Forex Archives - Page 41 of 59 - the patient investor

January 24, 2013

Sterling: double top warns of fall

Gavyn Davies writes on BOE governor Mervyn King’s UK economic policy speech on Tuesday in FT Blogs:

The governor gives an extremely broad hint that he would like sterling to be much lower against other currencies. In his view, the drop of 25 per cent in sterling, which happened between late 2007 and the beginning of 2009, was “certainly necessary” for a full rebalancing of the UK economy.

If we take a look at the long-term view, sterling is ranging in a narrow band against the greenback after a sharp fall in 2008. 63-day Twiggs Momentum oscillating close to the zero line (within 5%) is typical of a ranging market.
Pound Sterling/USD
Completion of a double top on the weekly chart signals a down-swing to primary support at $1.53*. 63-day Twiggs Momentum below zero strengthens the signal.

* Target calculation: 1.58 – ( 1.63 – 1.58 ) = 1.53

Colin Twiggs

Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

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.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.

January 24, 2013

Aussie Dollar tests support

Staying with long-term, monthly charts we can see the Aussie Dollar consolidating in a narrow range below resistance at $1.06. Oscillation of 63-day Twiggs Momentum close to zero also indicates a ranging market. Upward breakout is more likely and would signal an advance to $1.10*, while reversal below $1.02 would re-test primary support at $0.96.

Aussie Dollar/USD

* Target calculation: 1.06 + ( 1.06 – 1.02 ) = 1.10

On the daily chart, the Aussie is testing support at $1.05. Failure would signal another correction to test $1.02, while respect would suggest breakout above $1.06 — and a long-term advance to $1.10.

Aussie Dollar/USD

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

January 24, 2013

Euro up-trend

The Euro is headed for a test of resistance at $1.35 on the monthly chart. Breakout would confirm the primary up-trend. Rising 63-day Twiggs Momentum (above zero) strengthens the signal. Reversal below $1.30 and the rising trendline, however, would indicate another test of primary support at $1.20.

Euro/USD

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

January 17, 2013

Euro advances

The Euro is advancing against the weakening dollar. Target for the advance is the long-term declining trendline on the monthly chart — around $1.40. A primary up-trend is signaled by 63-day Twiggs Momentum recovery above zero.

Euro/USD

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

January 17, 2013

Sterling breaks euro support

Pound Sterling broke support at €1.23 on the weekly chart against the euro. Decline of 63-day Twiggs Momentum below zero warns of a primary down-trend. Breach of the rising trendline strengthens the signal.

Pound Sterling

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

January 17, 2013

Aussie Dollar threatens breakout

The Aussie Dollar is testing long-term resistance at $1.06 on the weekly chart. Breakout is likely and would signal an advance to $1.10*. Oscillation of 63-day Twiggs Momentum above zero suggests a primary up-trend.

Aussie Dollar/USD

* Target calculation: 1.06 + ( 1.06 – 1.02 ) = 1.10

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

January 17, 2013

Gold and the dollar

Gold is undergoing a correction on the weekly chart. Declining momentum and breach of the long-term rising trendline suggest that the 5-year bull-trend is ending, but recovery above $1700 per ounce would indicate one more attempt at $1800 resistance. Respect of $1700, however, would indicate a test of primary support at the May 2012 low at $1525.

Spot Gold

The Dollar Index respected resistance at 81 and is likely to re-test primary support at 78.50. Twiggs Momentum oscillating below zero already indicates a primary down-trend — confirmed if primary support is broken. Recovery above 81.50 remains unlikely, but would indicate an advance to 84.

US Dollar Index

* Target calculation: 78.5 – ( 81.5 – 78.5 ) = 75.5

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

January 4, 2013

Currency manipulation cost US economy up to 5 million jobs

Extract from a research brief by by C. Fred Bergsten and Joseph E. Gagnon, at Peterson Institute for International Economics, published December 2012:

More than 20 countries have increased their aggregate foreign exchange reserves and other official foreign assets by an annual average of nearly $1 trillion in recent years. This buildup — mainly through intervention in the foreign exchange markets — keeps the currencies of the interveners substantially undervalued, thus boosting their international competitiveness and trade surpluses. The corresponding trade deficits are spread around the world, but the largest share of the loss centers on the United States, whose trade deficit has increased by $200 billion to $500 billion per year. The United States has lost 1 million to 5 million jobs as a result of this foreign currency manipulation.

Hat tip to Simon Kennedy at Bloomberg.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

December 6, 2012

Sterling threatens euro down-trend

Pound Sterling broke its long-term rising trendline against the euro and is testing support at €1.225 on the weekly chart. Retreat of 63-day Twiggs Momentum below zero warns of a primary down-trend. Breach of support would confirm. Respect of support is most unlikely, but would test €1.260 in the medium-term.

Pound Sterling

* Target calculation: 1.23 – ( 1.28 – 1.23 ) = 1.18

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

December 6, 2012

Aussie Dollar bullish consolidation

The Aussie Dollar is consolidating in a narrow range below resistance at $1.05 — a bullish sign. Breakout would indicate a test of long-term resistance at $1.06. Rising 63-day Twiggs Momentum, above zero, indicates a primary up-trend. In the long-term, breakout above $1.06 would offer a target of $1.10* but the RBA may take measures to prevent further appreciation. Reversal below $1.04 and the rising trendline is unlikely, but would warn of a correction to test primary support at $1.015.

Aussie Dollar/USD

* Target calculation: 1.06 + ( 1.06 – 1.02 ) = 1.10

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.