The US Dollar Index broke resistance at 81.80, signaling the start of a primary advance to 86.00*. The 63-day Twiggs Momentum trough above zero indicates a strong up-trend. Expect retracement to test the new support level at 81.50/81.80. Respect would confirm the bull signal.
* Target calculation: 82 + ( 82 – 78 ) = 86
Spot Gold is testing the band of support between $1500 and $1550/ounce. Wednesday’s long tail is evidence of buying support, but declining 63-day Twiggs Momentum (below zero) warns of a primary down-trend. Another rally that respects resistance at $1600 would strengthen the bear signal. Breakout below $1500 would confirm, offering a target of $1200*. Recovery above $1600, while unlikely, would suggest another test of $1800.
* Target calculation: 1500 – ( 1800 – 1500 ) = 1200
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.
How is the USD index measured, and how do you buy it?
EUR/USD is more than half the total index. According to Wikipedia the weighting is:
Euro (EUR), 57.6% weight
Japanese yen (JPY) 13.6% weight
Pound sterling (GBP), 11.9% weight
Canadian dollar (CAD), 9.1% weight
Swedish krona (SEK), 4.2% weight and
Swiss franc (CHF) 3.6% weight
You can buy ETFs or futures that track the dollar index.