Apologies for my recent absence. I seem to take longer to recover from a ‘flu virus than I used to. The Dollar Index, however, has made a robust recovery, breaking resistance at 98.50. Completion of a double-bottom suggests a new advance with a target of 104*.
* Target calculation: 100 + ( 100 – 96 ) = 104
Gold retreated below its former primary support level of $1200/ounce as the dollar strengthened. Breach of the rising trendline suggests the bear rally is over; follow-through below $1180 would confirm, strengthening the long-term target of $1000/ounce*.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Looks like currencies are in an ugly dog competition. With the FED expected to hold off raising rates due to the slowdown in the economy, the dollar increases given the still poorer prognosis in Europe and Japan with their announced QE programs. Evidently the dollar looks attractive when compared to other currencies.
Remember the golden rule of the ugly dog competition..you don’t get to see how truely ugly it is until it turns around!