Dollar down, gold up but crude falls

By Colin Twiggs
September 20th, 2012 12:30 a.m. ET (2:30 p:m AET)

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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.

* 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.

* 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.

* 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.

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.

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.

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

~ Yogi Berra