. Failure would signal a decline to ¥75*.
* Target calculation: 80 - ( 85 - 80 ) = 75;
The kiwi dollar continues in an up-trend against the greenback but expect strong resistance between $0.81 and $0.82, around the 2008 high. Equally good support should be found at $0.76 (backed by the long-term trendline); so we may see a ranging market for a while.
The Aussie dollar established medium-term support between $1.06 and $1.05. Failure would signal a correction to $1.02. Respect is less likely, given the weakness of commodities, but recovery above $1.09 would offer a target of $1.15*.
* Target calculation: 1.10 + ( 1.10 - 1.05 ) = 1.15
I have just three things to teach: simplicity, patience, compassion. These three are your greatest treasures.
~ Lao Tzu: Tao Te Ching