Gold and Crude Oil Strengthen

By Colin Twiggs
April 8, 2010 5:30 a.m. ET (7:30 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 found short-term support at 80.5. Bearish divergence on Twiggs Momentum (21-day) indicates that the up-trend is losing impetus. Reversal below 80.5 would confirm a correction. Recovery above 82.5, however, would signal an advance to 84.5*.

* Target calculation: 82.5 + ( 82.5 - 80.5 ) = 84.5

Gold

Rising Momentum (21-day) and spot gold recovery above $1140 indicate the start of an up-trend. Breakout above $1160 would confirm, offering a target of 1220*.

* Target calculation: 1140 + ( 1140 - 1060 ) = 1220

Crude Oil

Crude broke through the upper border of a large broadening wedge formation, offering a target of $96/barrel. A large Momentum trough that respects the zero line would confirm the advance. Reversal below the rising trendline is unlikely, but would indicate a false signal.

Dow Jones Industrial Average

Bearish divergence on Twiggs Money Flow (21-day) and penetration of the rising trendline indicate a Dow retracement to test support at 10700. Respect of support would confirm the primary advance to 11500*. Failure is less likely, but would warn of a correction.

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

Euro

The euro respected the declining trendline and is testing support at $1.33. Bullish divergence on Twiggs Momentum (21-day) indicates buyer interest. Respect of support would indicate another test of resistance at $1.36 (and potential double-bottom), while breakout below $1.33 would signal a test of $1.30*.

* Target calculations: 1.33 - ( 1.36 - 1.33 ) = 1.30

Pound Sterling

The pound is consolidating below resistance at $1.53, while rising Twiggs Momentum (21-day) indicates reversal to an up-trend. Breakout above $1.54 would confirm the signal, offering a target of $1.58*.

* Target calculation: 1.53 + ( 1.53 - 1.48 ) = 1.58

Japanese Yen

The greenback's breakout against the yen was short-lived, with the dollar retreating below ¥93.50 to warn of a bull trap. Failure of short-term support at ¥92 would confirm, signaling a test of primary support at ¥88.50. Recovery above ¥93.50, however, would signal a primary advance to ¥98.50*. The higher trough on Twiggs Momentum (21-day) continues to indicate buyer interest — and a large trough above zero would further strengthen the signal.

* Target calculation: 93.50 + ( 93.50 - 88.50 ) = 98.50

Australian Dollar

The Aussie dollar is consolidating in a narrow range below $0.93, indicating an upward breakout. Twiggs Momentum respect of the rising trendline would strengthen the signal. Reversal below $0.9150 is less likely, but would warn of another down-swing. In the long term, breakout above $0.93 would offer a target of parity*; reversal below $0.86 is unlikely but would give a target of $0.79*.

* Target calculations: 0.93 + ( 0.93 - 0.86 ) = 1.00 and 0.86 - ( 0.93 - 0.86 ) = 0.79

Coaching is nothing more than eliminating mistakes
before you get fired.

~ Lou Holtz