Gold – FX- Dow – 4 October 2019

GOLD: Gold vs US Dollar, Euro and GBP

Gold/USD live price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 4 October: 1504 (1497)

Gold/USD LT-M MT-W ST-D
Trend ↓ (↑) ↓ (↓) ↑ (↓)
% Risk
Weight
86 (87) 73 (73) 52 (45)
Allocation 100% (100%)
Strong price rally late last week turning up in the ST-D timeframe from bullish price to risk weight divergence. As we expect bearish divergence in the MT-W or even LT-M time frames, we must first see new price highs at least. Given the strength of Gold since August last year from 1175 and holding around 1500 means the next price high could be significantly above the recent 1550 high. No Change.

Last week: Gold took a small dive again last week due to hard nosed dollar strength which did come somewhat unexpected. The LT-M is stil narrowly up whilst the shorter term time frames are in down trends now. Short term benefit may be achieved from a higher risk quick trade out and in, but there is a wider issue here. The choice of asset classes is limited due to the many balloon type conditions and the investment cushion is significant without yet having seen clear LT and MT bearish risk weight divergence. As a result we stay with our fully invested Long Gold portfolio

Gold/EUR live price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 4 October: 1363 (1367)

Gold/EUR LT-M MT-W ST-D
Trend ↓ (↑) ↑ (↓) ↑ (↓)
% Risk
Weight
89 (92) 77 (77) 50 (65)
Allocation 100% (100%)
A bit more LT overbought weight for GOLD vs EURO because the Euro looks a little stronger against USD and now holding around the 2012 high, but the technical picture is otherwise very similar to that of Gold/USD with LT (2 or 3 years out) channel resistance level of between 1775 and 1850. Anything can happen in the meantime including a price explosion. The fundamental reason for the latter is that Banks behave very much like the general market (buy high sell low). They may decide to start buying gold extensively much later into the price advance, simply because rates are negative and Gold is a Tier 1 Asset now. No Change.

Last week: Early last week we re-entered into a fully allocated Gold vs Euro position. The dollar rally that caused the retracement again came somewhat unexpected. The LT Monthly risk weight is still trending up without clear direction from MT and ST time frames , albeit down at the week's close. Price cushion and fewer investment alternatives make this risk acceptable. If the market turns lower for an extended period the ST and MT trend are more likely to diverge vis a vis LT if that happens during October. No Change.

Gold/GBP live price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 4 October: 1219 (1215)

Gold/GBP LT-M MT-W ST-D
Trend ↓ (↓) ↑ (↓) ↑ (↑)
% Risk
Weight
87 (91) 67 (67) 62 (57)
Allocation 100% (100%)
Gold also saw pressure and then rallied and finished strongly against Sterling last week. Short term it seeks direction and the analysis is again similar to that of Gold vs Dollar and Gold vs Euro. Waiting patiently for a new MT price high. No Change.

Last week: The picture for Gold/GBP is similar even though the LT Monthly has turned marginally down with one more trading day in September. The current risk status has wider impact than the pure technical %risk weight levels. MACD does look a little heavy but Stochastic, MACD and Relative relative strength index still need to show bearish div ergence before this longer term trend can be called to a MT or temporary finish. The one year stretch of the present price rally, the price cushion and the absence of bearish divergence in the MT time frame as well as the limited asset class choice based on pure risk, we are happy to stay with a fully invested position

SILVER: Silver vs US Dollar, Euro, GBP and Gold/Silver ratio

Silver/USD live price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 4 October: 17.52 (17.51)

Silver/USD LT-M MT-W ST-D
Trend ↑ (↑) ↓ (↓) ↑ (↓)
% Risk
Weight
70 (68) 59 (62) 32 (36)
Allocation 100% (100%)
Silver shows similar technical characteristics as Gold where we should expect a new price high at least in combi with a sub 85% risk weight to show bearish divergence in the MT-W time frame. This market has a long way to go yet if it indeed behaves as per pour base analysis. A price objective is totally irrelevant because we primarily manage risk based on risk weight irrespective of the price level.

Last week: Another volatile week starting at 18.00, up to 18.74 and ending near the lows at 17.50. MT risk to stay fully invested remains low with a still comfortable Monthly risk weight uptrend in progress in well below overbought territory. No Change

Silver/EUR live price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 4 October: 15.95 (16.30)

Silver/EUR LT-M MT-W ST-D
Trend ↓ (↑) ↓ (↓) ↑ (↓)
% Risk
Weight
77 (78) 62 (65) 30 (45)
Allocation 100% (100%)
The ST-D showed minor bullish risk weight to price divergence and similar to Silver/USD the MT-W should normally first reach new highs with a lower than previous % risk weight to show a potential intermediate Longer Term high. This could be a matter of weeks or many months. We hold on to our LT position, so No Change.

Last week: Same picture. Up on Monday and down rest of the week ending at 16.00. A poor week which may have a little further to go yet. The LT uptrend however is the leading indicator. We have not yet seen a risk weight level in overbought territory like the end of Silver price rallies in 2005, 2007 and 2011. Equilibrium in the Gold Silver ratio will probably require a Silver/Euro price of nearer 32.00 or about 36.00 vs US Dollar. A long, 'doubling price' way to go yet. No Change

Silver/GBP live price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 4 October: 14.21 (14.26)

Silver/GBP LT-M MT-W ST-D
Trend ↓ (↑) ↓ (↑) ↑ (↑)
% Risk
Weight
75 (79) 56 (58) 35 (44)
Allocation 100% (100%)
Silver vs Sterling continues to show similar price behavior as against Euro and the same analysis arguments apply. No Change in full allocation.

Last week: The exact same argument applies to Silver/British Pound at 14.25 as for Silver/Euro. We are experiencing a fairly volatile MT pause in the LT trend, that started sub 11.00 over a year ago. No Change

Gold/Silver Ratio live price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 4 October: 85.53 (85.15)

GOLD/SILVER Ratio LT-M MT-W ST-D
Trend ↓ (↓) ↑ (↑) ↓ (↑)
% Risk
Weight
47 (53) 39 (35) 79 (64)
Allocation 50/50 AU/AG (50/50 AU/AG)
The Gold/Silver ratio still appears to show relative weakness for Silver and this may last for a while longer. The current putlook from risk weight analysis is not very clear but the cushion against recent highs at 93.00 must favor giving the lead to the LT-M time frame which is still down. with the ST-D showing a bit of risk weight divergence vs MT-W and LT-M. No Change.

Last week: The LT Downtrend that started in 3 months ago is in force. Experience tells us that we will need to see bearish divergence in the MT risk weight to possibly call a temporary pause in the Long Term Gold/Silver ratio. The price level where this may occur is likely to show nearer the 2016 bottom at 64.00. A potential large price move yet. No Change

FX: EUR/USD, USD/CHF, GBP/USD, USD Index, GBP/EUR, Bitcoin

EUR/USD FX live price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 4 October: 1.0975 (1.0933)

EUR/USD LT-M MT-W ST-D
Trend ↓ (↓) ↓ (↓) ↑ (↓)
% Risk
Weight
5 (4) 16 (18) 37 (15)
Allocation 100% (100%)
Another manipulated attempt, it seems, for the USD to push higher across the board and which failed to hold towards the end of last week. The very slow but steady average advance of the USD since early 2018 typically would show a forceful reaction in the other direction. With LT-M risk weight in deep oversold territory, the best risk management position is to remain fully covered against a Long dollar transaction exposure. No Change.

Last week: The Euro lost 1% against USDollar last week. The Short Term Daily time frame may start to show bullish divergence versus risk weight in another attempt to push through what is fairly strong support at the 1.0930 level. With all Time frames at near oversold levels it is still bad risk judgement to call for a strong dollar rally, even though the market may still push it to extremes. As we said last week, a mor speculative opportunity to go short US dollars may come as the ST Daily trend turns back up from the present 15% level. No Change


USD/CHF FX live price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 4 October: 0.9947 (0.9902)

USD/CHF LT-M MT-W ST-D
Trend ↑ (↑) ↑ (↑) ↓ (↑)
% Risk
Weight
55 (51) 70 (66) 66 (50)
Allocation 100% (100%)
The Swiss Franc looks undecided in all time frames leaning a little weaker against USD in the Short to Medium time frames whilst LT-Monthly is up slightly in mid range at 55%. Long dollar transaction exposures to remain fully hedged. No Change.

Last week: A relatively strong performance of the CHF versus all currencies last week. The SFR even performed as well as the US dollar which may be the result of a large sovereign transaction being executed during the week. All time frames show a weakish uptrend but at mid range levels. Fresh long dollar exposure could be kept until the ST Daily turns back down again or covered a little above par. No Change otherwise

Cable GBP/USD FX live price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 4 October: 1.2320 (1.2277)

GBP/USD (Cable) LT-M MT-W ST-D
Trend ↑ (↓) ↓ (↑) ↑ (↓)
% Risk
Weight
15 (11) 51 (50) 27 (35)
Allocation 100% (100%)
Technically we could see a little pressure on Cable the coming weeks waiting to align with the Long Term Monthly which is 'Up' and showing bullish divergence in oversold territory. From the perspective of risk, the LT-M must now lead even though the MT-Weekly shows some bearish risk weight divergence vs LT-M. No Change.

Last week: ST Daily trend accelerated downward and will likely find a bottom relatively soon. With strong support at the 1.20 level a fully long dollar position is the best risk scenario as soon as the ST Daily turns back up again from an oversold level. No Change to maintaining a largely covered Short Sterling Long Dollar exposure

USdollar Index Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 4 October: 98.84 (99.13)

USD Index LT-M MT-W ST-D
Trend ↑ (↑) ↑ (↑) ↓ (↑)
% Risk
Weight
93 (92) 78 (76) 58 (82)
Allocation 100% (100%)
The Index reached an interim high early last week before reversing again. This has been the general picture for a long time, yet the risk pattern is not positive for the USD index with LT-M timeframe above 90%. No Change in keeping 100% cover on future net USdollar incoming payments

Last week: The Index followed the dollar trend of last week and is reaching Overbought territory in all time frames. Not quite finished Short Term and there is always a chance of reaching a relatively extreme high for the Index, but Risk analysis does not favor an attitude towards betting on a much stronger dollar. No Change therefore

GBP/EUR FX live price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 4 October: 1.1216 (1.1225)

GBP/EUR LT-M MT-W ST-D
Trend ↑ (↑) ↓ (↑) ↓ (↓)
% Risk
Weight
35 (25) 82 (83) 30 (63)
Allocation 100% (100%)
With ST-D at 30% in uptrend, LT-M in up trend at 35% and weekly 82% we need to wait for a full weekly divergence versus LT-M, but that requires the relative bullish risk weight divergence between ST and MT to close a bit further. Then we maybe can decide to lighten up on the Long GBP hedge in place. No Change for now.

Last week: GBP lost 1.0% ground vs Euro last week which came as expected and a slightly lighter hedge cover could be applied. The LT Monthly looks to turn up in September at a level showing bullish risk weight to price divergence. The best risk position is to remain fully covered on Short Sterlong Long Euro exposures. No Change

BTC Bitcoin Price, Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 4 October: 8133 (8180)

BITCOIN BTC/USD LT-M MT-W ST-D
Trend ↓ (↓) ↓ (↓) ↓ (↓)
% Risk
Weight
55 (60) 21 (28) 15 (20)
Allocation 0% (0%)
Relatively little change last week but downward pressure in LT and MT time frames. No Change.

Last week: BTC fell out of bed to the tune of 20% on Monday last week and then remained at that level throughout the week. The ST Daily is getting oversold but will more likely show bullish divergence first at a lower price level before price turns up. This manipulated market is too volatile still to participate for serious risk aware investors. Very high volatility does not make this cryptocurrency a real asset class yet, in spite of what many seem to want to promote

Remaining 'opening up' gap still to fill at 2828. We exclude weekend action to determine opening gaps as major players are not participating in size.
If this market is poised to turn from extremely overbought (Dec 2017) to completely oversold, it doesn't appear to be finished.

INDEX: US30, S&P500, Brent crude oil

Dow Jones Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 4 October: 26573 (26820)

US30 (Dow Jones) LT-M MT-W ST-D
Trend ↓ (↑) ↓ (↑) ↑ (↓)
% Risk
Weight
85 (84) 75 (80) 25 (38)
Allocation 0% (0%)
ST vs MT bullish divergence caused the Dow Jon es index to rally on Thursday and Friday.
The risk picture, Mt and LT trends down, is actually bearish. No change

Last week: MT Weekly and LT Monthly look to wish to picture bearish risk-weight to price divergence. Not quite there but from an overbought percentage risk weight, the Dow Jones Index is still in potentially troubled waters. Troubled only in case Longs remain whilst the market follows its logical risk weight trajectory downward. No Change to Stay out (since 12 months)

S&P 500 Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 4 October: 2952 (2962)

Standard & Poor 500 LT-M MT-W ST-D
Trend ↓ (↑) ↓ (↓) ↑ (↓)
% Risk
Weight
88 (87) 78 (83) 25 (40)
Allocation 0% (0%)
S&P also showed ST divergence vs MT and LT. That needs to be alleviated although the one way behavior late last week caused hourly risk to get very overbought. This remains a very high risk index which should be avoided. No Change.

Last week: S&P turned marginally down in the MT Weekly timeframe. It is possible that the LT Monthly does similar at the close on Monday 30 September. If not both time frames show bearish risk weight to price divergence, so the risk picture is very similar to that of the DJII. Because Daily Short term is in a strong rapid downtrend it is entirely possible that this market seeks to make another high again backed by a low interest rate environment. We will see but risk to be invested is still very high. No Change

Brent Crude oil Weekly update risk analysis relative to Long Term Monthly(LT-M), Medium Term Weekly(MT-W), Short Term Daily(ST-D) and Hourly(not shown) data
(Previous week in brackets)

Close 4 October: 58.43 (61.99)

Brent LT-M MT-W ST-D
Trend ↓ (↓) ↓ (↑) ↑ (↓)
% Risk
Weight
27 (33) 35 (41) 8 (28)
Allocation 0% (0%)
As the ST-D risk weight is now in uptrend and still in oversold (8%) territory our position appears relatively low risk, but we are less certain than 2 1/2 weeks ago with boith MT-W and LT-M in a downtrend. If the Short Term Daily turns down again from a slightly higher risk weight level it now looks like the better risk position is stay away. In that case we will sell our 50% allocation and closely monitor price the coming days. No Change for now.

Last week:
Interim October 3,2019: We re-entered a 50% allocation at 57.70. See: eyeforgold.com/invest-in-brent-crude
We still await the price gap at 60.22 to be filled before deciding a fresh entry into the Brent Oil market. LT-M risk is at a level and range where another upmove could turn the LT into an uptrend again after 4 months as we analysed a few weeks back when we went long. The massive rally following the drone attack has turned this market into a more uncertain risk proposal for the near future. More action is required to favor a Medium term or even Long term asset allocation. No Change for now.
Posted in A - All Financial Blogs | 2020 Forecast.