Category: Forex

Coverage of all major currencies and the US Dollar Index.

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Dollar and Treasuries likely to lift Gold

Spot gold continues to test support at $1300/ounce. Failure of support would visit the primary level at $1200/ounce, while respect would test $1440. Breach of the downward trend channel indicates the primary trend is slowing, but recovery above $1440, and a primary up-trend, seem some way off — as does recovery of 13-week Twiggs Momentum above zero.

Spot Gold

The two-hourly chart shows breakout above resistance at $1330. Retracement that respects the new support level would signal a rally to test $1375, improving the chances of a bottom.

Spot Gold

Dollar Index

The Dollar Index broke primary support at 80.50, warning of a primary down-trend. Follow-through below 80 would confirm. A 13-week Twiggs Momentum peak at zero also suggests a down-trend. A falling dollar would boost gold prices. Recovery above 81 is unlikely, but would warn of a bear trap.

Dollar Index

The yield on ten-year Treasury Notes broke support at 2.70 percent, warning of another test of 2.40 percent. Penetration of the rising trendline would strengthen the signal. Falling treasury yields are also likely to lift precious metal prices (because of the lower opportunity cost).

10-Year Treasury Yields

Crude Oil

Nymex light crude broke support at $103/barrel and its rising trendline, warning that the up-trend is slowing. A test of medium-term support at $98/barrel is now likely. The wider spread with Brent Crude is an indication of tensions over Syria which threaten supply.

Brent Crude and Nymex Crude

Commodities

Commodity prices continue to fall, with the Dow Jones-UBS Commodity Index headed for another test of 124 despite a resilient Shanghai Composite Index. Recovery above 130 is unlikely, but would confirm the earlier double-bottom reversal and a primary up-trend.

Dow Jones UBS Commodities Index

* Target calculation: 130 + ( 130 – 125 ) = 135

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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

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Forex: Euro, Sterling and Aussie Dollar strengthen

The Euro found support at $1.31, the short retracement suggesting a breakout above resistance at $1.34/$1.3450. Breakout would offer a target of $1.40*. Rising 13-week Twiggs Momentum indicates a healthy primary up-trend.

Euro/USD

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

Sterling is doing even better, breaking through resistance at €1.19 after piercing the descending trendline. Breakout completes a double bottom reversal with a target of €1.24*. Recovery of 13-week Twiggs Momentum above zero also suggests a primary up-trend. Reversal below €1.16 would warn of a bull trap, but is most unlikely.

Sterling/Euro

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

The greenback is stabilizing against the Yen after losing momentum over the last 3 months. The recent rally respected resistance at ¥100/101 and another test of ¥96 is likely. Breakout above ¥101 would offer a target of ¥106*, but failure of support at ¥96 remains as likely, and would warn of a primary down-trend.

USD/JPY

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

Canada’s Loonie is headed for a test of the descending trendline and resistance at $0.9750. Bullish divergence on 13-week Twiggs Momentum favors a breakout, while recovery above zero would suggest a primary up-trend. Breakout would also complete a double-bottom reversal, with a target of parity*. Reversal below $0.96 is unlikely, but would warn of another test of primary support at $0.9450.

Canadian Loonie

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

The Aussie Dollar also completed a double-bottom reversal against the greenback — this time on a daily chart — offering a target of $0.95*. Follow-through above $0.93 confirms the signal. Reversal below $0.92 is unlikely, but would warn of another test of primary support at $0.89.

Aussie Dollar

* Target calculations: 0.92 + ( 0.92 – 0.89 ) = 0.95

The Aussie continues to weaken against its Kiwi neighbour. Respect of primary support at $1.12 and recovery above the descending trendline, however, would warn that a bottom is forming. Breakout above $1.16 would confirm, offering a target of $1.20*.

Kiwi Dollar

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

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Gold tests key support at $1350/ounce

Spot gold is testing its rising trendline and support at $1350. Breach of support would warn that another test of primary support at $1200 is likely. Respect of the trendline, however, remains as likely and would offer a target of $1500*. Breakout above the standard deviation trend channel suggests that a bottom is forming and, although we may see another test of $1200 before this is over, primary support is likely to hold.

Spot Gold

* Target calculation: 1425 + ( 1425 – 1350 ) = 1500

Dollar Index

The Dollar Index is retreating for another test of primary support at 80.50, lifting gold and commodities. Breach of the long-term rising trendline would suggest that the primary up-trend is weakening, while failure of support would signal a reversal. Decline of 13-week Twiggs Momentum below zero also favors a down-trend; reversal below recent lows at -2% would strengthen the signal.
Dollar Index

Crude Oil

Nymex and Brent crude are retreating on easing of tensions over Syria, but are unlikely to break support at $103/barrel and the rising trendline.

Brent Crude and Nymex Crude

* Target calculation: 108 + ( 108 – 98 ) = 118

Commodities

A rising Shanghai Composite Index is likely to lift commodity prices. Recovery above 130 on Dow Jones-UBS Commodity Index would be likely to test 135. Follow-through below the present 129, however, would test primary support at 124/125. A 13-week Twiggs Momentum peak below zero would also indicate continuation of the primary down-trend.

Dow Jones UBS Commodities Index

* Target calculation: 130 + ( 130 – 125 ) = 135

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Forex: Euro weakens but Aussie, Yen resilient

The Euro followed through below $1.3150, after breaking support at $1.32, confirming a correction to primary support at $1.2750/1.2800. Reversal of 63-day Twiggs Momentum below zero would strengthen the signal.

Euro/USD

Sterling penetrated the descending trendline (weekly chart) against the euro, suggesting the primary down-trend is over. Breakout above €1.19 would complete a double bottom with a target of €1.24*. Recovery of 13-week Twiggs Momentum above zero also indicates a primary up-trend. Reversal below €1.16 is unlikely, but would warn the down-trend may continue; failure of primary support at €1.14 would confirm.

Sterling/Euro

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

The greenback broke out of its triangular pattern (weekly chart) against the Yen, but too close to the apex to have much significance. Follow-through above ¥101.50 would offer a long-term target of ¥114*. Reversal below ¥96 is unlikely, but would test primary support at ¥94.

USD/JPY

* Target calculation: 104 + ( 104 – 94 ) = 114

Canada’s Loonie is testing primary support at $0.9450 against the greenback. Respect, indicated by recovery above $0.96, would test the descending trendline (weekly chart) and resistance at $0.9750. Failure of support is as likely, however, and would warn of another decline.

Canadian Loonie

The Aussie Dollar penetrated its descending trendline (daily chart) against the greenback, suggesting the primary down-trend is weakening. Breakout above $0.92 would complete a double-bottom reversal with an initial target of $0.95*. Respect of resistance remains likely, however, and would signal another test of primary support at $0.89*.

Aussie Dollar

* Target calculations: 0.92 + ( 0.92 – 0.89 ) = 0.95; 0.89 – ( 0.92 – 0.89 ) = 0.86

The Aussie penetrated its descending trendline (weekly chart) against the Kiwi, suggesting that the primary down-trend is over. Breakout above $1.16 would confirm, while reversal below $1.12 would signal another decline.

Canadian Loonie

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Gold hesitates as the Dollar strengthens

Spot gold is testing support at $1380/ounce. Breach would indicate a test of the rising trendline and support at $1350. Penetration of the trendline would warn that the rally is slowing and another test of primary support at $1200 is likely. But respect of the trendline remains as likely, and would offer a target of $1500*.

Spot Gold

* Target calculation: 1425 + ( 1425 – 1350 ) = 1500

Dollar Index

The Dollar Index encountered resistance at 82.50. Narrow consolidation or a short retracement would suggest a breakout — and another test of the July high at 84.75. Recovery of 63-day Twiggs Momentum above zero favors this, but respect of resistance would again test primary support at 80.50.
Dollar Index

Crude Oil

Nymex WTI light crude retreated below its new support level at $108/barrel, suggesting a test of the rising trendline and support at $103. Brent crude, however is advancing on the back of rising Middle East tensions and falling Libyan production. Expect resistance at the 2013 high of $118/119. Breach of the rising trendline is most unlikely for both Nymex and Brent — expect the up-trend to continue.

Brent Crude and Nymex Crude

* Target calculation: 108 + ( 108 – 98 ) = 118

Commodities

The Shanghai Composite Index [green line] continues its gentle rise, helping to support commodity prices. But tall shadows on the last two candles indicate selling pressure on Dow Jones-UBS Commodity Index. Reversal below 130 would warn of another test of primary support at 124/125.

Dow Jones UBS Commodities Index

* Target calculation: 130 + ( 130 – 125 ) = 135

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Commodities rise as the Dollar falls

Dollar Index

The Dollar Index is testing primary support at 80.50. Bearish divergence on weekly Twiggs Momentum warns of a primary down-trend and breach of support at 80.50 would confirm. Respect of support and recovery above 82, however, would indicate an up-swing to 84.50.
Dollar Index

Crude Oil

Nymex WTI light crude broke resistance at $108/barrel, as the Syrian conflict threatens to escalate. Expect an advance to $118/barrel*. Reversal below $108 is most unlikely, but would signal another test of the rising trendline. Brent crude similarly broke through $110, offering a target of $120.

Brent Crude and Nymex Crude

* Target calculation: 108 + ( 108 – 98 ) = 118

Commodities

Copper is headed for a test of $7500/tonne. Respect of resistance would indicate another test of long-term support at $6600/$6800. Upward breakout and penetration of the descending trendline would suggest the primary down-trend is ending, while breach of support at $6600 would signal continuation. Momentum oscillating mainly below zero still favors a down-trend.
Dow Jones UBS Commodities Index
The Shanghai Composite Index bear rally continues, causing a lift in commodity prices. Dow Jones-UBS Commodity Index completed a double-bottom reversal, with breakout above 130, offering a target of 135*. Penetration of the descending trendline also suggests the primary down-trend has ended.

Dow Jones UBS Commodities Index

* Target calculation: 130 + ( 130 – 125 ) = 135

Be cautious, however, as the Shanghai Composite faces resistance at 2150. Reversal below the rising trendline would warn of another primary down-swing; confirmed if support at 1950 is breached.
Dow Jones UBS Commodities Index

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Forex: Euro and Aussie retreat

The Euro retreated after a false break above resistance at $1.34, suggesting a test of $1.32. Downward breakout would signal a test of primary support at $1.28, while recovery above $1.34 would indicate a primary advance to $1.40*. Momentum predominantly above zero favors an up-trend.

Euro/USD

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

The greenback is testing the upper border of its downward channel against the Yen. Breakout above ¥98.50 would suggest the correction is over and another test of ¥101.50 likely. Respect of resistance, however, would indicate a test of primary support at ¥94; breach of support at ¥96 would confirm.

USD/JPY

* Target calculation: 102 + ( 102 – 96 ) = 108; 94 – ( 102 – 94 ) = 86;

The Aussie Dollar retreated below $0.90 against the greenback, respect of the descending trendline suggesting another down-swing. Breach of support at $0.8850* would offer a medium-term target of  $0.86*, but the long-term target remains at $0.80*.

Aussie Dollar

* Target calculations: 0.89 – ( 0.92 – 0.89 ) = 0.86; 0.95 – ( 1.10 – 0.95 ) = 0.80

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Gold tests $1350, Crude bullish

Gold found support at $1270/ounce before rallying to test $1350. Breakout would offer a target of $1430*, but reversal below $1270 is as likely and would signal a re-test of primary support at $1200.

Spot Gold

* Target calculation: 1350 + ( 1350 – 1270 ) = 1430

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Dollar Index

The Dollar Index remains in a downward trend channel, headed for a test of primary support at 80.50. Bearish divergence on weekly Twiggs Momentum warns of selling pressure. Respect of the upper channel would warn of a down-swing to 80.50. Upward breakout is less likely, but would suggest the correction is ending. Follow-through above 82.50 would strengthen the signal.
Dollar Index

Crude Oil

Nymex WTI light crude is consolidating below resistance at $108/barrel, while Brent crude consolidates below $110. Upward breakout is likely and would signal an advance to $118* and $120 respectively.

Brent Crude and Nymex Crude

* Target calculation: 108 + ( 108 – 98 ) = 118

Commodities

Copper respected support at $6600/ton and is rallying to test $7500 and the descending trendline. Upward breakout would suggest that a bottom is forming, while respect would warn of another test of $6600. Momentum oscillating below zero suggests continuation of the primary down-trend. Failure of support at $6600 would confirm.
Dow Jones UBS Commodities Index
A bear rally on Shanghai Composite Index [lime green] caused a lift in commodity prices. Dow Jones-UBS Commodity Index recovered above long-term support at 126, suggesting a rally to 130. Breakout is unlikely, but would offer a target of 136*. The primary trend is down and reversal below 124 would suggest a long-term decline to the 2009 low at 100*.

Dow Jones UBS Commodities Index

* Target calculation: 125 – ( 150 – 125 ) = 100; 130 + ( 130 – 124 ) = 136

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Gold and commodities falling while Dollar weakens

Gold is drifting lower after breaking support at $1300/ounce. Penetration of support at $1270 would signal a re-test of primary support at $1200, but reversal above $1300 remains as likely and would indicate another test of $1350. Breakout above $1350 would target $1400.

Spot Gold

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The Gold Bugs Index, representing un-hedged gold stocks, continues its sharp fall. Follow-through below 200 would indicate a test of the 2008 low at 160 — a bearish sign for the spot metal.

Spot Gold

Dollar Index

The Dollar Index is heading for a test of primary support at 80.50. Respect of the rising trendline would be a bullish sign, but bearish divergence (and reversal below zero) on weekly Twiggs Momentum warns of weakness. Breach of 80.50 would signal a primary down-trend.
Dollar Index

Crude Oil

Nymex WTI light crude twice respected resistance at $108/barrel. Reversal below last week’s low at $103 would warn of a test of $98, while respect would suggest another strong advance. Brent crude is likely to track its US counterpart closely.

Brent Crude and Nymex Crude

* Target calculation: 98 + ( 98 – 86 ) = 110

Commodities

Copper is testing long-term support at $6800/ton. Follow-through below $6600 would confirm another primary decline.
Dow Jones UBS Commodities Index
The Shanghai Composite Index is holding above its 2012 low  at 1950, but further weakness is likely and would drive commodity prices lower. Dow Jones-UBS Commodity Index breached long-term support at 125/126, offering a target of the 2009 low at 100*. Not good news for Australian resources stocks, even if the impact is cushioned by a falling Aussie Dollar.

Dow Jones UBS Commodities Index

* Target calculation: 125 – ( 150 – 125 ) = 100

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