Metals – FX- Indices – update – 12 Feb 2019

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


Where market manipulation and greed outlaws technicals

If technicals show very high risk, consistent with all common technical profiles, whilst markets pursue their own rythm irrespective, we simply will not enter that risk trade. And because this may leave us with much access funds held in a higher risk banking environment, where we may not have full control over our assets, we need to find temporary alternatives to park those funds. 2019 and 2020 will likely manifest a paradigm shift for creating just those opportunities. It is a matter of time where all citizens of the world can own small or large participations by way of secure digital tokens backed by hard assets like precious metals, or other relevant minerals and property through legally regulated custodianship personal holdings.

Gold/USD

We stay fully invested with the Long term trend direction until a clear divergence signal between Risk weight and Price presents itself. Until such time the risk of rapid advance in current uptrend remains high.

Gold/USD Month Week Day Hour
12 Febr Price 1310
(1317)
Trend Direction Up (Up) Down (Up) N (Down) Down
Risk Weight 55-70 (55-70) 90-95 (90-95) 65-70 (85-95) 30-40
Allocation 100% (100%)

Silver/USD

We stay fully invested with the Long term trend direction until a clear divergence signal between Risk weight and Price presents itself. Until such time the risk of rapid advance in current uptrend remains high.

(No change in position risk. Trend direction and risk weight between LT to MT and ST favor being long)

Silver/USD Month Week Day Hour
12 Febr Price 15.75
(15.90)
Trend Direction Up (Up) Down (Up) Down (Down) Down
Risk Weight 35-50 (35-50) 80-85 (80-85) 50-55 (80-90) 10-20
Allocation 100% (100%)

Gold/EUR

Tempting to take profit on 30% as both Daily ST and Weekly MT are showing very high risk to turning down, but risk remains with LT and uptrend without confirmed divergence whilst hourly is showing bullish divergence vs daily. So we stay with the 100% long position.

(Momentum in LT still favors staying with the advancing price trend. Risk weight however in all time frames is high and ST risk could trigger a short pause and diverge from the MT Weekly risk which is also in high territory)

Gold/EUR Month Week Day Hour
12 FebrPrice 1157
(1150)
Trend Direction Up (Up) Down (Up) Down (Down) Down
Risk Weight 80-95 (80-95) 90-100 (90-95) 90-95 (90-95) 5-15
Allocation 100% (100%)

Silver/EUR

We stay with the LT uptrend, but cannot exclude a correction. The current level still appears a consolidation in a longer term uptrend.

(We stay with the LT uptrend until either MT or ST until a clear signal tell us otherwise. The 15% price advance since Aug 2018 probably has further to go. No change. Stay fully invested)

Silver/EUR Month Week Day Hour
12 FebrPrice 13.86
(13.85)
Trend Direction Up (Up) Up (Up) N (Down) Down
Risk Weight 45-60 (45-60) 85-90 (80-85) 70-75 (80-90) 5-10
Allocation 100% (100%)

Gold/GBP

We stay with full investment until MT or ST show strong bearish divergence.

(This pair may pause in a MT trading range between 980 and 1030. For now we prefer to remain with the LT uptrend but keep a watch on other GBP pairs to determine MT risk and LT risk. More price action is required to deviate from current position)

Gold/GBP Month Week Day Hour
12 Febr Price 1016
(1005)
Trend Direction Up (Up) Up (Down) Up (Up) Down
Risk Weight 75-90 (75-85) 70-80 (65-70) 90 (65-75) 10-15
Allocation 100% (100%)

Silver/GBP

Same as last week. No confirmation of LT trend changing even temporary because no sign of bearish divergence in MT or ST.

(We stay fully invested until clear signal that the LT and MT uptrend shown signs of getting tired. That is not the case right now)

Silver/GBP Month Week Day Hour
12 Febr Price 12.18
(12.13)
Trend Direction Up (Up) Up (Down) Up (Up) Down
Risk Weight 45-65 (30-40) 75-80 (65-75) 75-80 (70-80) 5-10
Allocation 100% (100%)

Gold/Silver Ratio

No Change. In spite of relative weaker Silver that weakness is marginal and unlike the volatility seen in earlier periods of silver weakness. We stay with the LT down trend.

(Gold/Silver ratio travelled in a mere 0.7% trading range this past week closing virtually unchanged. Current trend direction and risk weight position favors stronger silver. We stay with our 50/50 investment spread)

AU/AG Ratio Month Week Day Hour
12 Febr Price 83.25
(82.60)
Trend Direction Down (Down) Up (Up) Up (N) Up
Risk Weight 65-75 (65-75) 25-30 (20-30) 60-70 (25) 85-90
Allocation 50% AG (50% AG)

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

Euro/USD

The Battle for a strong dollar continues, but every time the dollar strengthens it returns to relative low risk. Euro/USD is now in the lower quartile of the recent 3 months price range. We remain with a fully hedged long dollar position and short dollars covered on an as required basis.

(The US$ peaked vs Euro late 2016 en weakened some 20% in the following year. 2018 was relative strong year for the US$ but technically looks like a natural reaction in a current low risk weight freshly established LT uptrend. Long dollars be 100% hedged)

EUR/USD Month Week Day Hour
12 Febr Price 1.1315
(1.1455)
Trend Direction Up (Up) Down (Up) Down (Up) Up
Risk Weight 10-15 (10-20) 40-50 (45-55) 10-15 (65-75) 85-95
Allocation 100% (100% hedge)

USD/Swiss franc

ST Daily showing bearish divergence having pushed Dollar up against the very upper range area over the past 9 months. We stay with fully hedged long dollar exposures.

(Swiss Fr keeps pushing against par resistance. No change to remain fully hedged on long dollar exposures)

USD/CHF Month Week Day Hour
12 Febr Price 1.0065
(0.9950)
Trend Direction N (Down) Up (Up) Down (Down) Down
Risk Weight 80 (75-80) 60-70 (40-55) 75-80 (70-75) 55-65
Allocation 100% unch

British Pound/USD

Another 1% drop in cable has developed a divergence between Daily SRT and Weekly MT whilst LT Monthly is in an unchanged uptrend. We stay with fully hedged short Cable exposures.

(GBP weakened 1% last week and stays under influence of Brexit gitters and a rather high risk weight ST picture. The LT picture is bullish on trend and risk weight. MT looks strong still whilst ST now provides more relief for another Cable rally. Stay fully hedged on short cable)

Cable Month Week Day Hour
12 Febr Price 1.2865
(1.3065)
Trend Direction Up (Up) Down (Up) Down (Down) Up
Risk Weight 15-25 (10-20) 70-75 (65-80) 10-20 (75-80) 85-90
Allocation 100% unch

British Pound/Euro

After previous week's 2% drop we've seen little real movement or direction. The general risk to trend picture favors staying with current LT uptrend and 75% cover for short Sterling exposures.

(GBP weakened about 1% against most currencies last week from a relatively high risk weight correlation. The overall technical picture favors a larger allocation to GBP, hence we increase the Short sterling cover to 75% from 50% and reduce short Euro vs GBP to 25%)

GBP/EUR Month Week Day Hour
12 Febr Price 1.1380
(1.1415)
Trend Direction Up (Up) Down (Up) Down (Down) Down
Risk Weight 45-55 (45-60) 70-75 (60-75) 25-35 (65-70 ) 20-35
Allocation 75% (50%)

Bitcoin/USD

With Daily ST now clearly diverging for a bearish setup vis a vis Weekly MT and Monthly LT
this remains a high risk play not to be touched.

(This largest of crypto currencies appears to be seeking a LT and MT bottom even though it has not finished. This makes this relatively low liquidity play a risky trade. A ST rally may also develop strong divergence with MT which would drive prices lower again and rapidly. We still believe BTC to hit level (well) below 2828 at some point. Hence, not ready to invest in this market but longs may find a better exit from long or even a MT remain in the next few weeks)

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
12 Febr Price 3640
(3435)
Trend Direction Down (Down) Up (Down) Down (Up) Up
Risk Weight 0-5 (0-5) 10-15 (5-10) 75-80 (25-30) 60-70
Allocation 0% (0%)

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

Dow Jones

The recent rally looks extremely suspicious technically whereas Daily ST is reading a possible third bearish divergence since the rally started around Christmas 2018. Stay out.

(We all read the financial news and the hawkish reaction to apparent further QE is understandable. But we do not invest in markets that show relatively high risk or reside in firm LT downtrends, irrespective of the size of the reaction. ST further upward pressure is possible but will more likely end relatively soon as everything from ST to LT points towards the current uptrend being a secondary reaction in a fresh LT downtrend)

US30 Month Week Day Hour
12 Febr Price 25400
(25063)
Trend Direction Down (Down) Up (Up) Up (Up) Down
Risk Weight 50-60 (50-65) 70-80 (60-70) 75-80 (85-95) 90-100
Allocation 0% (0%)

Standard & Poor 500

On the LT chart this rally looks very different from anything we have seen since 2009. Earlier intermediate bottoms always showed bullish divergence between LT Monthly risk weight and price. That was not the case at the recent bottom. This picture makes any ST or MT rally extremely suspicious. NO change, stay out.

(S&P confirms the technical picture on the Dow. Stay out!. ST further upward pressure is possible but will more likely end relatively soon as everything from ST to LT points towards the current uptrend being a secondary reaction in a fresh LT downtrend)

S&P500 Month Week Day Hour
12 Febr Price 2743
(2706)
Trend Direction Up (Down) Up (Up) Up (Up) Down
Risk Weight 45-55 (45-55) 75-80 (60-70) 75-85 (85-95) 90-100
Allocation 0% (0%)

Dollar Index

The further 1% Dollar rally with some price weakness today does not look strong at all.
Very short term the dollar may stay a little stronger still but poised to weaken again due to a high risk weight Daily ST in combination with a high risk weight and down trending Monthly LT.

(Dollar talk, War talk, China talk, Interest rate talk. Plenty confusion. Anything can happen ST but LT trend is down and still at high risk weight level and must prevail. Bias is for dollar to show further weakness MT and LT)

USDIndex Month Week Day Hour
12 Febr Price 96.65
(95.60)
Trend Direction Down (Down) Up (Down) Down (Down) Down
Risk Weight 85-90 (80-85) 40-50 (30-40) 85-95 (20-30) 5-10
Allocation 100% unch

Crude Oil

Technically all systems are positive, but only just after a five week range between 60 and 63. The danger lies in the fact that there is no technical, trend or risk weight, indication that this market has really turned upwards. It could become a big missed opportunity, but the technical picture also suggests possible heavy resistance evidenced by a long hesitation with only slightly higher prices since the initial 62.00 price peak at year end. We stay out of this market.

(LT trend crossed upwards from a medium low risk weight level on Febr 1. The end of month level will determine whether risk has changed to a clear buy. With ST risk pointing towards very possible divergence vis a vis price (lower risk weight / higher price level). We missed the opportunity to invest which technically looked very low risk ST end of December. As the price may increase further this also increases risk of a resumption of the LT downtrend if we see another drop ST and MT. Investing at the current level is technically not an attractive risk)

Brent Month Week Day Hour
12 Febr Price 62.75
(62.90)
Trend Direction Up (Up) Up (Up) Up (Up) Down
Risk Weight 20-25 (20-25) 45-50 (35-45) 60-65 (55-70) 70-75
Allocation 0% (0%)

Posted in A - All Financial Blogs | 2020 Forecast.

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