Gold and the Dollar both weaken

By Colin Twiggs
March 29th, 2012 5:00 a.m. ET (8:00 p:m AET)

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The Dollar Index is retracing to test primary support at 78.00 on the weekly chart. Respect of the rising trendline would signal continuation of the primary up-trend, while failure of support would warn of a down-trend to test support at 73.00. Reversal of 63-day Twiggs Momentum below zero would strengthen the bear warning.

* Target calculation: 82 + ( 82 - 78 ) = 86

Despite the weakening dollar, spot gold is headed for the long-term rising trendline on the weekly chart. Failure of support at $1600/ounce would warn that the primary trend is weakening, while failure of $1500 would signal that the trend has reversed. Reversal of 63-day Twiggs Momentum into negative territory — for the second time recently after several years above zero — already warns of a primary down-trend.

* Target calculation: 1700 - ( 1800 - 1700 ) = 1600; 1500 - ( 1800 - 1500 ) = 1200

The 4-hour chart shows gold respecting resistance at $1700 before retreating below medium-term support at $1670. Failure of short-term support at $1655 (the 0.618 Fibonacci retracement level) would test $1630 and signal continuation of the down-trend. Recovery above $1700 is unlikely but would signal respect of the long-term rising trendline (on the weekly chart above) and resumption of the primary up-trend.

Always take hold of things by the smooth handle.

~ Thomas Jefferson