Category: Forex

Coverage of all major currencies and the US Dollar Index.

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Euro strong but European stocks retreat

The Euro broke through resistance at $1.38, signaling an advance to $1.43*. Retracement that respects the new support level would strengthen the signal. Bearish divergence on 13-week Twiggs Momentum continues to warn of medium-term weakness, however, and reversal below $1.38 would suggest another correction.

Euro

* Target calculation: 1.38 + ( 1.38 – 1.33 ) = 1.43

Germany’s DAX retreated below 9500 to warn of another correction. Bearish divergence on 13-week Twiggs Money Flow indicates medium-term selling pressure. Respect of primary support at 9000 — and the rising trendline — would confirm a healthy up-trend. Breach of support is unlikely, but would signal reversal to a down-trend.

DAX

DAX Volatility at 20 reflects moderate risk.

DAX

The Footsie retreated to support at 6690/6700 on the daily chart. Breach would indicate another test of primary support at 6400. The primary trend is upward and a 21-day Twiggs Money Flow trough above zero would reflect medium-term buying pressure.

FTSE 100

* Target calculation: 6800 + ( 6800 – 6400 ) = 7200

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Dollar falls: Outflow to safe haven?

Rising gold prices would normally signal increased inflation expectations and higher Treasury yields, but the present situation is distorted by tensions in Ukraine and increased demand for gold as a safe haven. The yield on ten-year Treasury Notes found support at 2.60 percent and is now testing medium-term resistance at 2.80 percent. Breakout would indicate an advance to 3.50 percent*; confirmed if there is follow-through above 3.00 percent. Bearish divergence on 13-week Twiggs Momentum continues to warn of weakness and reversal below 2.60 remains as likely, testing primary support at 2.50 percent.

10-Year Treasury Yields

* Target calculation: 3.00 + ( 3.00 – 2.50 ) = 3.50

Rising Treasury yields and a weakening dollar may reflect international outflows from the Dollar in search of a safe haven. The Dollar Index is testing primary support at 79.50/79.60. Breach would signal a primary down-trend; confirmed if support at 79.00 is broken. The 13-week Twiggs Momentum peak below zero suggests further weakness.

Dollar Index

* Target calculation: 79.5 – ( 81.5 – 79.5 ) = 77.5

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Nikkei finds Yen support

The US Dollar found solid support at ¥101 against the Yen. Recovery above ¥103 would suggest an advance to ¥111*. Breakout above ¥106 would confirm. Recovery above the December 2013 high on 13-week Twiggs Momentum would strengthen the signal. Breach of support at ¥101 is unlikely, but would warn of a correction to primary support at ¥96.

Nikkei 225

* Target calculation: 106 + ( 106 – 101 ) = 111

The Nikkei 225 found support at 14000. Recovery above 15000 would indicate another attempt at 16000. Completion of a 13-week Twiggs Money Flow trough above zero would strengthen the signal.

Nikkei 225

* Target calculation: 16000 + ( 16000 – 14000 ) = 18000

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ASX 200 stalls as Aussie Dollar retreats

The Aussie Dollar retreated from resistance at $0.91. Breakout below primary support at $0.885 against the greenback would warn of a primary decline, with a long-term target of $0.81*. Follow-through below $0.865 would confirm. Recent Twiggs Momentum peaks below zero also indicate a primary down-trend. Respect of primary support and recovery above $0.91 is unlikely, but would suggest that a bottom is forming.

Aussie Dollar

* Target calculation: 0.89 – ( 0.97 – 0.89 ) = 0.81

The ASX 200 is consolidating below resistance at 5450, waiting for a lead from US markets. Bearish divergence on 13-week Twiggs Money Flow suggests long-term selling pressure, but completion of a large trough above zero (TMF recovery above 30%) would change this. Breakout above 5450 would signal an advance to 5800*. Reversal below 5400, however, would warn of another correction.

ASX 200

* Target calculation: 5400 + ( 5400 – 5000 ) = 5800

ASX 200 VIX below 15 indicates low risk typical of a bull market.

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DAX and Euro bearish

The Euro encountered resistance at $1.38 and is again testing the new support level of $1.37 on the weekly chart. Bearish divergence on 13-week Twiggs Momentum warns of trend weakness, but only reversal below zero would indicate a primary trend reversal. Breach of primary support at $1.35 would signal a down-trend, while breakout above $1.38 would offer a target of $1.43*.

Euro

* Target calculation: 1.38 + ( 1.38 – 1.33 ) = 1.43

Germany’s DAX paints a similar picture to the Euro, with bearish divergence on 13-week Twiggs Money Flow suggesting sellers at 10,000. Retreat below 9600 would warn of another test of primary support at 9000.

DAX

DAX Volatility below 20, however, continues to suggest low risk typical of a bull market.

DAX

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Dollar and treasury yields weaken

The yield on ten-year Treasury Notes is testing support between 2.60 and 2.65 percent. Breach would continue the correction to primary support at 2.50 percent. Bearish divergence on 13-week Twiggs Momentum warns of weakness. Breach of 2.50 would offer a target of 2.00 percent, while recovery above 2.75 would indicate an advance to 3.50 percent* — confirmed if there is a breakout above 3.00 percent.

10-Year Treasury Yields

* Target calculation: 3.00 + ( 3.00 – 2.50 ) = 3.50

Lower yields would suggest dollar weakness. A monthly chart shows the Dollar Index ranging between 80.00 and 81.50 over the past four months. Breach of the rising trendline indicates trend weakness and a break of support at 80.00 would test primary support at 79.00. Breach of primary support, and/or a 13-week Twiggs Momentum peak below zero, would signal a primary down-trend.

Dollar Index

* Target calculation: 81.5 + ( 81.5 – 79 ) = 84 or 79 – ( 84 – 79 ) = 74

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London Calling…..

The strong advance for Sterling, over the last 8 months, is likely to encounter substantial resistance at the 2011 and 2009 highs of $1.68 and $1.70 respectively. Resistance also coincides with the target of $1.68* from the double bottom completed in September 2013. Breakout above $1.70 would offer a long-term target of $1.90, but reversal below $1.66 would test support at $1.62 in the short-term.

FTSE 100

* Target calculation: 1.58 + ( 1.58 – 1.48 ) = 1.68

The FTSE 100 is likely to break out above resistance at 6850 after a higher trough on 13-week Twiggs Money Flow flagged a surge in buying pressure. Target for an advance is 7200* but expect committed sellers at the 1999 high of 7000. Retreat below primary support at 6400 is most unlikely, but would warn of a primary down-trend.

FTSE 100

* Target calculation: 6800 + ( 6800 – 6400 ) = 7200

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Dollar finds strong support

The yield on ten-year Treasury Notes is heading for another test of resistance at 3.00 percent after encountering buying pressure above primary support at 2.50. Bearish divergence on 13-week Twiggs Momentum, however, continues to warn of weakness. Breach of 2.50 is unlikely, but would offer a target of 2.00 percent. Breakout above 3.00 would signal an advance to 3.50 percent*.

10-Year Treasury Yields

* Target calculation: 3.00 + ( 3.00 – 2.50 ) = 3.50

The Dollar Index encountered strong support at 80, indicating another test of 81.50 is likely. Breakout would signal a primary advance to 83.00*. Recovery of 13-week Twiggs Momentum above zero would strengthen the signal. Reversal below 79.70 is unlikely, but would warn of a primary down-trend.

Dollar Index

* Target calculation: 81.5 + ( 81.5 – 80 ) = 83

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ASX 200 hits resistance

After a healthy start to the day, the ASX ran into poor Flash Manufacturing PMI out of China. The Aussie Dollar fell through 90 cents, suggesting another test of 87 (US cents).

Aussie Dollar

The ASX 200 faces strong resistance at 5400 to 5450. Rising 21-day Money Flow indicates medium-term buying pressure and breakout above 5450 would confirm a primary advance. But reversal below 5400 would warn of another correction; follow-through below 5350 would confirm.

ASX 200

* Target calculation: 5350 + ( 5350 – 5050 ) = 5650

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European recovery

Both the Euro and Dow Jones Euro Stoxx 50 Index are bullish.

Euro recovery above $1.37, the high of February 2013, suggests another advance. Breakout above $1.38 would confirm. Breach of the (secondary) rising trendline and declining Twiggs Momentum, however, warn of a weak trend. Reversal below $1.35 would test primary support at $1.33.

Euro

* Target calculation: 1.38 + ( 1.38 – 1.33 ) = 1.43

Dow Jones Euro Stoxx 50 is stronger, recovering above 3100 to indicate an advance to 3350*. Follow-through above 3180 would confirm. 13-Week Twiggs Momentum oscillating above zero reflects a healthy up-trend. Breach of the secondary trendline is unlikely, but would warn of another test of primary support at 2920.

Dow Jones Euro Stoxx 50

* Target calculation: 3150 + ( 3150 – 2950 ) = 3350

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