Crude oil

Brent Crude again found support at $105/barrel. Breakout above the trend channel and resistance at $115 would signal the end of the bear-trend and another test of $125. Recovery of 63-day Twiggs Momentum above zero would likewise suggest a primary advance. Failure would re-test primary support at $99.

ICE Brent Afternoon Markers

* Target calculation: 115 + ( 115 – 105 ) = 125

Gold falters as the dollar strengthens

Spot Gold is headed for another test of the lower trend channel on the weekly chart. Failure of support at $1600 would warn of reversal to a primary down-trend; follow-through below the September low at $1550 would confirm. A fall of 63-day Twiggs Momentum below zero would also warn of a reversal.

Spot Gold Weekly Chart

Penetration of medium-term support at $1700 on the daily chart of spot gold is not a strong signal, but follow-through below the recent low would indicate a test of primary support at $1600. Failure would offer a target of $1400*.

Spot Gold Daily Chart

* Target calculation: 1600 – ( 1800 – 1600 ) = 1400

The NYSE Arca Gold Bugs Index has been ranging between 500 and 600 for some time. Decline of 63-day Twiggs Momentum below zero suggests long-term weakness. Reversal below primary support at 500 would signal a primary down-trend — and a negative outlook for gold.

NYSE Arca Gold Bugs Index

Dollar declines, gold and commodities rise

The Dollar Index retraced to test the new support level at 76.00. Respect would confirm the primary up-trend, while failure would signal trend weakness. A trough above zero on 63-day Twiggs Momentum would strengthen the bull signal.

Dollar Index

* Target calculation: 80 + ( 80 – 76 ) = 84

Gold broke through $1700/ounce in response to dollar weakness. Expect retracement to test the new support level. Respect would signal a primary advance to 1800*. The long-term (primary) trend remains upward.

Spot Gold

* Target calculation: 1700 + ( 1700 – 1600 ) = 1800

The Amex Gold Bugs Index is testing medium-term resistance at 560. Breakout would test the upper border of broadening wedge pattern — around 650 — and support a similar advance for the spot metal.

Amex Gold Bugs Index

Brent crude is also stronger, testing its upper trend channel at $110/barrel. Respect would indicate another test of the lower channel — and the ascending long-term trendline — while breakout would signal an advance to $120*.

IPE Brent Afternoon Markers

* Target calculation: 110 + ( 110 – 100 ) = 120

The broader CRB Commodities Index is also headed for its upper trend channel. The ascending primary trendline remains intact but 63-day Twiggs Momentum respect of the zero line (from below) warns of a strong down-trend.

CRB Commodities Index

Crude and commodities rally

Brent Crude rallied off support at $99/$100 per barrel, headed for a test of the upper trend channel. 63-Day Twiggs Momentum above its descending trendline warns that the down-trend is weakening. Breakout above the upper channel would test the 2011 high of $125/barrel.

Brent Crude

CRB Commodities Index similarly rallied off support at 300. 63-Day Twiggs Momentum is still declining and failure to reach the upper trend channel (on the price chart) would warn of an accelerating down-trend.

CRB Commodities Index

Dollar fall lifts gold

The US Dollar Index broke out of its trend channel, warning of a correction back to 76 on the daily chart. Respect of 76 — or 63-day Twiggs Momentum respect of the zero line — would confirm the primary up-trend and offer a target of 84*.

Dollar Index

* Target calculation: 80 + ( 80 – 76 ) = 84

Spot gold rallied as the dollar weakened and is testing its descending trendline and resistance at $1700/ounce. Respect would signal a decline to $1500*, while upward breakout would indicate that the correction has weakened but not necessarily ended.

Spot Gold

* Target calculation: 1700 – ( 1900 – 1700 ) = 1500

ASX 200 trend channel

The ASX 200 index is testing its upper trend channel. Low volume is typical for a Monday — before US and European markets open for the week — but the low range indicates caution on the part of buyers. Reversal below 4100 would indicate a down-swing to the lower trend channel, while follow-through above 4200 would suggest a bear market rally to 4500. The primary trend remains down, however, and reversal below 4000 would warn of a decline to 3500*.

ASX 200 Index

* Target calculation: 4000 – ( 4500 – 4000 ) = 3500

ASX 200 rally — but it’s still a bear market

Australia’s ASX 200 index rallied strongly Thursday and is headed for a test of the upper trend channel. 63-day Momentum declining below zero reminds that we are in a strong primary down-trend. Respect of the upper channel would warn of another decline — to test the lower channel border.

ASX 200 Index

* Target calculation: 4000 – ( 4500 – 4000 ) = 3500

We are experiencing exceptional volatility at present and risk of false signals is high. It is important in such situations to look for strong confirmation. One step is to wait for signals on the weekly chart to confirm those on the daily chart. As you can see, this bear market is a long way from over.

ASX 200 Index Weekly

Pound joins Euro slide

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The euro retraced to test resistance at $1.34 but is likely to continue in its downward trend channel. Reversal below $1.3150 would test our target of $1.30*. 63-Day Momentum declining below zero confirms the primary down-trend.

EURUSD

* Target calculation: 1.40 – ( 1.50 – 1.40 ) = 1.30

The pound has been dragged lower by the euro-zone crisis. Breach of support at $1.53 would offer a target of the 2010 low at $1.43.

GBPUSD

Kiwi dollar

Apologies. I messed up the links at the bottom of the Trading Diary newsletter. For the correct link click here. Correct links are also available on the Trading Diary web page and under Recent Posts in the right margin of this page.

The Aussie dollar found support between $1.23 and $1.24 against its Kiwi counterpart. The trend channel has weakened and AUDNZD is now likely to range between $1.24 and $1.28. The primary trend remains down, however, and failure of support would offer a target of $1.20*.

AUDNZD

* Target calculation: 1.24 – ( 1.28 – 1.24 ) = 1.20

Commodities down-trend accelerates

Apologies. I messed up the links at the bottom of the Trading Diary newsletter. For the correct link click here. Correct links are also available on the Trading Diary web page and under Recent Posts in the right margin of this page.

CRB Commodities index broke out below its trend channel and is now retracing to test the new resistance level. Respect of resistance at 300 would confirm the breakout and warn of an accelerating down-trend. The 63-day Momentum peak below zero indicates a strong primary down-trend.

CRB Commodities Index