Forex: Euro tests resistance, Aussie breaks support

By Colin Twiggs
August 5th, 2012 1:00 a.m. EDT (3:00 p:m AET)

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The Euro broke medium-term resistance at $1.32 and is testing the next level at $1.34. Breakout would indicate a primary advance, while respect of resistance (indicated by reversal below $1.32) would warn of another test of primary support at $1.27. Close oscillation of 13-week Twiggs Momentum around the zero line reflects hesitancy.

* Target calculation: 1.34 + ( 1.34 - 1.28 ) = 1.40

Sterling is testing primary support at €1.135 against the euro. Long tails indicate buying pressure and recovery above €1.165 would suggest that a bottom is forming. Breakout above €1.19 would complete a double bottom with a target of €1.24. Recovery of 13-week Twiggs Momentum above zero would strengthen the signal.

* Target calculation: 1.19 + ( 1.19 - 1.14 ) = 1.24

Against the greenback, Sterling is testing medium-term resistance at $1.54. Last week's long tail suggests buying pressure. Breakout would offer a target of $1.575. Respect is less likely, but would indicate another test of primary support at $1.485. Recovery of 13-week Twiggs Momentum above zero would strengthen the bull signal.

The greenback is oscillating around resistance at ¥100 against the Yen. Follow-through above ¥101.50 would suggest a new advance, while breakout above ¥104 would confirm, offering a target of ¥114*. Reversal below ¥98 remains as likely, however, and would warn of a test primary support at ¥94.

* Target calculation: 104 + ( 104 - 94 ) = 114

Canada's Loonie continues its primary down-trend against the greenback. Breach of medium-term support at $0.96 would test the primary level at $0.94/$0.945. Failure of primary support would offer a long-term target of $0.84*.

Against the Aussie Dollar, the Loonie remains in a strong up-trend.

The Aussie Dollar also continues its primary down-trend against the greenback. Breach of medium-term support at $0.90 suggests a decline to $0.87*, but the long-term target is $0.80*.

* Target calculation: 0.90 - ( 0.93 - 0.90 ) = 0.87; 0.95 - ( 1.10 - 0.95 ) = 0.80

Even when they have the potential to become productive members of society, the loss of welfare state benefits if they try to do so is an implicit "tax" on what they would earn that often exceeds the explicit tax on a millionaire. If increasing your income by $10,000 would cause you to lose $15,000 in government benefits, would you do it? In short, the political left's welfare state makes poverty more comfortable, while penalizing attempts to rise out of poverty.

~ Economist Thomas Sowell on how the welfare state obstructs the poor's attempts to uplift themselves.