Dollar Strengthens, Gold Hesitates

By Colin Twiggs
February 24, 2010 10:00 p.m. ET (2:00 p:m AET)

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

The US Dollar Index is in a primary up-trend, testing resistance at 81. Slowing Momentum, however, warns of a retracement to test support at the rising trendline; confirmed if support at 80 is broken.

Gold

Gold is testing resistance at $1125. Breakout would indicate the end of the correction, while failure of short-term support at $1100 would test primary support — and reversal below $1060 would confirm a primary down-trend. Twiggs Momentum (21-day) recovery above 2% would suggest another primary advance, while below -2% would warn of a down-trend.

Crude Oil

Crude is headed for a test of resistance at $82; marginal breakout would form a large broadening wedge. Momentum recovered above the falling trendline; a large trough that respects zero would suggest a new primary advance. Reversal below $70 is unlikely, but would signal a primary down-trend.

Euro

The euro is consolidating below the new resistance level at $1.36. Failure of short-term support at $1.345 would signal a new primary decline, while recovery above $1.37 would warn of a reaction to $1.425 — only likely if the Greek debt crisis is resolved.

Japanese Yen

The greenback found short-term support at ¥ 90. Recovery above ¥ 92 would signal a primary advance; confirmed if resistance at ¥ 93.50 is broken. Reversal below ¥ 89, however, would warn of a strong correction.

* Target calculation: 93 + ( 93 - 89 ) = 97

Australian Dollar

The Aussie dollar is consolidating in a narrow range below resistance at $0.90, indicating a test of $0.93. Reversal below $0.89 is unlikely, but would test primary support — and a fall below $0.86 would signal a primary down-trend. Twiggs Momentum Oscillator (21-day) recovery above the declining trendline would be a bullish sign, while a large trough above zero would signal a primary advance.

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