Category: Forex

Coverage of all major currencies and the US Dollar Index.

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Forex: Australia, Canada and South Africa

The Australian dollar has tracked the CRB Commodities Index fairly closely since 2009. Weakening commodity prices warn that the Aussie is likely to follow.

CRB Commodities Index and Australian Dollar

Against the US dollar, the Aussie is headed  for another test of support at $1.02. Reversal of 63-day Twiggs Momentum below zero warns of a primary down-trend. Failure of support at $1.02 would confirm this, offering an initial target of $0.99.

Australian Dollar

* Target calculation: 1.02 – ( 1.05 – 1.02 ) = 0.99

Canada’s Loonie is in a primary up-trend against the Aussie dollar — as signaled by the 63-day Twiggs Momentum cross to above zero. Breakout above $0.982 completes a bullish ascending triangle formation with a target of parity.

Canadian Dollar

* Target calculation: 0.98 + ( 0.98 – 0.96 ) = 1.00

The Aussie is also weakening against the South African Rand. Cross of 63-day Twiggs Momentum below zero warns of a primary down-trend. Failure of support at R7.90 would confirm, offering an initial target of R7.50*.

South African Rand

* Target calculation: 8.00 – ( 8.50 – 8.00 ) = 7.50

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Gold and Dollar indicate uncertainty

Spot Gold continues its consolidation between $1600 and $1700 per ounce, while testing the long-term rising trendline.  Recovery above $1700 would suggest another primary advance; confirmed if an inverted head and shoulders formation is completed by a rise above $1800. 63-Day Twiggs Momentum oscillating around zero indicates uncertainty, however, and failure of support at $1600 would warn of a long-term trend change and test the primary level at $1500.

Spot Gold

* Target calculation: 1800 + (1800 – 1600) = 2000; 1500 – (1800 – 1500) = 1200

The US Dollar Index reflects the inverse of gold, with a potential triple bottom threatening to end the long-term down-trend on the Monthly chart. 50-Week Twiggs Momentum is oscillating around the zero line, indicating uncertainty.

US Dollar Index Monthly Chart

On the weekly chart, the dollar has met strong resistance at 80 and reversal below support at 78 would  warn of another test of the 2011 low at 73. Reversal of 63-day Twiggs Momentum below zero would strengthen the bear signal.

US Dollar Index Weekly Chart

* Target calculation: 82 + ( 82 – 78 ) = 86; 78 – ( 82 – 78 ) = 74

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Forex: Japanese Yen

The greenback is consolidating between ¥80 and ¥82 against the Japanese Yen. Recovery above ¥82 would indicate a fresh primary advance, with a target of ¥90*. Respect of zero by 63-day Twiggs Momentum would confirm a strong primary up-trend.

USD/Japanese Yen

* Target calculation: 85 + ( 85 – 80 ) = 90

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Forex: Euro and Pound Sterling

The euro continues to test medium-term support at $1.30. With the dollar currently “the best horse in the glue factory”, support is likely to fail, signaling a re-test of the primary level at $1.26. A 63-day Twiggs Momentum peak below zero would indicate continuation of the primary down-trend; failure of primary support would confirm.

Euro

* Target calculation: 1.26 – ( 1.35 – 1.26 ) = 1.17

Sterling is testing resistance at $1.62. Recovery of 63-day Twiggs Momentum above zero indicates a primary advance, but news that the UK has dipped back into recession may inhibit further gains. Reversal below the rising trendline would warn of another test of primary support at $1.53, while breakout above $1.62 would signal an advance to the 2011 high of $1.67.

Pound Sterling

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Forex: Canada's Loonie breaks out

The Loonie broke through resistance at $1.01 against the greenback, indicating an advance to the 2011 high of $1.06. This confirms the earlier signal when 63-day Twiggs Momentum recovered above zero.

Canadian Dollar/USD

* Target calculation: 1.01 + ( 1.01 – 0.96 ) = 1.06

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Dollar and gold test key support levels

The Dollar Index continues to struggle with resistance at 80. Reversal below 78 would signal the end of the primary up-trend and a re-test of the 2011 low. Reversal of 63-day Twiggs Momentum below zero would strengthen the warning, while respect would indicate another primary advance.

US Dollar Index

* Target calculation: 82 + ( 82 – 78 ) = 86

Spot Gold failed to respond to the listless dollar, testing the long-term trendline and support at $1600/ounce. 63-Day Twiggs Momentum oscillating around the zero line indicates indecision. Recovery above $1700 would indicate a fresh primary advance, while failure of $1600 would warn of a primary down-trend — with a long-term target of $1200*.

Spot Gold

* Target calculation: 1800 + ( 1800 – 1600 ) = 2000; 1500 – ( 1800 – 1500 ) = 1200

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Forex: Canadian Loonie and Aussie Dollar

Canada’s Loonie continues its narrow consolidation, having withstood falling crude oil prices over the last two weeks. 63-Day Twiggs Momentum holding above zero indicates a primary up-trend. Breakout above $1.01 would signal a primary advance to the 2011 high of $1.06*. Failure of support at $0.995 is less likely but would warn of a correction to primary support at $0.95.

Canadian Loonie

* Target calculation: 1.01 + ( 1.01 – 0.96 ) = 1.06

Weaker commodity prices are dragging the Aussie Dollar lower. On the weekly chart we can see the Aussie testing medium-term support at $1.02. Respect of the zero line by 63-day Twiggs Momentum suggest a strong up-trend. In the longer term, breakout above $1.085 would offer a target of $1.20*.

Aussie Dollar

* Target calculation: 1.08 + ( 1.08 – 0.96 ) = 1.20

On the daily chart, the Aussie Dollar is testing resistance at $1.045. Breach of its descending trendline indicates that the correction has weakened. Recovery above $1.045 would indicate the start of a fresh advance to test the 2012 high of $1.085.

Aussie Dollar

The Aussie Dollar is also retracing for another test of support against the South African Rand — at R7.90/R8.00. Momentum has fallen sharply and failure of support would warn of a correction to the long-term ascending trendline, around R7.50.

Aussie Dollar/South African Rand

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Forex: Euro, Pound Sterling and Yen

The Euro is consolidating above support at $1.30. Failure would test  primary support at $1.26. A 63-day Twiggs Momentum peak below zero would indicate continuation of the primary down-trend. In the long term, failure of $1.26 would signal a decline to the 2010 low of $1.19/$1.20*.

Euro

* Target calculation: 1.26 – ( 1.34 – 1.26 ) = 1.18

Pound Sterling is consolidating below resistance at $1.60. Upward breakout would indicate an advance to the 2011 high of $1.67 — confirmed if resistance at  $1.62 is penetrated — while failure of short-term support at $1.58 would warn of another test of primary support at $1.53. 63-Day Twiggs Momentum above zero indicates a primary up-trend; but this would only be confirmed by breakout above $1.62.

Pound Sterling

The US Dollar is testing support at ¥80, against the Japanese Yen. Respect is likely and recovery above ¥82 would indicate a fresh primary advance.  Penetration of resistance at ¥84 would confirm the primary up-trend already signaled by 63-day Twiggs Momentum above zero.

Japanese Yen

* Target calculation: 85 + ( 85 – 80 ) = 90

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Gold, Silver and the Dollar

The Dollar Index met strong resistance at 80.00 and is likely to re-test support at 78.00. Upward breakout would signal continuation of the primary up-trend, while failure of support would warn of reversal to a down-trend. In the longer term, breakout above 82.00 would offer a target of 86.00*. Respect of the zero line by 63-day Twiggs Momentum would reinforce the primary up-trend, while breach would indicate a primary down-trend.

US Dollar Index

* Target calculation: 82 + ( 82 – 78 ) = 86

Gold continues to test the long-term trendline at $1600/ounce. 63-Day Twiggs Momentum oscillating around the zero line highlights uncertainty. Failure of support at $1600 would warn that the decade-long up-trend is weakening, while breach of primary support at $1500 would confirm. Recovery above $1700, however, would indicate another test of $1800, suggesting the start of a new up-trend. Breakout above $1800 would confirm, offering a target of $2000/ounce*.

Spot Gold

* Target calculation: 1800 + ( 1800 – 1600 ) = 2000; 1500 – (1800 – 1500 ) = 1200

The Gold Bugs Index, representing un-hedged gold stocks, is already in a primary down-trend, suggesting that spot prices are likely to follow. Peaks below zero on 63-day Twiggs Momentum also indicate a strong down-trend.

Gold Bugs Index

Spot silver is also in a primary down-trend, having encountered strong resistance at $36/ounce. A medium-term descending triangle warns of further weakness. Failure of primary support at $26 would indicate a decline to $20*.

Silver

* Target calculation: 27.50 – (35 – 27.50 ) = 20

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Forex: Euro, Pound Sterling and Yen

The Euro is again testing support at $1.30. The short weekly candle at the support level warns of a downward breakout to test primary support at $1.26. A 63-day Twiggs Momentum peak below zero would suggest continuation of the primary down-trend. In the long term, failure of $1.26 would signal a decline to $1.18*.

Euro

* Target calculation: 1.26 – ( 1.34 – 1.26 ) = 1.18

Pound Sterling ran into resistance at $1.60 and failure of short-term support at $1.58 would test $1.56. Recovery of 63-day Twiggs Momentum above zero suggests reversal to a primary up-trend; but this would only be confirmed by breach of resistance at $1.62.

Pound Sterling

The US Dollar is correcting against the Japanese Yen, headed for a test of support at ¥80. Respect would indicate a primary up-trend; confirmed if resistance at ¥84 is broken. A 63-day Twiggs Momentum trough above zero would strengthen the signal.

Japanese Yen

* Target calculation: 85 + ( 85 – 80 ) = 90

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