Nymex Light Crude is falling steeply. Breakout below the trend channel warns of reversal to a primary down-trend. Breach of support at $55/barrel would indicate a test of $45/barrel.
Falling crude prices are likely to strengthen the Dollar. Dollar Index breakout above 100 would signal another primary advance. Penetration of the descending trendline on the Trend Index would also suggest another long-term advance.
Falling crude prices and a strengthening Dollar are likely to weaken demand for Gold. Reversal below $1150 would signal a decline to $1050/ounce (the 2015 low).
Silver is testing primary support at $14/ounce. Breach would offer a target of $10 but would also warn of a primary down-trend for Gold.
A weakening Australian Dollar has so far offset the decline in the Dollar price of Gold. The chart below, however, shows strong resistance at $A 1750 to $A 1800. Declining peaks on the Trend Index warn of selling pressure and penetration of the rising trendline on the price chart would threaten another test of LT support at $A 1350. Local gold miners would be likely to follow.
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He founded PVT Capital (AFSL number 546090), which provides income and growth strategies to wholesale clients.
Colin also co-founded Incredible Charts and writes the popular Patient Investor newsletter.
Using a top-down approach, Colin identifies macro trends in the global economy and then combines fundamental and technical analysis to evaluate opportunities in sectors that stand to benefit.
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.