Rising Dollar suggests lower gold and commodities

By Colin Twiggs
June 20th, 2012 11:00 p.m. ET (1:00 p:m AET)

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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.

* 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.

* 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.

* 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.

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.

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