Dollar Weakens Against Euro

By Colin Twiggs
April 1, 2010 2:00 a.m. ET (5:00 p:m AET)

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The US Dollar Index retraced to test short-term support at 81. Bearish divergence on Twiggs Momentum (21-day) indicates that the up-trend is losing impetus. Breakout below 81 and the rising trendline would reinforce the bear signal, warning of a correction— while reversal below 79.5 would confirm. Respect of support at 81, however, would signal an advance to 84.5*.

* Target calculation: 81.5 + ( 81.5 - 78.5 ) = 84.5

Gold

Gold is edging lower and failure of short-term support at $1085 would signal a test of the band of primary support between $1050 and $1060. Twiggs Momentum (21-day) oscillating in a narrow range around zero indicates uncertainty and the absence of a clear trend.

Crude Oil

Crude is headed for a test of the upper border of a large broadening wedge formation. Twiggs Momentum breakout above the declining trendline favors continuation of the primary up-trend; confirmed if a large trough respects the zero line. Reversal below the rising trendline is unlikely, but would indicate a failed up-swing and downward breakout from the wedge formation.

Dow Jones Industrial Average

The Dow is retracing to test the new support level at 10700. Bearish divergence on Twiggs Money Flow (21-day) indicates selling pressure. Failure of support would warn of a correction. Respect, however, would suggest an advance to 11500*.

* Target calculation: 10700 + ( 10700 - 9900 ) = 11500

Euro

The euro recovered above its former support level at $1.3450, headed for a test of the declining trendline. Bullish divergence on Twiggs Momentum (21-day) indicates buyer interest. Breakout above the trendline would indicate that the down-trend has weakened, while recovery above $1.38 would confirm that it has ended. Reversal below $1.33 is less likely, but would signal a test of $1.30* and possibly the 2009 low of $1.25*.

* Target calculations: 1.34 - ( 1.38 - 1.34 ) = 1.30 and 1.34 - ( 1.42 - 1.34 ) = 1.26

Japanese Yen

The greenback's correction against the yen has ended and breakout above ¥93.50 would confirm an advance to ¥ 100*. The higher trough on Twiggs Momentum (21-day) indicates buyer interest; a large trough above zero would further strengthen the signal. Reversal below ¥ 92 is unlikely, but would test primary support at ¥ 88.50.

* Target calculation: 94 + ( 94 - 88 ) = 100

Australian Dollar

The Aussie dollar is losing upward momentum, highlighted by a break below the rising trendline and a bearish lower peak on Twiggs Momentum. Reversal below $0.90 would confirm that the up-swing is over, warning of a test of primary support at $0.86. Twiggs Momentum Oscillator (21-day) reversal below zero would strengthen the bear signal, while a large trough above zero would suggest another primary advance.

You'll never get ahead of anyone as long as you try to get even with him.

~ Lou Holtz