Interim Update June 20:
Precious Metals – Gold
Is this a Maginot line and is it relevant? Relevant not really, but it’s a nice one out of many for the gold bugs. We calculate this resistance to come in at 1358 and was broken last night with good follow through today. We have been fully invested in PM sine 09/18 but the real test is taking out the peak at the end of Aug 2013 at 1434 (see chart below). A weekly close above that level being confirmed by multiple daily closes sets up Gold/USD for the next test which immediately becomes the all time 2011 high.
The strong advance we’ve seen recently provides potential price support at lower levels if Gold reverses short term with divergence developing between ST (Daily) and MT (Weekly) time frames. Currently there is a serious risk that ST bearish divergence emerges, which could happen by Fridays close or earlier. Because price risk support is at 1265 at worst, we would feel happy to remove 40% of the position if the ST trend changes to Down with a view to re-enter.
Silver looks stronger than Gold and the next few weeks could already see a more tangible price shift from Gold to Silver by way of a lower Gold/Silver ratio.
Crude:
Chart runs from 2002 to 2020. The big drop is late 2008 followed by serious volatility.
Today we are investing 50% in Crude based on tendency signal in ST and MT timeframes. This may become a short term hold but today or even yesterday was the first time in 9 months that we see a relatively low risk opportunity to own Crude.
Equities:
All equity markets, in spite of perceived dovish Fed comments yesterday and BTFD deja vue trading attitude, look extremely high risk. We simply cannot make a low risk choice in any of these markets worldwide and be confident that they hold. Further detail in our weekend update.
FX:
This is a real Maginot line. Dollar/Swiss holding support at par between 2007 and 2010. Now finding resistance around par having been under for most of 9 years. This CHF looks to become stronger before anything else and the resistance appears a very strong Maginot line just under par.
