The US Dollar Index continues to respect support at 81.00, indicating another test of resistance at 83.50 on the Weekly chart. Breakout would offer a target of 86.00*. 63-Day Twiggs Momentum oscillating above the zero line indicates a healthy up-trend.
* Target calculation: 82 + ( 82 – 78 ) = 86
Spot Gold similarly respected support at $1530 per ounce and is headed for a test of $1640/$1650. Confidence in the introduction of QE3 has strengthened support. Breakout above $1640 would indicate a rally to $1800. 63-Day Twiggs Momentum below zero, however, warns of a primary down-trend. Breach of primary support at $1530 would confirm.
* Target calculation: 1550 – ( 1800 – 1550 ) = 1300
The 2-Hour chart displays a flag formation over the last two days. Upward breakout (above 1620) would signal a test of $1640.
* Target calculation: 1620 – ( 1620 – 1600 ) = 1640
Brent Crude retraced sharply to test resistance at $100 per barrel, fueled by rising hope of recovery in Europe and tensions with Iran. Penetration of the declining trendline would suggest that a bottom is forming. Respect of resistance, however, would indicate a decline to $80, with the long-term target at $75*. A 63-day Twiggs Momentum peak below zero would strengthen the bear signal.
* Target calculation: 100 – ( 125 – 100 ) = 75
Crude is not the only commodity driving prices higher. The CRB Non-Energy Commodities Index is testing its upper standard deviation channel. Breakout would indicate that a bottom is forming. Recovery of 63-day Twiggs Momentum above zero would complete a bullish divergence, indicating reversal to a primary up-trend. Respect of the upper trend channel, on the other hand, would indicate a decline to 240*.
* Target calculation: 260 – ( 280 – 260 ) = 240
