Metals – FX- Indices – update – 17 Nov 2018


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

Gold/USD

Again Gold had a near one on one move with the USDollar. Monday $Up & Gold down. Rest of the week $Down and Gold up. The initial allocation of 60% at slightly lower levels remains. Weekly needs to turn up for the uptrend to be resumed in full force which is supported by clear daily and Monthly uptrends, hence still a serious allocation of 60% (A midweek accelerating USD was the major influence on PM. With weekly turning down the risk weight requires allocation to be reduced to 60% again)
Gold/USD Month Week Day Hour
Nov 16 close 1221 (1210)
Trend Direction Up (Up) Down (Down) Up (Down) Down
Risk Weight 20-25 (20-25) 70-80 (75-80) 30-45 (30-40) 65-70
Allocation 60% (60%)

Silver/USD

Divergence between Hourly and daily could see another early or midweek bottoming event. Monthly appears to become more neutral although risk weight same as last week. Before allocating a larger silver position we want to be patient and see the Weekly turning north. (The downside risk short term appears limited. Weekly turning down looks interim and for now stay with the minimum 40% allocation)
Silver/USD Month Week Day Hour
Nov 16 close 14.37 (14.12)
Trend Direction Down (Down) Down (Down) Up (Down) Down
Risk Weight 10-15 (10-15) 30-35 (30-35) 25-35 (25-40) 85-90
Allocation 40% (40%)

Gold/EUR

Ended the week where it started. With Daily turning Up with a bullish divergence from Weekly turning down. Staying with the same fairly full allocation of 75% seems an acceptable risk. (ST indicative of sideways range. With weekly divergence developing we will reduce allocation to 60% upon Hourly turning down from higher risk level)
Gold/EUR Month Week Day Hour
Nov 16 close 1069 (1066)
Trend Direction Up (Up) Down (N) Up (Down) Down
Risk Weight 20-35 (20-30) 70-75 (70-75) 30-40 (30-40) 5-15
Allocation 75% (75%)

Silver/EUR

Similar trend timeframe behavior as Gold. And whilst trading in a four year range of lows the allocation remains unchanged at 45%. (Allocation unchanged at 45%. USD move pushed silver lower and whilst MT still downside risk, ST and LT should balance this to a sideways risk)
Silver/EUR Month Week Day Hour
Nov 16 close 12.59 (12.45)
Trend Direction Up (Up) Down (N) Up (Down) Down
Risk Weight 15-20 (15-20) 40-50 (20-35) 20-35 (25-30) 20-25
Allocation 45% (45%)

Gold/GBP

Back to the higher level of 2 weeks ago, with all trading volatility coming from Brexit and Conservative party woes. The technical picture is less certain at this moment and we prefer to reduce the Gold allocation vs GBP from 70% to 50% until such time that a clearer trend develops again. This is a tough call but risk prudence requires limited exposure and possible opportuninity loss. (Not unexpected, this pair may swiftly fill the gap at 925. Daily reaching low risk is likely to see a reversal up again. Coming week close watch whether to reduce 70% allocation)
Gold/GBP Month Week Day Hour
Nov 16 close 950 (930)
Trend Direction Up (Up) Down (Down) Up (Down) Down
Risk Weight 20-35 (15-25) 60-70 (65-70) 30-50 (5-15) 65-75
Allocation 50% (70%)

Silver/GBP

With USD and Brexit woes influencing price movements the technical picture indeed looks more bullish, but the speed of the 3% down to up reversal requires caution still. We remain at 50% long Silver allocation. (Lower risk picture all round. May increase to 70% if daily trend turns Up)
Silver/GBP Month Week Day Hour
Nov 16 close 11.18 (10.87)
Trend Direction Up (N) Down (Down) Up (Down) Down
Risk Weight 10-20 (10-15) 30-35 (35-40) 30-50 (10-15) 35-40
Allocation 50% (50%)

Gold/Silver Ratio

Volatile moves blur the technical picture leaning towards a slight silver overweight again, but with monthly still up, Hourly near oversold and daily turning down rather quick, we may see another 1% range trading week ahead. Prudence is still to be cautious. Prefer Monthly to turn into Neutral area with weekly turning down confirmed by Daily before serious overweight silver allocation. (Ratio reaching higher risk but not finished. No allocation change) All time high: 1941 = 97, 1991 = 90
AU/AG Ratio Month Week Day Hour
Nov 16 close 84.50 (85.20)
Trend Direction Up (Up) N (Up) Down (Up) Down
Risk Weight 75-85 (75-85) 80 (75-85) 60-80 (65-70) 5-10
Allocation Flat

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

Euro/USD

Last Monday down 1%, Tuesday up 1%, Wed,Thu range and Friday up 1%. Last week's picture was confirmed however the speed of the uptick drives caution again. With Daily turning up and Hourly high risk we may see a 1% range trading again slightly lower from current level. Long USD position to remain hedged at 70%.
(Strong dollar finish may continue early in week. Overall picture becoming lower risk LT. No allocation change)

EUR/USD Month Week Day Hour
Nov 16 close 1.1410
(1.1410)
Trend Direction Down (Down) Down (Down) Up (Down) Down
Risk Weight 10-20 (10-20) 15-20 (15-25) 35-50 (30-40) 90-95
Allocation 70% hedge
(70% hedge)

British Pound/USD

With Monthly downtrend moving into exhaustion And more range trading expected no allocation change. Short cable cover 70%.
(Risk and trend show more sideways range action. No allocation change)

Cable Month Week Day Hour
Nov close 1.2830
(1.2840)
Trend Direction Down (Down) Down (Down) Down (Down) Up
Risk Weight 10-15 (10-20) 40-45 (40-45) 35-45 (75-80) 50-55
Allocation 70% (70%)

USD/Swiss franc

Same range bound outlook. LT Trend near exhaustion with weekly turning down but an acceleration of daily. Maintain a 70% hedge on Long $ positions.
(No change even though trend still up but at higher risk)

USD/CHF Month Week Day Hour
Nov 16 close 1.0000
(1.0050)
Trend Direction Up (Up) Down (Up) N
Risk Weight 75-85 (75-85) 85-90 (85-90) 50-65 (75-80) 0-5
Allocation 70% hedge
(70% hedge)

British Pound/Euro

Last week we increased our Short sterling hedge from 60 to 70%. 2 days of strenght were followed by a sharp drop into the end of October zone.
No strong direction with all time frames hovering middle of risk weight. Maintain 70% short sterling cover vs EUR.
(Short Sterling positions should be covered 70%, up from 60%)

GBP/EUR Month Week Day Hour
Nov 16 close 1.1240
(1.1435)
Trend Direction N (Up) Down (Up) Down (Down) N
Risk Weight 50-55 (55-65) 70-75 (85-90) 40-60 (60-70) 5-10
Allocation 60%
(50%)

Bitcoin/USD

Last week's speculative consideration lasted one day without price movement. News broke at Mainstream media that Bitcoin Cash lost support for another fork with main players shredding $1m per day on electronic mining and other expenses taking the entire cryptocurrency space down with it. It shows how extremely speculative this market is and why only small speculative allocations may be taken to manage overall risk in any portfolio including crypto. Back to 0% full stop. The totally manipulated crypto currency market has no other backing than 'old profits' by large early speculcators. Dangerous ground confirmed by the technical picture.
(With weekly turning up this market could rally. A small 20% allocation long is a speculative consideration)
[monthly chart 2016-to date]

Potential 'opening up' gaps still to fill at 4330 and 2828.
If this market is poised to turn from extremely overbought (Dec 2017) to oversold, it doesn't appear to be finished.

BTC/USD Month Week Day Hour
Nov 16 close 5655
(6420)
Trend Direction Down (Down) Down (Up) Down (Up) Up
Risk Weight 15-20 (20-25) 25-30 (25-30) 20-30 (50-55) 55-60
Allocation 0% (0%)

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

Dow Jones

Our risk path remains. Last weeks opening a little higher followed by a one way 1000p drop with an end of week 500p correction. No allocation to this index as yet. LT to SH, Down Up Down Up means stay with the current LT trend (Monthly), which is down.
(The Weekly turned up but Daily is diverging at high risk and syncs with Monthly. Hourly may push prices a little higher at opening, but market remains high risk. No change)

US30 Month Week Day Hour
Nov 16 close 25413
(25989)
Trend Direction Down (Down) Up (Up) Down (N) Up
Risk Weight 75-85 (80-85) 40-50 (30-40) 50-55 (90-95) 75-80
Allocation 0% (0%)

Standard & Poor 500

Weekly uptrend looks like a correction in longer down trend. S&P looks as suspicious as INDU. No change in 0% allocation.
(High risk daily risk divergence with Weekly risk weight which trend did turn up (temporarily it may turn out). Monthly down trend appears firmer. Same risk as DJII)

S&P500 Month Week Day Hour
Nov 16 close 2736
(2781)
Trend Direction Down (Down) Up (Up) N (Up) Up
Risk Weight 70-80 (70-85) 30-45 (25-35) 50-55 (85-90) 70-80
Allocation 0% (0%)

Dollar Index

The Dollar Index (USD vs basket of majors currencies) looks more exhaustive even than the $ pairs above. No Change for Long dollar positions; 70% hedge.
(No change, 70% hedge for long dollar positions. For hedging a more conservative approach is desired when risk weight is over 80 in LT time frames)

USDIndex Month Week Day Hour
Nov 16 close 96.43
(96.90)
Trend Direction Up (Up) Down (Up) Down (Down) Down
Risk Weight 80-85 (80-90) 80-85 (75-85) 50-65 (55-65) 0-10
Allocation 70% (70%)

Crude Oil

Early rally last week followed by 6% drop and 3% range trading latter half. Small rally possible but jitters of a 2 months 25% price drop will find sellers on any decent rally. Risk weight shows some divergence between LT and MT, thus possible rally into low 70's, but still too high risk for a fresh allocation to Oil. This market needs to find a real bottom first.
(Daily low risk weight may push prices higher early in the week creating possible divergence with weekly and monthly down trends. Patience seems the best before jumping into this market again seriously. Any small percentage short term speculative long position must be treated with great care. No change in 0% allocation)

Brent Month Week Day Hour
Nov 16 close 67.10
(69.90)
Trend Direction Down (Down) Down (Down) Up (Down) N
Risk Weight 65-80 (70-80) 10-25 (20-40) 10-15 (5-10) 40
Allocation 0% (0%)

Posted in A - All Financial Blogs | 2020 Forecast.

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