Dollar tests support, gold and commodities strengthen

The US Dollar Index made a false break above resistance at 83.50 before retracing to test support at 81.50. Respect of support and the rising trendline would confirm the primary up-trend is intact. Breakout above 83.50/84.00 would signal an advance to 86.00* in the next few weeks and to the 2010 high at 88.50 in a few months. Another 63-day Twiggs Momentum trough above zero would reinforce the healthy up-trend. Failure of support at 81.50 is unlikely, but would warn of a trend reversal.

US Dollar Index

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

Spot Gold continues to consolidate on the weekly chart between $1530 and $1650 per ounce. 63-Day Twiggs Momentum below zero warns of a primary down-trend. Recovery above zero, however, would confirm that a bottom is forming. Breakout below primary support at $1530 would offer a target of $1300*; recovery above $1640 would indicate an advance to $1800.

Spot Gold Weekly Chart

* Target calculation: 1550 – ( 1800 – 1550 ) = 1300

The daily chart displays a symmetrical triangle formation. Breakout would indicate direction of the next primary move. The failed down-swing — with a reversal short of the lower border — suggests an upward breakout. Follow-through above 1640 would confirm.

Spot Gold

 

The CRB Commodities Index broke its descending trendline, indicating that a bottom is forming. Breakout above medium-term resistance at 305, strengthening the signal, would test 325. Reversal below 295, however, would suggest another test of 265. Recovery of 63-Day Twiggs Momentum above zero would also suggest a primary up-trend.

CRB Commodities Index

Brent Crude has already penetrated its descending trendline, suggesting that a bottom is forming. Follow-through above $108 strengthens the signal. Recovery of 63-day Twiggs Momentum above zero would indicate a primary up-trend, while a peak below zero would signal a decline to $75 per barrel*.

ICE Brent Crude Afternoon Markers

* Target calculation: 100 – ( 125 – 100 ) = 75

Dollar and gold strengthen

The US Dollar Index broke resistance at 83.50, signaling continuation of the primary advance to the 2010 high at 88.50, with an interim target of 86.00*. 63-Day Twiggs Momentum oscillating above zero reinforces the up-trend.

US Dollar Index

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

Spot Gold shows strong support at $1530 per ounce and penetration of the descending trendline now suggests that a bottom is forming — possibly in anticipation of further QE by the Fed. 63-Day Twiggs Momentum below zero continues to warn of a primary down-trend, while recovery above zero would confirm that a bottom is forming. Breakout below primary support at $1530 would offer a target of $1300*; recovery above $1640 would indicate a new up-trend.

Spot Gold

* Target calculation: 1550 – ( 1800 – 1550 ) = 1300

Spot Silver is weaker and continues to test primary support at $26 per ounce. Failure would offer a target of $16*.

Spot Silver

* Target calculation: 26 – ( 36 – 26 ) = 16

The CRB Commodities Index is testing its descending trendline. Breakout would warn that the down-trend is ending, but reversal below 295 would suggest another test of 265. The S&P 500 is likely to follow commodities lower.

CRB Commodities Index

* Target calculation: 265 – ( 305 – 265 ) = 225

Brent Crude has already penetrated its descending trendline, suggesting that a bottom is forming, but 63-day Twiggs Momentum continues to indicate a primary down-trend. A peak below zero would signal a primary decline to $75 per barrel*.

Brent Crude and Nymex WTI Light Crude

* Target calculation: 100 – ( 125 – 100 ) = 75

Rising dollar but commodities strengthen

The rising dollar suggests weaker gold and commodity prices. The US Dollar Index continues to test resistance at 83.50. Breakout would target the 2010 high at 88.50, with an interim target of 86*, while respect would test support at 81.50. 63-Day Twiggs Momentum oscillating above zero indicates a strong up-trend.

US Dollar Index

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

Spot Gold continues to test primary support at $1530 per ounce, while 63-day Twiggs Momentum below zero warns of a primary down-trend. Breakout would offer a target of $1300*. QE3, however, would start a new up-trend.

Spot Gold

* Target calculation: 1550 – ( 1800 – 1550 ) = 1300

Spot Silver is similarly testing primary support at $26 per ounce. Failure would offer a target of $16*.

Spot Silver

* Target calculation: 26 – ( 36 – 26 ) = 16

Commodities, and not just crude oil, however, have rallied strongly. 63-Day Twiggs Momentum oscillating below zero indicates a strong down-trend and CRB Commodities Index respect of its descending trendline would warn of a decline to 240*. Penetration above the trendline is unlikely, but would suggest that a bottom is forming.

CRB Commodities Index

* Target calculation: 270 – ( 300 – 270 ) = 240

Brent Crude has already penetrated its descending trendline, suggesting that a bottom is forming, but 63-day Twiggs Momentum continues to indicate a primary down-trend. Recovery of the indicator above zero would strengthen the bull signal, while a peak below zero would signal a primary decline to $75 per barrel*.

Brent Crude and Nymex WTI Light Crude

* Target calculation: 100 – ( 125 – 100 ) = 75

Dollar rises, gold and silver threaten support

The US Dollar Index rallied to test resistance at 83.50. Breakout would target the 2010 high of 88.00. 63-Day Twiggs Momentum oscillating above the zero line indicates a strong up-trend.

US Dollar Index

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

Spot Gold is consolidating above primary support at $1530 per ounce. 63-Day Twiggs Momentum below zero signals a primary down-trend. Downward breakout would offer a target of $1300*……. unless the Fed introduces QE3.

Spot Gold

* Target calculation: 1550 – ( 1800 – 1550 ) = 1300

Spot Silver is similarly testing primary support at $26 per ounce. Breakout would offer a target of $16*….. again with the QE3 caveat.

Spot Silver

* Target calculation: 26 – ( 36 – 26 ) = 16

Commodities continue in a primary down-trend, warning of a global economic down-turn. Respect of resistance at 295 by the CRB Commodities Index would warn of another primary decline, with a target of 235*. 63-Day Twiggs Momentum oscillating below zero indicates a strong down-trend. Penetration of the descending trendline is unlikely, but would suggest that a bottom is forming.

CRB Commodities Index

* Target calculation: 265 – ( 295 – 265 ) = 235

Brent Crude is also testing resistance — and the descending trendline — at $100 per barrel. Respect would indicate another decline, with a target of $75 per barrel*. There are two wild cards that could impact on price: tensions with Iran and QE3.

Brent Crude and Nymex WTI Light Crude

* Target calculation: 100 – ( 125 – 100 ) = 75

The gold-oil ratio (measured against Brent crude) is close to its mid-point of 15.0, offering little in the way of overbought/oversold readings for gold over the last  few years (after a false overbought reading — above 20 — in 2009).

Gold/Brent Crude Ratio

Commodities rebound

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.

US Dollar Index

* 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.

Spot Gold

* 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.

Spot Gold

* 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.

ICE Brent Afternoon Markers

* 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*.

CRB Commodities (ex-Energy) Index

* Target calculation: 260 – ( 280 – 260 ) = 240

Dollar rebound drives gold and commodities lower

The US Dollar Index respected support at 81.00 and is headed for resistance at 83.50. Breakout would offer a target of 86.00*. 63-Day Twiggs Momentum oscillating above the zero line indicates a healthy up-trend.

US Dollar Index

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

Spot Gold retreated below support at $1600/ounce. 63-Day Twiggs Momentum reversal below zero signals a primary down-trend. Breach of primary support at $1530 would confirm. Introduction of QE3 by the Fed, however, would commence a new up-trend.

Spot Gold

* Target calculation: 1550 – ( 1800 – 1550 ) = 1300

The primary down-trend on CRB Commodities Index is unlikely to change unless we see the introduction of QE3. Declining 63-day Twiggs Momentum below zero indicates a strong primary down-trend.

CRB Commodities Index

* Target calculation: 270 – ( 290 – 270 ) = 250

Brent Crude and Nymex WTI Light Crude both offer a target of $75 per barrel. After falling sharply over the last few months, the gap has narrowed to just over $10 per barrel — from a peak of $25 in October 2011. Rapidly expanding gas and oil reserves are driving North American prices lower, while gloomy prospects for European economies have crimped demand for Brent Crude.

Brent Crude and Nymex WTI Light Crude

* Target calculation: 100 – ( 125 – 100 ) = 75

Australia: ASX 200

A monthly chart of the ASX 200 shows how the index tends to peak ahead of the CRB Commodities Index and Australian Dollar but then fall in step with them from there on. The ASX 200 was first to reverse direction in 2011 but commodities now lead the way. Expect Australian stocks — and the Aussie Dollar — to follow commodities lower. Breach of primary support at 3850 would offer a target of 3200*.

ASX 200, CRB Commodities Index, AUDUSD - Monthly Chart

* Target calculation: 3800 – ( 4400 – 3800 ) = 3200

On the daily chart, breach of support at 3980/4000 would signal a test of primary support at 3850. Reversal of 21-day Twiggs Money Flow below zero, warning of medium-term selling pressure, increases the likelihood of a downward breakout.

ASX 200 Index

* Target calculation: 4000 – ( 4150 – 4000 ) = 3850

Rising Dollar suggests lower gold and commodities

The Dollar Index is testing medium-term support at 81.00/81.50. Respect would confirm a healthy primary up-trend. Reversal below the rising trendline is unlikely, but would indicate trend weakness. Another trough above zero on 63-day Twiggs Momentum would strengthen the bull signal.

Dollar Index

* Target calculation: 81 + ( 81 – 78 ) = 84

Gold displays strong buying support above $1500 with four long tails on the weekly chart. Recovery above $1700/ounce would suggest a new primary up-trend, but the rising dollar warns of weakness. Reversal below $1600 would strengthen the bear signal from 63-day Twiggs Momentum declining below zero.

Spot Gold

* Target calculation: 1550 – ( 1800 – 1550 ) = 1300

Brent crude is consolidating after breaking support at $100/barrel. Respect of the new resistance level would warn of another decline, while reversal would test $110.

IPE Brent Afternoon Markers

* Target calculation: 100 – ( 125 – 100 ) = 75

The Nymex WTI Light Crude is similarly consolidating below $85/barrel. Respect of the new resistance level would indicate a decline to $75/76 per barrel.

Nymex WTI Light Crude

The broader CRB Commodities Index found short-term support at 265 as the dollar weakened, but is likely to follow through to long-term support at 250 as the greenback strengthens. 63-Day Twiggs Momentum oscillating below zero warns of a strong down-trend.

CRB Commodities Index

Dollar, gold, crude oil and commodities

The Dollar Index is retracing to test support at 81.50. Respect would confirm the primary up-trend, offering a long-term target of the 2010 high at 89. 63-Day Twiggs Momentum oscillating above zero indicates a healthy up-trend.

Dollar Index

Spot Gold is rallying to test resistance around $1650/ounce — at the descending trendline on the monthly chart. Breakout from the long-term trend channel suggests that a top has formed in response to the stronger dollar. Reversal below $1600 would indicate another test of primary support at $1500, while upward breakout would test $1800. A second dip of 63-day Twiggs Momentum below zero strengthens the warning of a primary down-trend.

Spot Gold

* Target calculation: 1550 – ( 1800 – 1550 ) = 1300

CRB Commodities Index is consolidating above support at its target of 265. Expect a rally to test resistance at 295, but failure of support would test the 2010 low at 250. 63-Day Twiggs Momentum oscillating below zero indicates a healthy down-trend. Commodities are falling (and the dollar rising) in anticipation of a global economic down-turn. Expect stocks (as indicated by the S&P 500 index) to follow commodities lower.

CRB Commodities Index

Nymex WTI Light Crude is headed for support at its 2011 low of 76, though we may see medium-term retracement to test resistance. 63-Day Twiggs Momentum below zero signals a primary down-trend.

Nymex WTI Light Crude

Stronger dollar, weaker commodities: gold, copper and crude

The US Dollar is in a primary up-trend, the Dollar Index having broken resistance between 81 and 82. Retracement is likely to test the new support level; respect of 81 would confirm a healthy up-trend. Respect of the zero line by 63-day Twiggs Money Flow would likewise strengthen the signal.

US Dollar Index

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

Spot gold is also testing a new support level — this time on the daily chart — after breaking resistance at $1600/ounce. Penetration of the declining trendline suggests that the down-trend is weakening, but 63-day Twiggs Momentum remains firmly below zero. Follow-through above $1640 would strengthen the bull signal — as would recovery of Momentum above zero — but failure of $1600 would re-test $1540.

Spot Gold

* Target calculation: 1550 – ( 1800 – 1550 ) = 1300

Other commodities have reacted negatively to the stronger dollar, suggesting that gold will continue its downward path. Copper is in a clear down-trend, headed for a test of the 2011 low at 6800.

Copper Grade A

Brent crude broke its mid-2011 low at $100/barrel, offering a long-term target of $75*.

ICE Brent Afternoon Markers

* Target calculation: 100 – ( 125 – 100 ) = 75

Nymex WTI Light Crude is similarly headed for a test of long-term support at $75/barrel.

Nymex WTI Light Crude

CRB Commodities Index is similarly headed for a test of support at 250. The peak below zero on 63-day Twiggs Momentum warns of a strong primary down-trend. First, expect retracement to test resistance at 295; respect would confirm the down-trend.

CRB Commodities Index

* Target calculation: 290 – ( 330 – 290 ) = 250