Dollar down, gold up but crude falls

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 Non-Energy 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 Crude 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

The impact of QE3

Expect stocks and commodities to rally – especially gold.

The S&P 500 followed through above 1440, confirming the primary advance to 1560*.

Index

* Target calculation: 1420 + ( 1420 – 1280 ) = 1560

Spot gold broke through short-term resistance at 175, headed for a test of $1800/ounce*.

Index

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

Dollar down-trend, gold and commodities rally

The Dollar Index broke primary support at 81.00 and the rising trendline on the weekly chart, signaling reversal to a primary down-trend. Fall of 63-day Twiggs Momentum below zero strengthens the signal. Expect retracement to test the new resistance level at 81.00/82.00. Respect is likely and would confirm the primary down-trend.

US Dollar Index

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

Spot Gold continues its advance toward $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 4-hour chart shows gold advancing in even steps of $30: from $1590 to $1630, $1660, $1690, and $1720. Each sharp jump is followed by several days consolidation, before another breakout. Occasional false starts — above $1700 — and reversals — below $1650 — keep traders on their toes, but this is a strong trend and should yield good results. False breaks at $1600, $1650 and $1700 remind us to be vigilant at $1750.

Spot Gold 4-Hour Chart

The Gold Bugs Index, representing un-hedged gold stocks, broke out of its double-bottom to signal a primary advance to 530*. Recovery of 63-day Twiggs Momentum above zero strengthens the signal.

Gold Bugs Index

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

The CRB Commodities Index is also rising in response to the weaker dollar. Recovery of 63-Day Twiggs Momentum above zero suggests a primary up-trend. Expect a test of the 2012 high at 325.

CRB Non-Energy Commodities Index

Brent Crude continues to consolidate between $112 and $116 per barrel. Upward breakout would test $126. 63-Day Twiggs Momentum recovery above zero strengthens the bull signal. Reversal below $112 is unlikely, but would signal another test of support at $100.

ICE Brent Crude Afternoon Markers

Dollar weak, Gold Bugs double bottom

The Dollar Index is testing primary support at 81.00. Downward breakout would warn of reversal to a primary down-trend. Fall of 63-day Twiggs Momentum below zero would strengthen the warning, while respect of zero would continue the primary up-trend.

US Dollar Index

* Target calculation: 82 + ( 82 – 78 ) = 86

The Gold Bugs Index, representing un-hedged gold stocks, responded by forming a double-bottom. Breakout above 460 would signal primary advance to 530*. Recovery of 63-day Twiggs Momentum above zero would strengthen the signal.
Gold Bugs Index

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

Spot Gold respected its new support level at $1640 and is advancing toward $1800 per ounce*. Recovery of 63-day Twiggs Momentum above zero indicates a primary up-trend. Expect some resistance at $1700 but reversal below $1640 is unlikely.

Spot Gold

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

The CRB Non-Energy Commodities Index shows commodities responding to the weaker dollar. Short retracement followed by breakout above 296 indicates a test of primary resistance at 305. Recovery of 63-Day Twiggs Momentum above zero suggests a primary up-trend. Breakout from the trend channel indicates the primary down-trend is over, but no clear (primary) up-trend has yet formed.

CRB Non-Energy Commodities Index

Brent Crude is consolidating between $112 and $116 per barrel. Narrow consolidation suggests an upward breakout and test of $126. 63-Day Twiggs Momentum recovery above zero strengthens the bull signal. Reversal below $112 is unlikely, but would signal another test of support at $100.

ICE Brent Crude Afternoon Markers

China’s steel mills braced for slowdown – FT.com

Wang Qinghai, chief executive of Shougang, one of China’s biggest state-owned mills, says one reason for slowing steel demand is that China is changing its economic development model. “The investment-led mode of economic development isn’t sustainable, so the government is actively lowering the growth rate . . . in order to create space for economic structural adjustment,” he said at a conference in Beijing on Saturday. That adjustment is a painful process, however, and Mr Wang summarises the outlook for the steel industry as “huge production capacity, a bleak market, and meagre profit”.

via China’s steel mills braced for slowdown – FT.com.

Gold and dollar test support

The Dollar Index is testing primary support at 81.00/81.50. Failure would signal reversal to a primary down-trend. Reversal of 63-day Twiggs Momentum below zero would also suggest a reversal, while respect of the zero line would indicate continuation of the primary up-trend.

US Dollar Index

* Target calculation: 82 + ( 82 – 78 ) = 86

Spot Gold is retracing to test its new support level after breaking resistance at $1650 per ounce. Respect of $1640 would confirm the primary up-trend. Respect of the zero line by 63-day Twiggs Momentum would strengthen the signal. Reversal below $1640 is unlikely but would indicate a false signal and re-test primary support at $1525.

Spot Gold

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

The CRB Commodities Index is retracing after breaking medium-term resistance at 305. Recovery of 63-Day Twiggs Momentum above zero suggests a trend reversal, but only a trough above zero would confirm.

CRB Commodities Index

Brent Crude retreated from resistance at $115 per barrel. Reversal below $108 is unlikely, but would signal another test of support at $100. Breakout would indicate a test of the March high at $126. 63-Day Twiggs Momentum recovery above zero would strengthen the bull signal.

ICE Brent Crude Afternoon Markers

Gold breaks out on dollar weakness

Raised expectations of further quantitative easing by the Fed caused the Dollar to fall sharply. Penetration of the rising trendline by the US Dollar Index would warn that a top is forming. Reversal of 63-day Twiggs Momentum below zero would suggest a primary trend reversal. Respect of support, however, would indicate that the market overreacted and the primary trend will continue.

US Dollar Index

* Target calculation: 82 + ( 82 – 78 ) = 86

Spot Gold broke resistance at $1650 per ounce, indicating  a primary up-trend. Recovery of 63-day Twiggs Momentum above zero strengthens the signal. A trough above zero or retracement that respects the new support level would confirm the breakout, suggesting an advance to $1800.

Spot Gold

The CRB Commodities Index also benefited from the weaker dollar, breaking medium-term resistance at 305 to indicate a test of the February high at 325. Recovery of 63-Day Twiggs Momentum above zero suggests a trend reversal, but only a trough above zero would confirm.

CRB Commodities Index

Brent Crude continues to test resistance at $115 per barrel. Breakout would indicate a test of the March high at $126. Reversal below $108 is unlikely, but would signal another test of support at $90/$100. 63-Day Twiggs Momentum recovery above zero would strengthen the bull signal.

ICE Brent Crude Afternoon Markers

Dollar up-trend continues, gold finds support, commodities range widely

The US Dollar Index is testing support at 81.50/82.00. Respect of support and the rising trendline would confirm the primary up-trend is intact, offering a target of 86.00*. Breakout above 83.50/84.00 would confirm the advance. In the longer term, expect a test of the 2010 high at 88.50. Oscillation of 63-day Twiggs Momentum above zero indicates a healthy up-trend. Failure of support at 81.50 is unlikely, but would warn of a trend reversal.

US Dollar Index

* Target calculation: 82 + ( 82 – 78 ) = 86

With the Dollar Index in a primary up-trend, Spot Gold would be expected to commence a primary down-trend. Declining 63-day Twiggs Momentum (below zero) indicates a primary down-trend but strong buying support at $1530/ounce has kept consolidation (on the weekly chart) between $1530 and $1650 per ounce. Breakout below primary support at $1530 would offer a target of $1300*. Recovery above $1650 is unlikely but would indicate an advance to $1800.

Spot Gold

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

Spot silver shows similar consolidation to gold, between $26 and $30 per ounce. Breakout will indicate future direction.

Spot Silver

 

CRB Commodities Index is testing its descending trendline; follow-through above $305 would warn that a bottom is forming — and test 325. Recovery of 63-Day Twiggs Momentum above zero would also suggest a trend change. However, reversal below 295 — and respect of zero by TMO — would indicate another test of 265.

CRB Commodities Index

Brent Crude is testing resistance at $115, having penetrated its descending trendline to suggest that a bottom is forming. Reversal below $108 would signal another test of support at $90/$100. 63-Day Twiggs Momentum below zero continues to indicate a primary down-trend; a peak below zero would strengthen the signal.

ICE Brent Crude Afternoon Markers

Nymex WTI Light Sweet Crude diverged from Brent Crude but is similarly testing resistance, at $93/barrel. Long-term oscillation of 63-day Twiggs Momentum around the zero line suggests a ranging market — between $75 and $110 — but a peak below zero would change that.

Nymex WTI Light Sweet Crude

Dollar tests support, gold and commodities strengthen

The US Dollar Index made a false break above resistance at 83.50 before retracing to test support at 81.50. Respect of support and the rising trendline would confirm the primary up-trend is intact. Breakout above 83.50/84.00 would signal an advance to 86.00* in the next few weeks and to the 2010 high at 88.50 in a few months. Another 63-day Twiggs Momentum trough above zero would reinforce the healthy up-trend. Failure of support at 81.50 is unlikely, but would warn of a trend reversal.

US Dollar Index

* Target calculation: 82 + ( 82 – 78 ) = 86

Spot Gold continues to consolidate on the weekly chart between $1530 and $1650 per ounce. 63-Day Twiggs Momentum below zero warns of a primary down-trend. Recovery above zero, however, would confirm that a bottom is forming. Breakout below primary support at $1530 would offer a target of $1300*; recovery above $1640 would indicate an advance to $1800.

Spot Gold Weekly Chart

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

The daily chart displays a symmetrical triangle formation. Breakout would indicate direction of the next primary move. The failed down-swing — with a reversal short of the lower border — suggests an upward breakout. Follow-through above 1640 would confirm.

Spot Gold

 

The CRB Commodities Index broke its descending trendline, indicating that a bottom is forming. Breakout above medium-term resistance at 305, strengthening the signal, would test 325. Reversal below 295, however, would suggest another test of 265. Recovery of 63-Day Twiggs Momentum above zero would also suggest a primary up-trend.

CRB Commodities Index

Brent Crude has already penetrated its descending trendline, suggesting that a bottom is forming. Follow-through above $108 strengthens the signal. Recovery of 63-day Twiggs Momentum above zero would indicate a primary up-trend, while a peak below zero would signal a decline to $75 per barrel*.

ICE Brent Crude Afternoon Markers

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