Europe on the rise

Dow Jones Euro Stoxx 50 — representing 50 leading stocks in the Eurozone — is advancing strongly, with a 13-week Twiggs Momentum trough above zero suggesting a healthy up-trend. Breakout above 2800 offers a target of 3200*. Reversal below 2850 is unlikely, but would warn of a correction to the long-term rising trendline.

Euro Stoxx 50

* Target calculation: 2850 + ( 2850 – 2500 ) = 3200

The FTSE 100 threatened a primary down-trend after breaching primary support at 6400, but this proved a false break and recovery above 6400 now suggests a rally to 6650/6700. Rising 13-week Twiggs Money Flow indicates medium-term buying pressure. Breakout above 6700 would indicate an advance to 7000*, but reversal below support at 6400, while less likely, would warn of a correction to 6000.

FTSE 100

* Target calculation: 6700 + ( 6700 – 6400 ) = 7000

Forex: Euro, Aussie up-trend

The Euro continues to test its new support level at $1.34/$1.3450. Respect is likely and would signal a test of the February high at $1.37. Breakout above $1.37 would offer a long-term target of $1.47*. A trough above zero on 13-week Twiggs Momentum indicates a healthy up-trend. Failure of support — and penetration of the rising trendline — is unlikely, but would warn of another correction.

Euro/USD

* Target calculation: 1.37 + ( 1.37 – 1.27 ) = 1.47

Sterling faltered after breaking resistance at €1.19. Reversal below €1.18 would warn of another test of primary support at €1.14. Follow-through above €1.20 is less likely, but would signal an advance to €1.24*.

Sterling/Euro

* Target calculation: 1.19 + ( 1.19 – 1.14 ) = 1.24

The greenback is testing primary support at ¥96 against the Yen. Reversal of 13-week Twiggs Momentum below zero would warn of a primary down-trend. Follow-through below ¥94 would confirm. Recovery above ¥101 is less likely, but would indicate another advance.

USD/JPY

* Target calculation: 96 – ( 100 – 96 ) = 92

Canada’s Loonie respected its descending trendline and is testing support at $0.96. Failure (of support) would signal another test of the primary level at $0.9450. Bullish divergence on 13-week Twiggs Momentum continues to favor a primary up-trend. Breakout above $0.9750 is presently unlikely, but would complete a double-bottom reversal with a target of parity*.

Canadian Loonie

* Target calculation: 97.5 + ( 97.5 – 94.5 ) = 100.5

The Aussie Dollar is retracing to test its new support level at $0.94 against the greenback. Respect would indicate a test of resistance at $0.95, but failure is as likely and would warn of another test of medium-term support at $0.93. Breach of $0.93 would be more serious, warning of a correction to primary support at $0.89.

Aussie Dollar

* Target calculations: 0.95 + ( 0.95 – 0.93 ) = 0.97

The Aussie continues to test primary support at $1.12 against its Kiwi neighbour. Recovery above $1.14 — and the descending trendline — would indicate a test of primary resistance at $1.16. Breakout above $1.16 would complete a double-bottom reversal with a target of $1.20*. Breach of primary support remains as likely, however, and would offer a target of $1.08*.

Kiwi Dollar

* Target calculations: 1.12 – ( 1.16 – 1.12 ) = 1.08

FTSE breaks primary support

The FTSE 100 broke support at 6400, signaling a primary down-trend. Penetration of the rising trendline would strengthen the signal. Expect a test of the June low at 6000. Bearish divergence on 13-week Twiggs Money Flow highlights strong selling pressure; crossover to below zero would further strengthen the signal. Recovery above 6400 is unlikely, but would warn of a bear trap.

FTSE 100

Germany’s DAX is a lot more bullish, testing the new support level at 8500. Respect would offer a medium-term target of 9300*. Reversal below 8000 is unlikely, but would warn of another test of primary support at 7500/7600.

DAX

* Target calculation: 8500 + ( 8500 – 7700 ) = 9300

France’s CAC-40 is similarly testing new support at 4100. Recovery above its 2011 high of 4200 would offer a target of 4400*. Reversal below 3900 is unlikely but would warn of a test of primary support at 3600.

CAC-40

* Target calculation: 4000 + ( 4000 – 3600 ) = 4400

Spain’s Madrid General Index is even stronger, with no hint of retracement while 13-week Twiggs Money Flow indicates medium-term buying pressure. Retracement that respects support at 900 would confirm an advance to 1050*. Reversal below 900 is unlikely, but would warn of a correction.

Madrid General Index

* Target calculation: 900 + ( 900 – 750 ) = 1050

Italy’s MIB Index broke through resistance at 17500/18000, signaling a primary advance to 20000*. Successive troughs above zero on 13-week Twiggs Money Flow suggest a strong primary up-trend. Reversal below 17500 and the rising trendline is unlikely, but would warn of a bull trap.

MIB Index

* Target calculation: 17500 + ( 17500 – 15000 ) = 20000

Forex: Euro and Aussie rise as Dollar weakens

The Euro respected support, on a brief retracement to $1.34/$1.3450, before following through above the last two week’s high — signaling a test of the February high at $1.37. Breakout would offer a long-term target of $1.46*. The trough above zero on 13-week Twiggs Momentum indicates a healthy up-trend. Respect of resistance is unlikely, but would warn of another correction.

Euro/USD

* Target calculation: 1.37 + ( 1.37 – 1.28 ) = 1.46

The greenback is heading for a test of primary support at ¥96 after breaking short-term support at ¥98 on the daily chart. Failure of support would offer a target of ¥92*. Reversal of 13-week Twiggs Momentum below zero would also warn of a primary down-trend. Recovery above the descending trendline is unlikely at present, but would indicate a rally to ¥100.50.

USD/JPY

* Target calculation: 96 – ( 100 – 96 ) = 92

The Aussie Dollar has so far respected support at $0.93 against the greenback. Follow-through above $0.94 would suggest an advance to $0.97; confirmed if resistance at $0.95 is broken. Reversal below $0.93, however, would warn of a correction to primary support at $0.89.

Aussie Dollar

* Target calculations: 0.95 + ( 0.95 – 0.93 ) = 0.97

The Aussie continues to test support at $1.12 against its Kiwi neighbour. Tall shadows (wicks) for the last two weeks indicate selling pressure. Failure of support would offer a target of $1.08*. Recovery above the descending trendline is less likely, but would suggest an advance to $1.20; breakout above $1.16 would confirm, completing a double-bottom reversal.

Kiwi Dollar

* Target calculations: 1.12 – ( 1.16 – 1.12 ) = 1.08

European markets retrace, but FTSE bearish

European markets are consolidating after recent gains with the exception of Italy, which is suffering from political instability, while the FTSE 100 displays persistent selling pressure.

The FTSE 100 is heading for a test of primary support at 6400, having broken medium-term support at 6500. Declining 21-day Twiggs Money Flow after a lengthy period below zero indicates medium-term selling pressure; bearish divergence on the 13-week indicator also warns of strong selling pressure. Failure of support at 6400 would signal a primary down-trend; respect is unlikely, but would suggest another test of 6700.

FTSE 100

Germany’s DAX retraced to the new support level at 8500. Respect would offer a medium-term target of 9000* and a long-term target of 9400*. Reversal below 8000 is unlikely, but would warn of another test of primary support at 7600.

DAX

* Target calculation: 8500 + ( 8500 – 8000 ) = 9000 ; 8500 + ( 8500 – 7600 ) = 9400

France’s CAC-40 is similarly testing support at 4100. Recovery above its 2011 high of 4200 would offer an immediate target of 4300* and a long-term target of 4500*. Reversal below 3900 is unlikely but would warn of a test of primary support at 3600.

CAC-40

* Target calculation: 4100 + ( 4100 – 3900 ) = 4300 ; 4050 + ( 4050 – 3600 ) = 4500

Spain’s Madrid General Index displays healthy buying pressure on 13-week Twiggs Money Flow. Retracement that respects support at 900 would confirm a long-term advance to 1050*. Reversal below 900 is unlikely, but would warn of a correction.

Madrid General Index

* Target calculation: 900 + ( 900 – 750 ) = 1050

Italy’s MIB Index is weaker, following a rift between Prime Minister Enrico Letta and his coalition partner, Silvio Berlusconi. Follow-through below the rising trendline would test support at 16500. Recovery above 18000, on the other hand, would signal a primary advance with a long-term target of 20000*.

MIB Index

* Target calculation: 17500 + ( 17500 – 15000 ) = 20000

Forex: Aussie and Euro breakout

The Euro broke through resistance at $1.34/$1.3450, offering a medium-term target of $1.37* and long-term target of $1.40*. A trough above zero on 13-week Twiggs Momentum indicates a healthy up-trend.

Euro/USD

* Target calculation: 1.34 + ( 1.34 – 1.31 ) = 1.37; 1.34 + ( 1.34 – 1.28 ) = 1.40

The greenback is ranging aimlessly between ¥96 and ¥101 against the yen, indicating uncertainty. Breakout from the range will indicate future direction. Reversal of 13-week Twiggs Momentum below zero would suggest a primary down-trend.

USD/JPY

* Target calculation: 101 + ( 101 – 96 ) = 106

The Aussie Dollar retraced to test support at $0.93/$0.935 against the greenback after its recent breakout. Respect is likely and would suggest an advance to $0.97*. Follow-through above $0.95 would confirm.

Aussie Dollar

* Target calculations: 0.95 + ( 0.95 – 0.93 ) = 0.97

The Aussie found support at $1.12 against its Kiwi neighbour. Recovery above $1.16 and the descending trendline would complete a double-bottom reversal, offering a target of $1.20*.

Kiwi Dollar

* Target calculations: 1.16 + ( 1.16 – 1.12 ) = 1.20