Dollar bear trap?

The Dollar Index found support at 80. Recovery above 81 would suggest a bear trap. A peak close to zero on 13-week Twiggs Momentum, however, indicates a primary down-trend. Reversal below 80 would confirm the long-term target of 76.50*.

A falling dollar would boost gold prices.

* Target calculation: 80.5 – ( 84.5 – 80.5 ) = 76.5

The yield on ten-year Treasury Notes threatens recovery above 2.70 percent, which would signal an advance to 3.40 percent. Failure of support at 2.60 is unlikely, but would warn of a correction to 2.40 percent.

Rising treasury yields would lift the dollar, while raising the opportunity cost of holding precious metals and exerting downward pressure on gold.

* Target calculation: 3.00 + ( 3.00 – 2.60 ) = 3.40

Gold

Spot gold continues its correction toward primary support at $1200. Follow-through below $1250 would confirm, while recovery above $1300 would suggest a higher trough and primary up-trend. 13-Week Twiggs Momentum peaking below zero, however, would indicate continuation of the down-trend.

Crude Oil

Nymex light crude is edging lower and likely to test medium-term support at $98/barrel. Brent crude is diverging, reflecting continuing tensions over Syria.

Commodity Prices

China’s Shanghai Composite Index is testing medium-term support at 2150. Downward breakout would warn of another correction — a bearish sign for commodity prices. Dow Jones-UBS Commodity Index shows evidence of a higher trough, however, and recovery above 130 would signal a primary up-trend. Bullish divergence on 13-week Twiggs Momentum also suggests a reversal.

* Target calculation: 130 + ( 130 – 125 ) = 135