Dollar down, gold up but crude falls

By Colin Twiggs
September 20th, 2012 12:30 a.m. ET (2:30 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 Dollar Index is in a primary down-trend, as indicated by 63-day Twiggs Momentum below zero. Expect a test of support at 78.00. An ensuing rally that respects resistance at 81.00/81.50 would reinforce the primary down-trend.

US Dollar Index

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

Spot Gold is headed for a test of $1800 per ounce*. Recovery of 63-day Twiggs Momentum above zero indicates a primary up-trend.

Spot Gold

* Target calculation: 1650 + ( 1650 - 1500 ) = 1800

The Gold Bugs Index, representing un-hedged gold stocks, reinforces the primary up-trend in the spot metal, with breakout above the double-bottom signaling an advance to 530*. Again, 63-day Twiggs Momentum above zero strengthens the signal.

Gold Bugs Index

* Target calculation: 460 + ( 460 - 390 ) = 530

The CRB Commodities Index fell sharply on the daily chart after last week's run-up. Failure of initial support at 305 would indicate that momentum is slowing, but only a fall below 295 would warn of a reversal. A 63-day Twiggs Momentum trough above zero would indicate a primary up-trend.

CRB Commodities Index

Brent Crude fell sharply after breaking support at $112 per barrel. Upward breakout would test $126. 63-Day Twiggs Momentum reversal below zero warns of a primary down-trend. Expect a test of support at $100.

ICE Brent Afternoon Markers

Nymex WTI light crude also broke medium-term support, closing at $92.12 on Wednesday (October delivery). Expect a test of primary support at $76.00/$78.00.

Nymex WTI light crude

If the world were perfect, it wouldn't be.

~ Yogi Berra