Spot gold is headed for a test of resistance at $1800 after breaching the descending trendline on the weekly chart, indicating that a bottom is forming. Breakout above $1800 would complete a double bottom reversal, with a target of $2100*. Respect of $1800 remains as likely, however, and would indicate another test of primary support at $1500.
* Target calculation: 1800 + ( 1800 – 1500 ) = 2100
The Dollar Index is weakening in anticipation of QE3 ahead of the November 2012 elections. The primary trend remains upward, though breach of the rising trendline, and/or reversal of 63-day Twiggs Momentum below zero, would warn that a top is forming.
* Target calculation: 80 + ( 80 – 75 ) = 85
the correlation is great indicator by itself
however the momentum indicator should be have a moving average attached to it to clarify a more accurate trade.