Spot gold is likely to rally to $1400/ounce before encountering strong resistance, from patient sellers. Bullish divergence on 13-week Twiggs Momentum strengthens the signal. Momentum breakout above zero would suggest a primary up-trend, but breach of $1400 seems a long way off. Retracement that respects new support at $1250 would strengthen the rally.
The Dow Jones-UBS Commodity Index followed through above resistance at 128, after breaking its descending trendline, completing a double bottom reversal with a target of 134*. Breakout above 134 would confirm a primary up-trend.
* Target calculation: 128 + ( 128 – 122 ) = 134
Nymex Light Crude followed, completing a large double bottom reversal, with a target of $110/barrel*. Recovery of 13-week Momentum above zero indicates a primary up-trend. Brent crude continues to range between $106 and $112/barrel.
* Target calculation: 100 + ( 100 – 90 ) = 110
Rising commodity prices suggest that the global economy is recovering, but copper (widely considered a bellwether for the global economy) has yet to follow. Bullish divergence on 13-week Twiggs Momentum favors an upward breakout. Breakout above $7500/tonne (and the descending trendline) would signal a primary up-trend.
The Gold Bugs Index followed through above 225 after breaking its descending trendline, suggesting that a bottom is forming. Bullish divergence on 13-week Twiggs Momentum strengthens the signal. Reversal below 210 is unlikely, but would re-test primary support at 190.
Spot gold similarly followed-through above 1280, suggesting a bottom. Again, bullish divergence on 13-week Twiggs Momentum strengthens the signal. Another retracement to find support is likely before there is a serious attempt at the September 2013 high of 1430, which would complete a large double bottom. Reversal below 1240 is unlikely, but would warn of another test of primary support at 1180.
Silver is likely to follow gold. Breakout above $20.50 would suggest another test of $25.00/ounce.
Nymex Light Crude is testing resistance at $100/barrel. Breakout would complete a double bottom reversal, offering a target of $108/barrel*. Respect of resistance, however, would suggest another test of primary support at $92. Recovery of US stocks would lift crude prices in anticipation of increased demand. Brent crude is more directionless, affected by both UK North Sea supply concerns as well as reports of increased output from Libya.
* Target calculation: 100 + ( 100 – 92 ) = 108
Copper prices, bellwether for the global economy, have been consolidating in a narrow band for almost a year. Breakout above $7500/tonne (and the descending trendline) would indicate a primary up-trend. Reversal below support at $6800/tonne, however, would offer a target of $6000. Narrow oscillation of 13-week Twiggs Momentum around zero reflects the current indecision.
The monthly chart below illustrates how the Shanghai Composite Index tends to lead broad commodity prices by up to 12 months. The Dow Jones-UBS Commodity Index is testing its descending trendline, but another decline on the Shanghai Index would likely cause further weakness. Recovery above 135 is unlikely at present, but would suggest a primary up-trend.
The Gold Bugs Index broke its descending trendline on the weekly chart and shows a bullish divergence on 13-week Twiggs Momentum. Both suggest reversal to a primary up-trend, but first we are likely to see a re-test of support at 190. Respect of 190 followed by recovery above the recent high at 225 would strengthen the reversal signal.
Spot gold displays a similar penetration of the descending trendline and bullish divergence on 13-week Twiggs Momentum, suggesting that a bottom is forming. Follow-through above 1280 would strengthen the signal. Reversal below 1240, however, would warn of another test of primary support at 1180. Breach of 1180 is unlikely, but would offer a target of 1000*.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
The silver chart, consolidating above primary support at $18/ounce, is mimicking gold. Recovery above $20.50 would also suggest that a bottom is forming.
Nymex Light Crude is headed for another test of resistance at $100/barrel. Respect of resistance is likely, given the primary down-trend, and would suggest another test of primary support at $92/barrel. Breach of primary support would offer a target of $84/barrel*. Recovery above $100 is unlikely and another 13-week Twiggs Momentum peak below zero would strengthen the bear signal. Brent crude is headed for another test of support at $104/barrel. Breach would join Nymex crude in a primary down-trend.
* Target calculation: 92 – ( 100 – 92 ) = 84
Nymex Light Crude found support at $92/barrel. Penetration of the descending trendline would suggest trend weakness, while respect would signal another test of primary support at $92/barrel. Breach of primary support would offer a target of $84/barrel*. Recovery above $100 is unlikely and another 13-week Twiggs Momentum peak below zero would indicate a strong down-trend. Brent crude continues to drift sideways, reflecting global supply constraints; breach of $104 would warn of a down-trend.
* Target calculation: 92 – ( 100 – 92 ) = 84
The Gold Bugs Index, representing un-hedged gold stocks, is often a leading indicator of spot prices. Bullish divergence on 13-week Twiggs Momentum and breach of the descending trendline suggest that a bottom is forming. Only recovery above 280 would signal a primary reversal at present, but another retracement that respects support at 190 would change that.
Spot gold broke resistance at $1250/ounce and we should expect retracement to test the new support level. Bullish divergence on 13-week Twiggs Momentum and breach of the descending trendline suggest that a bottom is forming. We may face an extended consolidation if falling interest rates boost gold while a stronger dollar exerts downward pressure. Failure of $1200 is now unlikely, but would warn of a decline to 1000*.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Nymex crude continues its downward trend. Respect of the descending trendline would warn of further weakness, while breach of support at $92 would indicate a decline to $84/barrel*. Recovery above $100 is unlikely, with 13-week Twiggs Momentum declining below zero. Brent crude continues its consolidation above $105, reflecting global supply constraints. Breach of $105 would warn of a down-trend.
* Target calculation: 92 – ( 100 – 92 ) = 84
Commodities also continue their primary down-trend, encouraged by a falling Shanghai Composite Index. Bullish divergence on Dow Jones-UBS Commodity Index 13-week Twiggs Momentum, however, warns that a bottom is forming. Breach of the descending trendline would strengthen the signal — as would recovery of Momentum above zero. Breakout above 128 would signal a primary up-trend: a bullish sign for resources stocks.
