Forex Trade Alert.
Gold Rise As Dollar Falls
Gold, USD/JPY, Dollar Index
Gold
Spot gold shows signs of an accelerating up-trend, after three trendlines of increasing slope. Retracement respected support at $1040 and breakout above $1070 would indicate an advance to $1100. Reversal below $1040 is unlikely, but would test $1000. In the long term, the break above $1000 offers a target of $1300; failure of support at $985 is unlikely, but would warn of a primary trend reversal.
The only bearish sign is a divergence on Momentum Indicator (14-day), warning that the Market Vectors Gold Miners Index [GDX] has encountered selling pressure. Breakout above $50 would confirm the rise in spot gold, while reversal below $43 would signal a secondary correction (and bearish sign for gold). Divergences between gold miners and physical gold often forewarn of changes in the spot price.
Dollar Fall Continues
US Dollar Index
The US Dollar Index is consolidating in a narrow band below resistance at 76. In the short term, expect a test of 74.50. Reversal above 77.50 is most unlikely, but would indicate that the down-trend has ended. The greenback is replacing the yen as the favorite weak currency used for carry trades. Hedge funds effectively borrow dollars then sell them to invest in a high-yielding currency like the Australian Dollar, pocketing the interest rate spread — and reinforcing the dollar’s downward spiral.
Japanese Yen
The dollar respected short-term resistance at 90.00 and is likely to test the 2008 low of 87.00. Breakout above the declining trendline (and 90.00), however, would warn of a rally to test the upper channel border. In the long term, breakout below 87.00 would offer a target of 80.00.
MONTHLY PIVOT ALERT: Support level of 90.44 was broken today. When the monthly pivot point is broken – we can look for a possible drop to the monthly S1 ( support level 1).
TRENDLINE ALERT: Support level of 90.34 was broken today. Look for a possible drop to the next support level.
Next Day Trading Ranges for Tuesday Oct 20, 2009
The [R3] or the most extreme high trading range is 91.14.
The [R2] or the extreme high trading range is 90.96.
The [R1] or the high trading range is 90.64.
The [P] or pivot point is 90.46.
The [S1] or the low trading range is 90.14.
The [S2] or the extreme low trading range is 89.96.
The [S3] or the most extreme low trading range is 89.64.
Current Day Trading Session:
No signs of downward momentum at this time.
Next Day Trading Session:
If the next day’s close is below 89.85 then that could be a sign that new downward momentum is beginning.
4xGenie Support Team
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