Market Update 20 September 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 20 September: 1515 (1488)

Gold/USD LT-M MT-W ST-D
Trend ↑ (↑) ↓ (↓) ↑ (↑)
% Risk
Weight
88 (85) 81 (83) 25 (10)
Allocation 100%
(100%)
LT Monthly and MT Weekly technically look like they need an extension into an overbought MT situation. This could develop with and without price movement of course and with a bullish diverging ST Daily vs Weekly and Monthly the risk of staying fully invested is small. No Change.

Last week: Hourly near oversold. ST Daily shows Bullish divergence versus MT Weekly.
The one year Gold uptrend in progress vs USD and all other fiat currencies did reach a temporary plateau 3 weeks ago. 90 years of technical analysis statistics learns that MT and LT overbought indicators are most likely to repeat themselves several times before a major trend ends and subsequently turns. Long term patience is likely to offer a big reward for any investor in insurance Gold and especially against USD once the Greenback finally starts that long expected downtrend and this pair reaches new all time highs. No Change


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 20 September: 1375 (1337)

Gold/EUR LT-M MT-W ST-D
Trend ↑ (N) ↓ (↓) ↑ (↓)
% Risk
Weight
93 (90) 87 (85) 27 (12)
Allocation 100%(24/9)
(70%)
Interim update Tuesday 24 Sept 2019 Gold Euro: With hourly risk weight getting oversold and Daily in an uptrend expecting a bearish divergence in the Medium Term Weekly timeframe is risk on. So are now fully invested again awaiting a strong rally in the Medium Term.

Close 20 Sept: The steady acceleration at the end of the past week is positive even though risk is still downward in the MT Weekly time frame. We are looking to enter to fully invested but timing requires a low risk approach. Right now the Hourly risk weight at 90% needs to get into oversold weight level to consider a purchase. This may happen already Monday or Tuesday.
If this happens we will do an interim update. No Change for now.

Last week: Hourly near oversold. And for the ST, MT and LT time frames the same analysis applies as for USD. The high risk of a steeper than average drop 2 weeks ago is now diminishing although we may still see further pressure. The irregular hourly reversal we saw Thursday due to the ECB lowering base rate to -0.5%, may indicate that the correction has further to go with potential to towards the 1275-80 level. We would seek to go back to 100% as soon as the Daily ST risk weight turns back up, now Neutral to Down in the 10-15% range. Technically, Gold seems to be one of the very few asset classes that has real potential of regaining above average strength. This means we can now wait for a low risk entry point to get back to 100% allocation probably during the coming week and as early as Monday September 16. However, if this market indicates further pressure to come in MT time frame and subsequently turns back up we have a cushion to re-enter below the recent sale.


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 20 September: 1215 (1190)

Gold/GBP LT-M MT-W ST-D
Trend ↓ (↓) ↓ (↓) ↑ (↑)
% Risk
Weight
93 (90) 72 (80) 15 (10)
Allocation 100%(24/9)
(60%)
Interim update Tuesday 24 Sept 2019 Gold vs Pound Sterling: With hourly risk weight getting into oversold condition and Daily in an uptrend expecting a bearish divergence in the Medium Term Weekly timeframe is a risk on situation. So are now fully invested again awaiting a stronger rally in the Medium Term.

Close 20 Sept: Gold/GBP offers a very similar risk picture as Gold/EURO including an Hourly overbought weight level waiting to come into balance with the ST Daily. If that happens early in the week we would seek to become fully invested again and we will interim update if that materializes. No Change for now.

Last week: Hourly oversold (0-5). Gold has reversed towards the 2011 all time high and may even drop into the July 2019 consolidation range at 1140. If that is to happen the move should be quick. If Monday's close shows a positive confirmation of the Friday's daily Daily Risk weight uptrend we will go full allocation. Next week's update may confirm that 100% allocation. No Change for now.


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 20 September: 17.96 (17.41)

Silver/USD LT-M MT-W ST-D
Trend ↑ (↑) ↓ (↓) ↓ (↓)
% Risk
Weight
70 (67) 67 (78) 17 (27)
Allocation 100%
(100%)
Silver USD may need to build a bit more energy to begin a fresh upmove. The St and MT risk weight are in a position to turn back Up. We are confident to stay fully invested in Silver. No Change.

Last week: Three months of relatively strong performance has abruptly found strong resistance at 19.50. The 11% highly volatile drop followed the steep advance of the last quarter. We feel confident that this most recent move is typical for markets that have just seen a major bottom and a profit to be taken. The cushion since entry is substantial and the risk small the remain fully allocated for an initial target of 21.00+. 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 20 September: 16.30 (15.72)

Silver/EUR LT-M MT-W ST-D
Trend ↑ (↑) ↓ (↓) N (↓)
% Risk
Weight
77 (77) 70 (80) 20 (30)
Allocation 100%
(100%)
Risk weight development and trends in a Short Term, Medium Term and Long Term time frames are very similar for Silver/EURO. No Change.

Last week: We may see a bit more price pressure before this reaction finds a bottom. Here the cushion is also substantial and the potential for a major rally into the 20.00 level is strong once this volatile reversal finds fresh support. Happy to stay with the LT Risk weight trend. 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 20 September: 14.38 (13.92)

Silver/GBP LT-M MT-W ST-D
Trend ↑ (↑) ↓ (↓) ↓ (↓)
% Risk
Weight
80 (80) 65 (77) 15 (20)
Allocation 100%
(100%)
The Medium Term Weekly is still down but will likely develop bearish divergence upon a new current trend price high. A fresh rally couldf be quick given the 12% price drop in the previous 2 weeks. the Low risk weight position of the Short Term Daily time frame is still in play making the No Change allocation a No Brainer.

Last week: Hourly oversold (0-5). The ST trend may not be finished but the LT and MT risk weight is likely to require a lot more upward price pressure before the trend that started Sept 2018 is finished. 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 20 September: 84.06 (85.09)

GOLD/SILVER Ratio LT-M MT-W ST-D
Trend ↓ (↓) ↑ (↑) ↑ (↑)
% Risk
Weight
55 (55) 30 (20) 78 (50)
Allocation 50/50 AU/AG
(50/50 AU/AG)
Just like Silver is building fresh momentum against the above individial fiat currencies, it is also building new energy against gold. Maybe a few more days and we could witness another attach of the 80.00 ratio level. No Change to maintain a fully or even slightly higher Silver ratio in the Precious metals space.

Last week: The 15% correction that started early July 2019 is different from the correction that ended in July 2016 in that the LT risk weight at that time was oversold at 20% together with a MT Weekly bullish divergence position. The present correction has more downward pressure in the bag whilst the MT weekly is making a single oversold bottom. The present correction to the upside also appears to be the net result of profit taking in the Silver space. The technical risk to maintain a full silver allocation, i.e. a minimum of 50% silver and possibly some platinum remains our preferred allocation. Platinum performance appears stronger relative to Gold recently and the ratio is likely to return to equilibrium which means at least a doubling of the platinum price versus Gold. 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 20 September: 1.1013 (1.1025)

EUR/USD LT-M MT-W ST-D
Trend ↑ (↑) ↑ (↑) ↑ (↑)
% Risk
Weight
5 (7) 20 (17) 57 (38)
Allocation 100%
(100%)
The Euro is now struggling against the USD for a whole month. At the same time the Long Term Monthly risk weight is ready to turn up from a clear oversold level. No Change to maintain 100% long dollar transaction exposures covered. If we now see the Short Term Daily becoming low risk there will be a LT opportunity to take a speculative short dollar position against the Euro and any other major currency.

Last week: Whilst the LT risk weight is trying to find it bottom, the ST and MT risk weight continue to indicate more potential dollar weakness ahead. The ECB move last week caused a quick dollar rally based on nothing and only lasted 2 hours. That is a very positive technical signal and we strongly recommend staying fully covered on long USD exposures. At this point in time we would see little investment risk in a larger currency diversification away from USDollars. Last week's 3 hour double reversal could indicate a rapid dollar mini crash in case the Fed follows with another rate drop of any size. 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 20 September: 0.9900 (0.9891)

USD/CHF LT-M MT-W ST-D
Trend ↑ (↑) ↑ (↑) ↓ (↓)
% Risk
Weight
50 (50) 60 (52) 77 (85)
Allocation 100%
(100%)
Our analysis of last week expecting a slightly weaker CHF is still the dominant technical picture. If the Weekly time frame starts turning down as a result of a more rapid slide of the US Dollar, the Long Term Monthly may also turn back down again. In our view it be a matter of time before the USD makes a first dive into a fresh Long Term downtrend which could last many years as it always has in previous decades. No Change.

Last week: CHF has been relatively strong holding below par vs USDollar and steadily increasing its value vs EURO for nearly 3 years. Technically CHF/EURO price may start to turn and reverse because the LT risk weight looks extremely overbought. The result of this could be that CHF shows a weaker hand relatively to USD. Nonetheless we propose No Change to CHF reporting companies with Long USD transaction exposures. From an investment perspective CHF looks less attractive at this moment


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 20 September: 1.2472 (1.2490)

GBP/USD (Cable) LT-M MT-W ST-D
Trend ↑ (↑) ↑ (↑) ↑ (↑)
% Risk
Weight
15 (15) 47 (33) 90 (90)
Allocation 100%
(100%)
The Short term Daily risk weight is overbought and turning down. It means Cable is likely to pause it recent uptrend and fresh cover can be delayed until the divergence between Daily and Long Term Monthly is reduced. Cable basic rally confirms the potential Long Term weakness of the Greenback. No Change.

Last week: NOTHING points towards imminent weakness of sterling or Cable for that matter. The ST Daily time frame is a little overbought but WITHOUT any price to risk weight bearish divergence. In fact the LT Monthly risk weight is turning up with bullish risk weight to price divergence. That means low risk and Long dollar exposures should remain fully covered. No Change


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 20 September: 98.46 (97.86)

USD Index LT-M MT-W ST-D
Trend ↑ (↑) ↑ (↑) ↑ (↓)
% Risk
Weight
90 (87) 73 (75) 37 (43)
Allocation 100%
(100%)
For 2 months the USD index has been trying to drive higher alternating up and down weeks. This story is definitely ending and the risk picture looks of course very similar to that of the USD vs other major currencies. No Change to stay with a fully covered long dollar risk.

Last week: The LT uptrend of USD vs the other majors appears to get really tired. ST is in downtrend and MT as well as LT can tip over anytime. Dollar weakness becoming a serious trend is a matter of time. No Change.


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 20 September: 1.1315 (1.1273)

GBP/EUR LT-M MT-W ST-D
Trend ↑ (↑) ↑ (↑) ↑ (↑)
% Risk
Weight
30 (27) 75 (60) 92 (83)
Allocation 100%
(100%)
GBO/Euro has now advanced 7% from the recent August lows. It looks like a longer trend that appears to have been set in motion 6 weeks ago and we would look for a Short Term risk weight to price bearish divergence before allowing a lighter hedge of short Sterling exposure versus Euro. No Change for now.

Last week: As we expected GBP did become a low risk environment across the board. The 5% rally from recent lows does appear a little tired ST and new or expiring transaction exposures can be delayed for cover. In general, risk weight trend and levels demand short GBP exposures beyond 2 or 3 months to be fully covered.


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 20 September: 10168 (10342)

BITCOIN BTC/USD LT-M MT-W ST-D
Trend ↓ (↓) ↓ (↓) ↑ (↓)
% Risk
Weight
65 (65) 37 (42) 40 (58)
Allocation 0%
(0%)
This high spec bitcoin seems to have lost some market interest of late with much lower price volatility in a much narrower price range. As always we stay out of this market until it matures into a higher liquid less manipulative commodity.

Last week: Risk weight has not experienced an oversold condition since reaching the violent overbought conditions back in June July. Risk neutral means this market can go to 20,000 or back to this years lows and beyond. Highly speculative and we simply keep following developments with market interest but without investment interest. No Change

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 20 September: 26935 (27219)

US30 (Dow Jones) LT-M MT-W ST-D
Trend ↑ (↑) ↑ (↑) ↓ (↓)
% Risk
Weight
85 (87) 77 (70) 80 (95)
Allocation 0%
(0%)
We have never before seen a market that has looked to tired for such a very long time and technically we have seen many Long Term and Medium Term bearish divergence signals and the index always recovered to generate a fresh divergence at new highs. For now we have NOT seen a new high in the Dow whilst risk weight remains high. This index remains poor risk as an investment. No Change.

Last week: Central Bankers worldwide or at least the Elite central bankers that do not allow everyone into their inner circle have a plan. Mainstreet financial media clearly love it and remain bullish. We don't know what the plan is but it is officially designed to take certain countries off the hook and to ensure the world economy remains robust. This could of course lead to much more stock for debt activity. Technically there is absolutely nothing to support a fresh upward price action into substantially higher levels. That technical risk is simply unacceptable and highly speculative. If anything both the Dow and S&P index are showing a succession of irregular tops with bearish divergence. We cannot begin to predict what will end this apparent madness in equities and only know that some day it will and will hurt many unaware participants creating a tsunami of sellers without bids. We stay out. No Change


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 20 September: 2992 (3007)

Standard & Poor 500 LT-M MT-W ST-D
Trend ↑ (↑) ↑ (↑) ↓ (↓)
% Risk
Weight
87 (87) 83 (73) 85 (95)
Allocation 0%
(0%)
Logically, as usual, the S&P shows a similar risk picture and this index covering many more companies is actually looking higher risk technically with LT and MT risk weight leaning towards an earlier turn down. The best outlook for fresh investment is one of huge patience and a much much lower price level. Individual promising start ups is another matter of course. No allocation to the Standard and Poor index, hence No Change.

Last week: All tools we cover with most weight on Slow Stochastic, MACD and RSI show bearish divergence. And that means high(er) risk. Higher risk means get out, which we have been for more than a year. In previous years we have seen bullish divergence between ST, MT and LT time frames. That was not the case in 2018 and is not the case in 2019 until now at least. Thus, same story as Dow Jones. Staying out and 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 20 September: 64.77 (60.25)

Brent LT-M MT-W ST-D
Trend ↓ (↓) ↑ (↑) ↑ (↑)
% Risk
Weight
35 (33) 42 (32) 50 (55)
Allocation 0%
(50%)
We have experience a positive influence of drones on our 50% investment allocation two weeks back. We commented interim on exiting the position with a nice opportunity profit last Monday and we are now looking to possibly re-enter upon a near gap fill in the Daily time frame. Brent would need to drop to very near 60.22 in order to make that happen. History learns that gaps tend to being filled and usually fairly quickly. With that risk in mind we follow this market with great interest.

Last week: Our long position as per 10 days ago is already being challenged in ST and LT time frames. We wish to see a bearish divergence developing in the ST to determine whether the position should be abolished. This is not a matter of price movement. Only risk weight level and trend determines the length and size of a transaction.
Note: The effect of drone attacks on the Aramco refinery may or may not be fundamental to future price development but statistically such events only have short term to medium term effect unless they support an already established trend. If a trend is up any presumed negative influences will be very short lived and vice versa as there are always many more fundamental parameters to consider to make a reliable ST or MT forecast let alone LT. No Change

Posted in A - All Financial Blogs | 2020 Forecast.

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