Commodities rebound

By Colin Twiggs
July 5th, 2012 2:00 a.m. ET (4:00 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 continues to respect support at 81.00, indicating another test of resistance at 83.50 on the Weekly chart. 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: 82 + ( 82 - 78 ) = 86

Spot Gold similarly respected support at $1530 per ounce and is headed for a test of $1640/$1650. Confidence in the introduction of QE3 has strengthened support. Breakout above $1640 would indicate a rally to $1800. 63-Day Twiggs Momentum below zero, however, warns of a primary down-trend. Breach of primary support at $1530 would confirm.

Spot gold

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

The 2-Hour chart displays a flag formation over the last two days. Upward breakout (above 1620) would signal a test of $1640.

Spot gold

* Target calculation: 1620 - ( 1620 - 1600 ) = 1640

Brent Crude retraced sharply to test resistance at $100 per barrel, fueled by rising hope of recovery in Europe and tensions with Iran. Penetration of the declining trendline would suggest that a bottom is forming. Respect of resistance, however, would indicate a decline to $80, with the long-term target at $75*. A 63-day Twiggs Momentum peak below zero would strengthen the bear signal.

Brent Crude

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

Crude is not the only commodity driving prices higher. The CRB Non-Energy Commodities Index is testing its upper standard deviation channel. Breakout would indicate that a bottom is forming. Recovery of 63-day Twiggs Momentum above zero would complete a bullish divergence, indicating reversal to a primary up-trend. Respect of the upper trend channel, on the other hand, would indicate a decline to 240*.

CRB Non-Energy Commodities Index

* Target calculation: 260 - ( 280 - 260 ) = 240

The more I talk to athletes, the more convinced I become that the method of training is relatively unimportant. There are many ways to the top, and the training method you choose is just the one that suits you best. No, the important thing is the attitude of the athlete, the desire to get to the top.

~ Australian Olympic athlete, Herb Elliott