Euro weak while Aussie dollar strengthens

By Colin Twiggs
February 9th, 2012 2:00 a.m. ET (6:00 p:m AET)

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The euro is testing resistance around $1.32 but the primary down-trend is strong. With 63-day Twiggs Momentum deep below zero, expect another test of primary support at $1.26. Breakout remains likely and would offer a target of $1.20*.

* Target calculations: 1.26 - ( 1.32 - 1.26 ) = 1.20

The Aussie dollar has surged ahead of the CRB Commodities Index which it tracks quite closely. Breakout above $1.08 would signal a primary advance to $1.20*.

* Target calculations: 1.08 + ( 1.08 - 0.96 ) = 1.20

Canada's Loonie shows a similar pattern, testing resistance at $1.01. Breakout would offer a target of $1.06*.

* Target calculations: 1.01 + ( 1.01 - 0.96 ) = 1.06

Pound Sterling followed through above the descending trendline, indicating that the primary down-trend is over. Recovery of 63-day Twiggs Momentum above zero would strengthen the signal. Only a breakout above 41.62, however, would signal the start of a primary up-trend.

The greenback continues to test support against the Japanese Yen at ¥76. Breakout would signal another decline, this time with a target of ¥72*. Long-term bullish divergence on 63-day Twiggs Momentum, however, indicates that the down-trend is slowing; breach of the descending trendline would strengthen the signal. Recovery above ¥80 would start a primary up-trend.

* Target calculations: 76 - ( 80 - 76 ) = 72

The South African Rand unexpectedly broke downwards from its bullish ascending triangle against the Aussie Dollar; follow-through below R8.00 would signal a correction to R7.50 (and the long-term trendline).