Category: Forex

Coverage of all major currencies and the US Dollar Index.

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Dollar fall lifts gold

Spot gold’s recovery above $1250/ounce suggests another bear rally. The primary trend remains down and breach of support at $1200/ounce would signal a decline to $1000*. The 63-day Twiggs Momentum peak below zero also warns of a down-trend, but a weaker dollar would boost gold prices.

Spot Gold

* Target calculation: 1200 – ( 1400 – 1200 ) = 1000

Dollar Index

The Dollar Index broke support at 80.50, signaling another test of primary support at 79.00. Twiggs Momentum declining (below zero) warns of a primary down-trend. Breach of primary support would confirm. Recovery above 80.50 is less likely, but would suggest a primary advance — confirmed if resistance at 81.50 is broken.

Dollar Index

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

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Forex: Dollar and Sterling strengthen

The Euro is rallying for another test of resistance at $1.37 after finding support at $1.3350 against the greenback. Troughs above zero on 13-week Twiggs Momentum suggest a healthy up-trend. Breakout above $1.37 would signal an advance to $1.40*. Respect of resistance, indicated by reversal below the secondary rising trendline, would, however, warn of a correction to the primary trendline at $1.31.

Euro/USD

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

Sterling breakout above resistance at €1.20 signals a primary up-trend. Recovery of 13-week Twiggs Momentum above zero strengthens the signal. Target for the advance is €1.23*. Reversal below €1.19 is unlikely, but would warn of another test of €1.1650.

Sterling/Euro

* Target calculation: 1.20 + ( 1.20 – 1.17 ) = 1.23

The Greenback is likely to retrace to test the new support level at ¥101 Japanese Yen. Respect would confirm an advance with a target of ¥108*. The trough above zero on 13-week Twiggs Momentum strengthens the signal. Reversal below ¥101 is unlikely, penetration of the rising trendline warning of trend weakness.

USD/JPY

* Target calculation: 1.01 + ( 1.01 – 0.94 ) = 1.08

Canada’s Loonie broke primary support at $0.94, signaling another decline with a target of $0.915*. A peak below zero on 13-week Twiggs Momentum strengthens the signal. Recovery above $0.945 is unlikely, but would warn of a bear trap.

Canadian Loonie

* Target calculation: 0.945 – ( 0.975 – 0.945 ) = 0.915

The Aussie Dollar is heading for a test of primary support at $0.89. The peak below zero on 13-week Twiggs Momentum signals continuation of the down-trend. Breakout below $0.89 would offer a long-term target of $0.81*, while respect of support would suggest a rally to $0.93. The RBA needs a weaker Aussie Dollar, without lowering interest rates, and will do all it can to assist the decline.

Aussie Dollar

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

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Gold support at $1200

Gold

The long tail on this week’s candle reflects buying support for spot gold at $1200/ounce. Recovery above $1250 would suggest another rally to $1350. But the 63-day Twiggs Momentum peak below zero warns of a down-trend. And breach of primary support at $1200 would confirm.

Spot Gold

* Target calculation: 1250 – ( 1350 – 1250 ) = 1150

Often a leading indicator of spot prices, the Gold Bugs Index, representing un-hedged gold stocks, continues in a primary down-trend after breaking support at 210. Completion of a 13-week Twiggs Momentum peak below zero would strengthen the signal.

Gold Bugs Index

Dollar Index

The yield on ten-year Treasury Notes broke through medium-term resistance 2.75, suggesting a primary advance to 3.50 percent*. Breakout above 3.00 percent would confirm. Reversal below the rising trendline is unlikely, but would warn of trend weakness and another test of 2.50. Higher yields are likely to strengthen the dollar.

10-Year Treasury Yields

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

The Dollar Index shows evidence of strong support at 80.50, consolidating in a narrow band between 80.50 and 81.00 over the last 2 weeks. Upward breakout would suggest a primary advance; confirmed if resistance at 81.50 is broken. Breach of support at 80.50 remains as likely and would warn of another test of primary support at 79.

Dollar Index

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

Higher interest rates and a stronger dollar would increase downward pressure on gold.

Crude Oil

Nymex crude penetrated its downward trendline but this first bear rally may not be the last. Expect resistance between $98 and $100/barrel. Respect remains likely and would indicate another test of support at $92. Brent crude reflects global supply constraints and is likely to find strong support at $100/barrel.

Brent Crude and Nymex Crude

Commodity Prices

A rising Shanghai Composite Index is supporting commodity prices. Recovery of the Dow Jones-UBS Commodity Index above 126 would indicate a bear trap. Breakout above 130 would suggest reversal to a primary up-trend; and cross-over of 13-week Twiggs Momentum above zero would strengthen the signal. Respect of resistance at 126 and a primary decline now appear unlikely.

Dow Jones UBS Commodities Index

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Aussie down-trend

The Aussie Dollar found short-term support at $0.91 against the greenback. Expect a rally to test the descending trendline and resistance at $0.93. Respect of the trendline is likely and would warn of a down-swing to primary support at $0.89. The peak below zero on 63-day Twiggs Momentum signals continuation of the down-trend. Breakout above $0.93 is unlikely, but would suggest that the down-trend is ending. The RBA needs a weaker Aussie Dollar, without lowering interest rates, and will do all it can to assist the decline.

Aussie Dollar

* Target calculation: 0.91 – ( 0.93 – 0.91 ) = 0.89

Aussie breach of support at $1.12 against its Kiwi neighbor, warns of a primary down-trend. Retracement is likely to respect the new resistance level and would confirm the down-trend. Follow-through above $1.13 is unlikely but would warn of a bear trap. The peak below zero on 63-day Twiggs Momentum signals continuation of the down-trend. Target for the decline is $1.08*.

Kiwi Dollar

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

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Gold: $1200 next?

Spot gold consolidating in a narrow band below support at $1250/ounce suggests a test of $1200. The 63-day Twiggs Momentum peak below zero strengthens the signal. Breakout below the June low ($1200) would confirm a primary down-trend. Recovery above $1260 is unlikely, but would indicate a rally to $1350.

Spot Gold

* Target calculation: 1250 – ( 1350 – 1250 ) = 1150

Silver broke through support at $20.50/ounce and is headed for a test of primary support at $18/ounce. Completion of a 13-week Twiggs Momentum peak below zero warns of a primary down-trend. Breach of primary support would confirm.

Spot Silver

Often a leading indicator of spot prices, the Gold Bugs Index, representing un-hedged gold stocks, broke primary support at 210 to signal a primary down-trend. Completion of a 13-week Twiggs Momentum peak below zero would strengthen the signal.

Gold Bugs Index

Dollar Index

The yield on ten-year Treasury Notes retreated below 2.75. Breakout would signal a fresh primary advance, with a target of 3.50 percent* (breakout above 3.00 percent would confirm). Reversal below the rising trendline is less likely, but would warn of trend weakness and another test of 2.50. Higher yields would help strengthen the dollar.

10-Year Treasury Yields

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

The Dollar Index retraced to test the new support level at 80.50. Completion of a 13-week Twiggs Momentum peak below zero would warn of a primary down-trend. Breach of primary support at 79 would confirm. Breakout above 81.50 remains as likely, however, and would indicate an advance to 84*.

Dollar Index

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

Higher interest rates and a stronger dollar would increase downward pressure on gold.

Crude Oil

Nymex crude is undergoing a strong correction and is likely to test primary support at $85/$86 per barrel. Reversal of 13-Week Twiggs Momentum below zero warns of a primary down-trend. Brent crude is rising despite an easing of tensions with Iran. The primary reason for the divergence is supply. Iain Armstrong, oil analyst at Brewin Dolphin, earlier in the year explained that Brent is effectively a global brand — affected by global issues of supply/demand — while Nymex is a “local” brand and benefits from plentiful shale oil in the US.

Brent Crude and Nymex Crude

Commodity Prices

A resurgent Shanghai Composite Index is supporting commodity prices. Recovery of the Dow Jones-UBS Commodity Index above 126 would indicate a bear trap. A peak below zero on 13-week Twiggs Momentum, however, warns of a continuing down-trend. Respect of the resistance level, as indicated by follow-through below 122, would signal a decline to 114*.

Dow Jones UBS Commodities Index

* Target calculation: 124 – ( 134 – 124 ) = 114

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Stronger dollar drives Euro & Aussie lower

The Euro continues to test support at $1.3350 against the greenback after a false break above the February high of $1.37. Breach of support would warn of a bull trap, and follow-through below $1.31 and the rising trendline would signal a reversal. 13-Week Twiggs Momentum, however, continues to indicate a primary up-trend; a trough above zero would strengthen the signal. Recovery above $1.37 is less likely, but would signal a fresh advance.

Euro/USD

* Target calculation: 1.38 + ( 1.38 – 1.34 ) = 1.42

Sterling is testing resistance at €1.20. Recovery of 13-week Twiggs Momentum above zero suggests an up-trend. Breakout above €1.20 would signal an advance to €1.23*. Respect of resistance is unlikely, but would suggest another test of €1.1650.

Sterling/Euro

* Target calculation: 1.20 + ( 1.20 – 1.17 ) = 1.23

The Greenback is headed for another test of resistance at ¥101. The bullish ascending triangle suggests an upward breakout with a target of ¥108. Breakout above ¥101 would confirm. 13-Week Twiggs Momentum descended steeply over the length of the consolidation, but completion of a trough above zero (recovery above say 5%) would indicate a primary up-trend. Reversal below support at ¥96 is now unlikely.

USD/JPY

* Target calculation: 1.01 + ( 1.01 – 0.94 ) = 1.08

Recovery of Canada’s Loonie above $0.96 would complete a second higher trough against its US neighbor. Breakout above $0.9750 would signal a primary up-trend, but breach of primary support at $0.9450 is as likely and would signal continuation of the primary down-trend. Another 13-week Twiggs Momentum peak below zero would also indicate a down-trend.

Canadian Loonie

The Aussie Dollar is testing medium-term support at $0.93*. Respect of the zero line by 63-day Twiggs Momentum suggests continuation of the down-trend. Breach of support at $0.93 would confirm, signaling a test of primary support at $0.89. Recovery above $0.9450 is less likely, but would a rally to $0.9750. The RBA needs a weaker Aussie Dollar, without lowering interest rates, and will do all it can to assist the decline.

Aussie Dollar

* Target calculation: 0.975 + ( 0.975 – 0.95 ) = 1.00

The Aussie continues to test support at $1.12 against its Kiwi neighbor. Rising Momentum suggests another rally to $1.16, confirmed if resistance at $1.14 is broken. But breakout below $1.12 would signal a decline to $1.08*. Breakout above $1.16 would complete a triple-bottom reversal with a target of $1.20*.

Kiwi Dollar

* Target calculations: 1.12 – ( 1.16 – 1.12 ) = 1.08 OR 1.16 + ( 1.16 – 1.12 ) = 1.20

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Rising interest rates drive gold through support

The yield on ten-year Treasury Notes followed through above 2.75, indicating a fresh primary advance, with a target of 3.50 percent*. Breakout above 3.00 percent would confirm. Completion of a 13-week Twiggs Momentum trough above zero (recovery above say 30%) would strengthen the signal. Reversal below the rising trendline is unlikely, but would warn of another test of 2.50.

10-Year Treasury Yields

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

Dollar Index

Rising interest rates would strengthen the dollar. The Dollar Index rallied off support at 79 on the monthly chart, suggesting a test of 84. Breach of the rising trendline, however, still warns of trend weakness, and 13-week Twiggs Momentum respect of the zero line (from below) would strengthen the signal.

Dollar Index

* Target calculation: 79 – ( 84 – 79 ) = 74 or 84 + ( 84 – 79 ) = 89

Gold

Rising interest rates and a stronger dollar weaken gold. Spot gold broke support at $1250/ounce, signaling a primary down-trend. A 63-day Twiggs Momentum peak below zero strengthens the signal. Follow-through below the next support level, the June low of $1200, would confirm. Recovery above $1260 is unlikely, but would warn of a bear trap.

Spot Gold

* Target calculation: 1250 – ( 1350 – 1250 ) = 1150

Crude Oil

Nymex crude is undergoing a strong correction. 13-Week Twiggs Momentum crossing to below zero warns of reversal to a primary down-trend; a peak below the zero line would strengthen the signal. Expect strong support at $85/$86 per barrel. Respect of support would mean that Nymex remains in a primary (albeit weak) up-trend. Diverging Brent crude reflects both a strengthening European recovery and continued supply threats in the Middle East.

Brent Crude and Nymex Crude

Commodity Prices

Copper prices, bellwether for the global economy, respected resistance at $7400/$7500 per tonne and are heading for another test of the 2011 lows at $6800/tonne. Downward breakout would signal a primary down-trend, as would completion of a 13-week Twiggs Momentum peak below zero. Recovery above the descending trendline would be a bullish sign for the global economy, while breach of support at $6800 would be bearish.

Copper

China is a primary driver of commodity prices and a strengthening Shanghai Composite Index has slowed the fall in commodity prices. Dow Jones-UBS Commodity Index broke primary support at 124, but is consolidating in a narrow range below the former support level. Recovery above 124 would be a bullish sign, while follow-through below 122 would indicate a decline to 114*. Completion of a 13-week Twiggs Momentum peak below zero would also suggest a continuing down-trend.

Dow Jones UBS Commodities Index

* Target calculation: 124 – ( 134 – 124 ) = 114

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Aussie Dollar tests support

The Euro is testing support at $1.3350 against the greenback after a false break above the February high of $1.37. Penetration of the secondary trendline warns of a correction. Rising 13-week Twiggs Momentum, however, continues to indicate a primary up-trend. Breach of $1.3350 would test primary support and the long-term rising trendline at $1.31. Recovery above $1.37 is less likely, but would signal a fresh advance.

Euro/USD

* Target calculation: 1.38 + ( 1.38 – 1.34 ) = 1.42

The greenback completed a higher trough against the Yen, offering a target of ¥101. Breakout above ¥101 would signal a fresh advance to ¥105. Recovery of 13-week Twiggs Momentum above 5% would complete a trough above zero, continuing the primary up-trend. Reversal below support at ¥96 is unlikely, but would test primary support at ¥94.

USD/JPY

* Target calculation: 1.01 + ( 1.01 – 0.97 ) = 1.05

The Aussie Dollar also weakened against the greenback, retracing to medium-term support at $0.93*. Respect would signal continuation of the up-trend; follow-through above $0.97 would confirm, offering a target of parity*. Recovery of 13-week Twiggs Momentum above zero would strengthen the signal. Breach of support at $0.93 and a Twiggs Momentum peak below zero, on the other hand, would test primary support at $0.89. The RBA needs a weaker Aussie Dollar and will do all it can to assist the decline.

Aussie Dollar

* Target calculation: 0.975 + ( 0.975 – 0.95 ) = 1.00

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Gold tests key support as the dollar rises

The yield on ten-year Treasury Notes rallied off support at 2.50 percent. Follow-through above 2.75 would indicate a fresh primary advance, with a target of 3.50 percent*. A 13-week Twiggs Momentum trough above zero would strengthen the signal. Respect of resistance is unlikely, but would warn of another test of 2.50.

10-Year Treasury Yields

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

Dollar Index

Rising interest rates would strengthen the dollar. The Dollar Index respected support at 79, suggesting a rally to resistance at 84. Breach of the rising trendline, however, still warns of trend weakness, and 13-week Twiggs Momentum respect of the zero line (from below) would strengthen the warning.

Dollar Index

* Target calculation: 79 – ( 84 – 79 ) = 74

Gold

Rising interest rates and a stronger dollar would weaken gold. Spot gold is testing primary support at $1250/ounce. A 13-week Twiggs Momentum peak below zero warns of a primary down-trend; breach of $1250 would strengthen the signal, while follow-through below the June low of $1200 would confirm. Respect of support at $1250 is less likely, but would indicate another test of $1350.

Spot Gold

* Target calculation: 1250 – ( 1350 – 1250 ) = 1150

Silver is similarly testing support at $20.50/ounce. Breach would signal a decline to $18/ounce. Completion of a 13-week Twiggs Momentum peak below zero would warn of a primary down-trend.

Spot Silver

Crude Oil

Nymex crude is undergoing a strong correction. 13-Week Twiggs Momentum crossing to below zero warns of reversal to a primary down-trend. Breach of primary support at $86/barrel would confirm. Until then, however, Nymex remains in a primary up-trend. Diverging Brent crude reflects both a strengthening European recovery and continued supply threats in the Middle East.

Brent Crude and Nymex Crude

Commodity Prices

China is a primary driver of commodity prices and a weakening Shanghai Composite Index is driving commodity prices lower. Dow Jones-UBS Commodity Index broke primary support at 124, offering a target of 114*. A 13-week Twiggs Momentum peak below zero also suggests a continuing down-trend.

Dow Jones UBS Commodities Index

* Target calculation: 124 – ( 134 – 124 ) = 114

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Forex: Euro & Aussie test support

The Euro is retracing to test the new support level at its February high of $1.37. Respect of the rising trendline would confirm a long-term advance to $1.46*. Troughs above zero on 13-week Twiggs Momentum indicate a healthy up-trend. Reversal below the trendline is unlikely, but would warn of a correction to the primary trendline and support at $1.31.

Euro/USD

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

Sterling broke medium-term support at €1.175, signaling a correction to test primary support at €1.14. Reversal of 13-week Twiggs Momentum below zero strengthens the warning. Recovery above resistance at €1.19 is unlikely, but would suggest an advance to €1.24*.

Sterling/Euro

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

A higher trough on the Greenback against the Yen suggests buying pressure. Breakout above ¥99 would strengthen the signal, offering a target of ¥101. 21-Day Twiggs Momentum appears to have leveled out and a trough above zero would indicate a primary up-trend. Reversal below support at ¥97 is unlikely, but would test primary support at ¥96.

USD/JPY

Canada’s Loonie retreated below support at $0.96 against its US neighbor. Breach of primary support at $0.9450 would signal continuation of the primary down-trend, as would another 13-week Twiggs Momentum peak below zero. Recovery above $0.96 is unlikely, but would warn of a trend reversal.

Canadian Loonie

The Aussie Dollar retraced to test medium-term support at $0.95* against the Greenback. Recovery above $0.9550 is likely and would indicate a test of parity*. Two doji candles suggest support and follow-through below $0.9450 is unlikely, indicating a fall to $0.93.

Aussie Dollar

* Target calculation: 0.975 + ( 0.975 – 0.95 ) = 1.00

The Aussie encountered resistance at $1.16 against its Kiwi neighbour, suggesting a test of medium-term support at $1.14. Respect of $1.14 would be bullish and breakout above $1.16 would complete a double-bottom reversal with a target of $1.20*. Failure of $1.14 is now unlikely, but would threaten primary support at $1.12.

Kiwi Dollar

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

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