Dollar rebound drives gold and commodities lower

By Colin Twiggs
June 28th, 2012 1:00 a.m. ET (3:00 p:m AET)

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The US Dollar Index respected support at 81.00 and is headed for resistance at 83.50. Breakout would offer a target of 86.00*. 63-Day Twiggs Momentum oscillating above the zero line indicates a healthy up-trend.

US Dollar Index

* Target calculation: 81 + ( 81 - 78 ) = 84

Spot Gold retreated below support at $1600/ounce. 63-Day Twiggs Momentum reversal below zero signals a primary down-trend. Breach of primary support at $1530 would confirm. Introduction of QE3 by the Fed, however, would commence a new up-trend.

Spot gold

* Target calculation: 1550 - ( 1800 - 1550 ) = 1300

The primary down-trend on CRB Commodities Index is unlikely to change unless we see the introduction of QE3. Declining 63-day Twiggs Momentum below zero indicates a strong primary down-trend.

CRB Commodities Index

* Target calculation: 270 - ( 290 - 270 ) = 250

Brent Crude and Nymex WTI Light Crude both offer a target of $75 per barrel. After falling sharply over the last few months, the gap has narrowed to just over $10 per barrel — from a peak of $25 in October 2011. Rapidly expanding gas and oil reserves are driving North American prices lower, while gloomy prospects for European economies have crimped demand for Brent Crude.

Brent Crude and Nymex WTI Light Crude

* Target calculation: 100 - ( 125 - 100 ) = 75



I'm extraordinarily patient provided I get my own way in the end.

~ Margaret Thatcher: The Path To Power

Colin Twiggs

Author: Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.

He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.