Stronger dollar, weaker commodities: gold, copper and crude
By Colin Twiggs
June 7th, 2012 2:00 a.m. ET (6:00 p:m AET)
The US Dollar is in a primary up-trend, the Dollar Index having broken resistance between 81 and 82. Retracement is likely to test the new support level; respect of 81 would confirm a healthy up-trend. Respect of the zero line by 63-day Twiggs Money Flow would likewise strengthen the signal.
* Target calculation: 82 + ( 82 - 78 ) = 86
Spot gold is also testing a new support level — this time on the daily chart — after breaking resistance at $1600/ounce. Penetration of the declining trendline suggests that the down-trend is weakening, but 63-day Twiggs Momentum remains firmly below zero. Follow-through above $1640 would strengthen the bull signal — as would recovery of Momentum above zero — but failure of $1600 would re-test $1540.
* Target calculation: 1550 - ( 1800 - 1550 ) = 1300
Other commodities have reacted negatively to the stronger dollar, suggesting that gold will continue its downward path. Copper is in a clear down-trend, headed for a test of the 2011 low at 6800.
Brent crude broke its mid-2011 low at $100/barrel, offering a long-term target of $75*.
* Target calculation: 100 - ( 125 - 100 ) = 75
Nymex WTI Light Crude is similarly headed for a test of long-term support at $75/barrel.
CRB Commodities Index is similarly headed for a test of support at 250. The peak below zero on 63-day Twiggs Momentum warns of a strong primary down-trend. First, expect retracement to test resistance at 295; respect would confirm the down-trend.
* Target calculation: 290 - ( 330 - 290 ) = 250
No one would remember the Good Samaritan if he'd only had good intentions; he had money as well.
~ Margaret Thatcher