Metals – FX- Indices – update – 10 March 2019

Precious Metals: Gold & Silver vs US Dollar, Euro, GBP, Ratio


Market Risk analysis Closing March 8, 2019

Risk awareness limits short term opportunity

Technicals show increasing risk in most asset classes. Where risk is unacceptably high we remain underinvested or Out. We do not apply an aggressive trading position in this weekly update unless the long term technical position demands it.
Gold recently recorded new all time highs against Scandies Aussie and CAD.

Gold/USD

Charting statistics favor a fresh convergence between ST Daily and MT weekly risk weight. Weekly risk has not yet shown a risk weight to price divergence which is more typical for an intermediate top. We therefore stay with the LT trend.

(LT trend still prevails. Developing divergence between ST Daily and MT Weekly. Prognoses for a week of sideways price range action. No Change in full gold allocation)

Gold/USD Month Week Day Hour
Close 8 March Price 1298
(1293)
Trend Direction Up (Up) Down (Down) Up (Down) Down
Risk Weight 65-75 (65-75) 70-80 (80-90) 10-15 (25-40) 80-85
Allocation 100% (100%)

Silver/USD

Price is holding after two weeks of relative weakness. No change in full allocation. Divergence between Daily (oversold) and Weekly (a higher risk level price reaction) and Monthly in a low to medium risk Uptrend supports the risk position taken many months ago.
Hourly divergence with daily may put a little pressure on price at open Monday.

(The relatively sharp drop is a deja vu event. We do not change our long position due to developing divergence between Daily and Weekly risk weight)

Silver/USD Month Week Day Hour
Close 8 March Price 15.35
(15.19)
Trend Direction Up (Up) Down (Down) Up (Down) Down
Risk Weight 40-50 (40-50) 60-75 (70-80) 5-10 (20-30) 85-90
Allocation 100% (100%)

Gold/EUR

LT trend Monthly turned back up laast week. This is intra-month and only a month-end trend change determines the final call which can often be pre-empted via the Weekly and Daily risk weight levels. Price recovered 50% of the recent decline and present divergence between Daily and Weekly/Monthly favours a no change full allocation.

(LT Monthly trend turned down on the first trading day. Divergence between Daily and Weekly risk weight is reason to expect decent upward pressure and stay with allocation)

Gold/EUR Month Week Day Hour
Close 8 MarchPrice 1155
(1138)
Trend Direction Up (Down) Down (Down) Up (Down) Up
Risk Weight 85-90 (80-85) 70-85 (80-90) 15-30 (10-30) 65-75
Allocation 100% (100%)

Silver/EUR

Similar to Gold/EUR the expected price support did materialise. Current risk weight levels support staying fully allocated.

(We expect upward pressure after rapid ST decline with divergence between ST Daily and Weekly. No change in allocation)

Silver/EUR Month Week Day Hour
Close 8 MarchPrice 13.65
(13.36)
Trend Direction Up (Up) Down (Down) Up (Down) Down
Risk Weight 55-65 (50-60) 65-80 (75-85) 10-20 (10-25) 85-90
Allocation 100% (100%)

Gold/GBP

Price weakness and foiund support followed by recovery last week together with a low risk ST Uptrend favours staying fully allocated.

(All time frames are down. Risk weight divergence between MT and ST is no reason not to stay fully allocated)

Gold/GBP Month Week Day Hour
Close 8 March Price 997
(1015)
Trend Direction Down (Down) Down (Down) Up (Down) Down
Risk Weight 70-80 (70-80) 50-70 (65-80) 15-20 (0-10) 80-90
Allocation 100% (100%)

Silver/GBP

There is no technical evidence that the LT rally that started to take shape since early November is ending with the recent price reaction. No change.

(The present reversal technically looks to build another return to price strength.
We stay fully allocated)

Silver/GBP Month Week Day Hour
Close 8 March Price 11.80
(11.50)
Trend Direction Up (Down) Down (Down) Up (Down) Down
Risk Weight 50-55 (45-55) 50-65 (60-75) 10-15 (5-10) 85-90
Allocation 100% (100%)

Gold/Silver Ratio

The risk weight and price picture remains somewhat mixed. The intra-month LT Uptrend is not a signal further upcoming relative Silver weakness. ST HOurly may push prices a little higher on Monday but Daily favours ratio weakness which could drag the MT weakly with it. We stay with a 50/50 Gold silver risk allocation.

(Silver again lead the weakness of the primary Precious metals this week causing the ratio to advance. Palladium and Platinum showed strong relative performance. Risk weight with exception of MT Weekly remains high and supports staying with a 50/50 ratio allocation)

AU/AG Ratio Month Week Day Hour
Close 8 March Price 84.50
(84.80)
Trend Direction Up (Up) Up (Up) Down (Up) Down
Risk Weight 70-75 (70-80) 45-65 (35-50) 90-95 (70-85) 5-15
Allocation 50% AG (50% AG)

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

Euro/USD

Last week's Dollar strength has now driven all relevant times frames into support zones. The risk analysis still favours long dollar exposures to remain fully hedged.

(No Change. Long dollar transaction risk to remain fully covered)

EUR/USD Month Week Day Hour
Close 8 March Price 1.1230
(1.1365)
Trend Direction Down (Down) Down (Down) Down (Down) Down
Risk Weight 10-15 (10-15) 25-30 (25-35) 20-35 (75-85) 75-85
Allocation 100% (100% hedge)

USD/Swiss franc

USD/CHF has crossed par again for the umpteen'd time the past 12 months. All time frames are Up with relatively high risk weight but without much price change. We continue to call for fully covered long dollar exposures.

(Daily divergence vs Weekly could support the dollar temporarily.
Overall picture remains in favor of full cover of long dollar exposures)

USD/CHF Month Week Day Hour Close 8 March Price 1.0080
0.9987) Trend Direction Up (Up) Up (Up) Up (Up) Up Risk Weight 80-85 (75-85) 75-80 (70-75) 70-80 (25-35) 15-25 Allocation 100% unch

British Pound/USD

We expected some Cable weakness again which primarily was caused by general strength of the USD. Recent actions were mixed but current level and risk weight positions across time frames favours a fully covered long dollar exposure. I.e. we return short Cable exposure to fully hedged from 50%.

(Last week we appeared early to call a 50% cover of long dollar exposures, but the technical picture is somewhat divided between ST long and short. We believe Cable is likely to again show pressure and we stay with the present allocation)

Cable Month Week Day Hour
Close 8 March Price 1.3015
(1.3195)
Trend Direction Up (Up) Up (Up) Down (Down) Up
Risk Weight 30-40 (30-40) 70-75 (70-75) 45-60 (80-90) 15-20
Allocation 100% (50%)

British Pound/Euro

No change. Bias remains for short Sterling exposures to be 75% hedged. This call, like every market call is where the lowest risk outcome can be expected.

(Mixed picture With relatively high risk and still strong LT uptrend. Short Sterling transaction exposures to remain 75% hedged)

GBP/EUR Month Week Day Hour
Close 8 March Price 1.1590
(1.1605)
Trend Direction Up (Up) Up (Up) Down (Down) Up
Risk Weight 65-80 (65-85) 75-85 (75-80) 70-80 (80-90) 10-20
Allocation 75% (75%)

Bitcoin/USD

BTC clearly has a positive technical tone ST, MT and LT. Due to relative low liquidity controlled (it seems) activity this market remains very high risk.

(The BTC looks to hold its own for the time being. There is a known long position ready for distribution given the chance. More range trading expected with a slightly higher bias MT. We do not invest in this market)

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.)

BTC/USD Month Week Day Hour
Close 8 March Price 3865
(3811)
Trend Direction Up (Up) Up (Up) Up (Down) Down
Risk Weight 0-10 (0-5) 30-50 (20-30) 35-40 (30-40) 65-75
Allocation 0% (0%)

INDEX: US30, S&P500, Dollar Index, Brent crude oil

Dow Jones

Continued Central Bank favoured low rates together with continued liquidity support still drives this and almost all equity indices around the globe. Afterr some weakness late last week we could see a bit of strength into the coming week, but MT and LT risk weight do call for an extremely cautious approach to fresh investment.

(Mixed picture with ST and MT vulnerability, i.e downside risk. We stay uninvested until the market shows clear oversold conditions. The opposite is technicaly more evident at this moment)

US30 Month Week Day Hour
Close 8 March Price 25473
(26026)
Trend Direction Up (Up) Down (Up) Down (Down) Up
Risk Weight 60-75 (55-60) 90-95 (85-95) 25-40 (80-85) 75-90
Allocation 0% (0%)

Standard & Poor 500

The same call for S&P. These Indices of course usually move in tandem which is relevant confirmation of the Risk calls in these markets.

(Every time frame is showing an uptrend. High risk in MT and ST is reason to stay our of this market. No change since October 2018)

S&P500 Month Week Day Hour
Close 8 March Price 2749
(2804)
Trend Direction Up (Up) Up (Up) Down (Down) Up
Risk Weight 50-70 (50-55) 90-95 (85-95) 25-45 (80-90) 65-85
Allocation 0% (0%)

Dollar Index

Whilst all times frames show a positive price-trend for the USD. Problem is that this trend is not supported by a significant price move. We have seen these 1% moves back and forth for quite a while with Risk weight remaining relatively high in ST, MT and LT. Long dollar exposures to remain fully hedged.

(Mixed picture with LT down trend and high risk weight prevailing. We stay with fully covered long dollar positions)

USDIndex Month Week Day Hour
Close 8 March Price 97.35
(96.44)
Trend Direction Up (Down) Up (Up) Up (Down) Up
Risk Weight 80-85 (80-90) 60-65 (50-60) 70-80 (50-60) 35-45
Allocation 100% (100%)

Crude Oil

The technical picture remains a little mixed and we are carefully watching the divergence between MT Weekly and LT Monthly. This divergence increases the risk of renewed price weakness.

(Further consolidation expected with ST range trading around current price level.
We stay out until a clear oversold condition becomes evident)

Brent Month Week Day Hour
Close 8 March Price 65.80
(65.00)
Trend Direction Up (Up) Up (Up) Down (Down) up
Risk Weight 25-40 (25-30) 80-90 (55-75) 50-55 (90-95) 90-95
Allocation 0% (0%)

Posted in A - All Financial Blogs | 2020 Forecast.

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