Dollar and gold strengthen

By Colin Twiggs
July 26th, 2012 4:30 a.m. ET (6:30 p:m AET)

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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.

* 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.

* 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*.

* 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.

* 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*.

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