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Dollar Weak, Gold Strong

By Colin Twiggs
January 15, 2008 4:00 a.m. ET (8:00 p.m. AET)

These extracts from my trading diary are for educational purposes and should not be interpreted as investment advice. Full terms and conditions can be found at Terms of Use.

Gold

Gold and the euro continue to strengthen against the greenback as the Fed contemplates further rate cuts.

Spot gold reached its medium-term target of $900, but the rally shows no signs of slowing. Primary support at $775 is unlikely to be tested.

spot gold

Source: Netdania





Crude Oil

Crude is likely to lag gold and the euro as it is more susceptible to falling demand from a slowing US economy.

June 2008 Light Crude has been testing resistance at the key psychological level of $100/barrel. Reversal below $90 would signal weakness, while a fall below $86 would warn that the primary trend has reversed.

crude oil






Currencies

The euro is headed for another attempt at $1.50. Expect major resistance, while narrow consolidation below this level would be a strong bull signal. Primary support remains at $1.43.

euro us dollar short-term

Source: Netdania





The (dollar) down-trend against the yen continues. Breakout below suport at 107 would signal a test of key long-term support at 100. The target is calculated as: 107 - (114 - 107) = 100.

us dollar yen

Source: Netdania





The Australian dollar broke through resistance at $0.8900, signaling a test of the previous high of $0.9400. Consolidation above the new support level (0.8900) is a bullish sign; reversal below $0.8900 is not expected and would indicate weakness.

The more hawkish stance of the RBA should see the Aussie continue to strengthen against the greenback.

australian dollar compared to us dollar

Source: Netdania



No speculator can be right all the time. In fact, if a speculator is correct half of the time he is hitting a good average. Even being right three or four times out of ten should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong.

~ Bernard Baruch: My Own Story

To understand my approach, please read Technical Analysis & Predictions in About The Trading Diary.