Overview:
- Treasury yields recover
- The Dollar establishes a base
- Gold bearish
Interest Rates and the Dollar
The yield on ten-year Treasury Notes made a false break through primary support at 2.50 percent, before recovering to 2.60 percent*. 13-Week Twiggs Momentum below zero continues to suggest weakness. Recovery above 2.80 remains unlikely at present, while reversal below 2.50 would signal a decline to 2.00 percent.
* Target calculation: 2.50 – ( 3.00 – 2.50 ) = 2.00
The Dollar Index completed a double-bottom reversal, breaking through resistance at 80.50, but last week’s tall shadow (wick) warns of selling pressure. Reversal below 80.00 would indicate a test of primary support at 79.00, but 13-week Twiggs Momentum recovery above zero is bullish and follow-through above 81 would suggest a primary up-trend. Breakout above 81.50 would confirm.
* Target calculation: 81.5 + ( 81.5 – 79.0 ) = 84.0
Gold
Low inflation and a strengthening Dollar reduce demand for precious metals. Gold found short-term support at $1240, but reversal of 13-week Twiggs Momentum below zero is bearish. Expect a test of primary support at $1200. Recovery above $1300 is unlikely, but would warn of a bear trap and rally to $1400.
