Forex Archives - Page 41 of 59 - the patient investor

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

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 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.

December 5, 2012

Gold breaks $1700

Gold broke support at $1700 per ounce, indicating a test of primary support at $1675. Breakout would offer an initial target of $1600*, with a long-term target of the May 2012 low at $1525. Declining 63-day Twiggs Momentum indicates weakness but values above zero still reflect a primary up-trend and the weakening dollar suggests strong support.

Spot Gold

* Target calculation: 1675 – ( 1750 – 1675 ) = 1600

The Dollar Index broke medium-term support at 80 on the weekly chart while the dollar is approaching its September low against the euro. The 63-day Twiggs Momentum peak below zero indicates a primary down-trend — confirmed if primary support at 78.50 is broken. Recovery above 81.50 is most unlikely but would indicate an advance to 84.

US Dollar Index

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

The daily chart shows retracement to confirm resistance at 80.

US Dollar Index

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.

November 29, 2012

Gold long tail as dollar retreats

Yesterday’s long tail on the spot gold daily chart indicates support at $1700 per ounce. Recovery above $1750 would signal another test of $1800. 63-Day Twiggs Momentum well above zero continues to indicate a healthy up-trend. A weakening dollar would strengthen the signal.

Spot Gold

* Target calculation: 1800 + ( 1800 – 1700 ) = 1900

The Dollar Index (weekly chart) is testing medium-term support at 80. Failure would threaten a head-and-shoulders reversal. Breach of primary support at 78.50 would offer a target of 74*. 63-Day Twiggs Momentum holding below zero already suggests a primary down-trend. Recovery above 81.50 is unlikely but would indicate an advance to 84.

US Dollar Index

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

The DJ-UBS Commodity Index (weekly chart) respected support at 140, helped by the weaker dollar. 63-Day Twiggs Momentum above zero suggests a primary up-trend but reversal would re-test primary support at 126.

DJ-UBS Commodity Index

Nymex WTI Light Crude and ICE Brent Crude both trend downwards but the gap between the two is widening. Middle East tensions affect Brent Crude supply more than its West Texas cousin. 63-Day Twiggs Momentum holding below zero warns of a primary down-trend. Breach of primary support would confirm: WTI at $78 per barrel and Brent Crude at $90.

Nymex WTI Light Crude

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.

November 28, 2012

Euro recovers

The Euro is testing its long-term descending trendline in response to the weakening dollar. Breakout above $1.315/$1.32 would confirm the primary up-trend signaled earlier by 63-day Twiggs Momentum recovery above zero.

Euro/USD

* Target calculation: 1.315 + ( 1.315 – 1.265 ) = 1.365

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.

November 28, 2012

Aussie Dollar tests $1.05

The Aussie Dollar found short-term support at $1.04 and is testing medium-term resistance at $1.05. Breakout would indicate a test of long-term resistance at $1.06. Oscillation of 63-day Twiggs Momentum above zero suggests a primary up-trend. In the long-term, breakout above $1.06 would offer a target of $1.10* but the RBA is likely to take measures to counter further appreciation.

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.

November 22, 2012

Sterling threatens euro support

Pound Sterling is headed for another test of support at €1.225/€1.230 on the weekly chart against the euro. Reversal of 63-day Twiggs Momentum below zero warns of a primary down-trend. Breach of support and the rising trendline would confirm the signal. Respect of support is unlikely, but would test €1.260 in the medium-term.

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.

November 22, 2012

South African Rand weakens on mining unrest

Continued clashes between rival mining unions fueled further weakening of the South African Rand against the greenback.

South African Rand

Rising 63-day Twiggs Momentum reflects a strong primary up-trend. Breakout above R9.00 would offer a medium-term target of R9.50. In the long-term, the next major resistance level is the 2008 high of R11.00.

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.