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Gold tests key support at $1350/ounce

By Colin Twiggs
September 12th, 2013 2:00 a.m. EDT (4:00 p:m AET)

These extracts from my trading diary are for educational purposes. Any advice contained therein is provided for the general information of readers and does not have regard to any particular person's investment objectives, financial situation or needs and must not be construed as advice to buy, sell, hold or otherwise deal with any securities or other investments. Accordingly, no reader should act on the basis of any information contained therein without first having consulted a suitably qualified financial advisor. Full terms and conditions can be found at Terms of Use.



Spot gold is testing its rising trendline and support at $1350. Breach of support would warn that another test of primary support at $1200 is likely. Respect of the trendline, however, remains as likely and would offer a target of $1500*. Breakout above the standard deviation trend channel suggests that a bottom is forming and, although we may see another test of $1200 before this is over, primary support is likely to hold.

Gold

* Target calculation: 1425 + ( 1425 - 1350 ) = 1500

Dollar Index

The Dollar Index is retreating for another test of primary support at 80.50, lifting gold and commodities. Breach of the long-term rising trendline would suggest that the primary up-trend is weakening, while failure of support would signal a reversal. Decline of 13-week Twiggs Momentum below zero also favors a down-trend; reversal below recent lows at -2% would strengthen the signal.

Dollar Index

Crude Oil

Nymex and Brent crude are retreating on easing of tensions over Syria, but are unlikely to break support at $103/barrel and the rising trendline.

Crude Oil

* Target calculation: 108 + ( 108 - 98 ) = 118

Commodities

A rising Shanghai Composite Index is likely to lift commodity prices. Recovery above 130 on Dow Jones-UBS Commodity Index would be likely to test 135. Follow-through below the present 129, however, would test primary support at 124/125. A 13-week Twiggs Momentum peak below zero would also indicate continuation of the primary down-trend.

Dow Jones-UBS Commodity Index

* Target calculation: 130 + ( 130 - 125 ) = 135



Losing a position is aggravating, whereas losing your nerve is devastating.

~ Ed Seykota

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