Metals – FX- Indices – update – 20 Jan 2019

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


Gold/USD

LT (monthly) still in early Uptrend phase. MT (weekly) high risk but no divergence, whilst ST (Daily and hourly) are in a risk position that likely will limit downside. Important is that this market is not expected to peak MT until ST Daily and/or weekly show price/risk weight divergence. No change.

(LT trend and risk weight are the major force still. Both Daily and Weekly risk weight only topped once following a major trend change. Risk is that this market has (much) further to go. No change in full allocation to Gold vs USD)

Gold/USD Month Week Day Hour
18 Jan close 1282
(1287)
Trend Direction Up (Up) Down (Up) Down (Down) Down
Risk Weight 35-50 (35-50) 85-90 (90-95) 55-70 (75-80) 5-10
Allocation 100% (100%)

Silver/USD

LT (monthly) in very early Uptrend phase. MT (weekly) high risk but no divergence, whilst ST (Daily and hourly) are in a risk position that likely will limit downside. Important is that this market is not expected to peak MT until ST Daily and/or weekly show price/risk weight divergence. No change.

(Past week's correction was minor and weak. We stay will full allocation to silver)

Silver/USD Month Week Day Hour
18 Jan Close 15.30
(15.55)
Trend Direction Up (Up) Down (Up) Down (Down) N
Risk Weight 15-30 (20-30) 80-85 (85-90) 30-50 (75-85) 0-5
Allocation 100% (100%)

Gold/EUR

Eur lost a bit of ground vs USD this week, hence a slightly stronger Gold price. In general the technical picture indicates a slower advance of Gold vs Eur than vs USD. We remain fully allocated to Gold vs Eur.

(Last week's correction may be over fairly soon joining the LT trend again. We remain fully allocated)

Gold/EUR Month Week Day Hour
18 Jan Close 1127
(1123)
Trend Direction Up (Up) Down (Down) N (Down) Down
Risk Weight 60-80 (60-75) 85-90 (90-95) 75-80 (50-55) 35-40
Allocation 100% (100%)

Silver/EUR

LT (monthly) in very early Uptrend phase. MT (weekly) high risk but no divergence, whilst ST (Daily and hourly) are in a risk position that likely will limit downside. Important is that this market is not expected to peak MT until ST Daily and/or weekly show price/risk weight divergence. No change.

(We remain fully allocated. Last week's minor correction is a small divergence away from Weekly and strongly supported by LT uptrend)

Silver/EUR Month Week Day Hour
18 Jan Close 13.50
(13.60)
Trend Direction Up (Up) Down (Up) Down (Down) Down
Risk Weight 25-40 (30-40) 80-85 (85-90) 40-55 (65-75) 5-15
Allocation 100% (100%)

Gold/GBP

Sterling, technically and MT, looks stronger than most currencies. This may put a little more relative pressure on any pair including GBP. The trend that started in October 2018 has some way to go. We stay fully invested on Gold/GBP.

(Last week's action in rather nearing divergence between ST and MT/LT. We will stay with full allocation to Gold vs GBP)

Gold/GBP Month Week Day Hour
18 Jan Close 994
(1003)
Trend Direction Up (Up) Down (Down) N (Down) Down
Risk Weight 60-75 (60-80) 70-85 (80-90) 10-15 (35-45) 70-80
Allocation 100% (100%)

Silver/GBP

Silver has lost 5% from thge recent peak but is still up 14% from the Nov low. We are happy for GBP based investors to keep a full silver allocation.

(Silver vs GBP as against Gold has retraced but is not yet showing any real tiredness coming off the Nov Lows. Remain fully allocated)

Silver/GBP Month Week Day Hour
18 Jan Close 11.90
(12.15)
Trend Direction Up (Up) Down (Down) Down (Down) Down
Risk Weight 30-40 (30-45) 75-85 (85-90) 10-25 (65-70) 30-40
Allocation 100% (100%)

Gold/Silver Ratio

Despite a rally last week there is no change to the Long term and MT picture and we prefer to maintain a 50% ratio investment vs Gold or less if one also holds Platinum.

(Last week's rally appears fairly weak. The bias remains for Silver to strengthen more than Gold, i.e the Ratio to continue its newly established LT downtrend)

AU/AG Ratio Month Week Day Hour
18 Jan Close 83.35
(82.75)
Trend Direction Down (Down) Down (Down) Up (Up) Down
Risk Weight 75-85 (75-85) 20-30 (20-45) 60-75 (15-20) 85-90
Allocation 50% AG (50% AG)

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

Euro/USD

The weak Eur rally that started in Nov shows technical signs of broader USD weakness for MT and LT in spite of a near 1% drop last week. Bias is for a weaker dollar and one should remain fully hedged on long dollar exposures.

(USD bias remains weak overall. Some MT pressure against the EUR, but that will prove temporary. Long dollar positions must be fully hedged)

EUR/USD Month Week Day Hour
18 Jan Close 1.1360
(1.1470)
Trend Direction Up (Up) Up (Up) Down (Down) Down
Risk Weight 10-15 (10-15) 40-50 (35-45) 35-45 (80-85) 20-25
Allocation 100% (100% hedge)

USD/Swiss franc

Last week $/Swiss recovered 50% of the 10 wk downtrend that started in November. Technical bias is for Long dollar exposures to remain fully hedged.

(As the LT trend just changed to down any ST and MT lift is an opportunity to full cover any long dollar positions)

USD/CHF Month Week Day Hour
18 Jan Close 0.9950
(0.9835)
Trend Direction Down (Down) Down (Down) Up (Up) Down
Risk Weight 75-85 (70-80) 35-40 (30-45) 80-95 (20-30) 75-80
Allocation 100% unch

British Pound/USD

Early week votes in parliament only had a very brief violent 1.5% crash effect on GBP which thereafter quickly recovered to end the week nearly unch. Divergence between Hourly and Daily risk weight is reason to stay with the MT and LT trend and remain fully hedged on Short cable exposures.

(Short GBP/Long USD positions must be 100% covered. Any short term GBP weakness, which can easily be driven by Brexit issues is an opportunity to establish fully hedged positions and even for the maximum possible transaction risk time frame. This pair almost tells the story of a No Deal extended membership obligation or even No Brexit outcome being positive for Cable)

Cable Month Week Day Hour
18 Jan Close 1.2865
(1.2840)
Trend Direction Up (Up) Up (Up) Down (Up) Up
Risk Weight 10-15 (10-15) 35-50 (25-40) 85-90 (90-95) 0-10
Allocation 100% unch

British Pound/Euro

GBP vs Eur remains uncertain. Current technical spectrum eyes for more sideways action near term. No change to 50% cover.

(GBP did gain weight last week, but from a pure risk point of view it is wise to remain half covered on any transaction risk exposure time frame. Our bias however, looking at trend and risk weight favors GBP)

GBP/EUR Month Week Day Hour
18 Jan Close 1.1315
(1.1200)
Trend Direction Down (Down) Up (Up) Down (Up) N
Risk Weight 40-45 (35-45) 30-45 (20-30) 90-95 (60-65) 0-10
Allocation 50% (50%)

Bitcoin/USD

BTC keeps finding resistance with every short term rally. Probable fake news that Russia is a large potential buyer of BTC to frustrate the USA and diversify further away from the world reserve currency in itself is a joke. A dangerous play not to be touched for serious investors.

(The very recent ST and MT rally never finished and turned down with prices last week. This is not a normal market and as long as LT trend remains down even though low risk weight in all time frames, the fact that there is a gap to be filled lower down keeps us out of this market. This market is manipulated and one cannot count on high liquidity for more serious size investors

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
18 Jan Close 3600
(3600)
Trend Direction Down (Down) Down (Down) Up (Down) Down
Risk Weight 0-10 (0-10) 10-15 (10-15) 25-30 (10-20) 75-80
Allocation 0% (0%)

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

Dow Jones

Risk is not as high as it was when we first stepped away from this index. The continued push higher however has turned ST (Daily and Hourly) in high risk mode. This is not a BTFD risk anymore where ST continued to quickly diverge bullish from LT. This time round the reverse picture applies. Stay out.

(Strong rally again last week. The technical picture very much points towards a correction in a major downtrend. This is not a risk to start a fresh long position that has serious potential. We stay out)

US30 Month Week Day Hour
18 Jan Close 24706
(23995)
Trend Direction Down (Down) Up (Up) N (Up) Down
Risk Weight 50-65 (45-60) 35-50 (20-35) 95 (90-95) 80-85
Allocation 0% (0%)

Standard & Poor 500

The S&P has recovered 50% from its decline that started early October. The same analysis applies as with DJII. Longs are pure speculative without technical support. Stay out.

(Same strong rally last week. The technical picture very much points towards a correction in a major downtrend. This is not a risk to start a fresh long position that has serious potential. We stay out)

S&P500 Month Week Day Hour
18 Jan Close 2670
(2596)
Trend Direction Down (Down) Up (Up) Up (Up) Up
Risk Weight 45-55 (40-55) 35-50 (20-35) 95-100 (90-95) 75-80
Allocation 0% (0%)

Dollar Index

The index strengthened broadly attempting to reach a 3 months trading range around 97.00. The LT high risk weight means absolute caution for long dollar exposures. Full hedge against majors.

(We could see a bit of range and up for the USD, but the main trend is LT and MT = Down.
No long dollar positions as that risk is high)

USDIndex Month Week Day Hour
18 Jan Close 96.35
(95.65)
Trend Direction Down (Down) Down (Down) Up (Up) Up
Risk Weight 85-90 (85-90) 40-50 (45-65) 50-60 (10-20) 90-95
Allocation 100% unch

Crude Oil

LT trend remains firmly down in spite of January action so far recovering the entire Dec decline. Daily (ST) high risk weight is in divergence relative to Weekly (MT) and Monthly (LT). We are not yet ready to invest in Oil. Possibly an opportunity loss but further downside risk simply must be respected.

(This market is showing divergence between daily and Weekly whilst the LT trend is down. The strong rally of the past two weeks has not removed the major risk position which is for this market to first finish the LT downtrend. We don't know at which level that may be, which could be at current levels at a later date or much lower levels. And that is where risk tells us to stay out)

Brent Month Week Day Hour
18 Jan Close 62.50
(60.55)
Trend Direction Down (Down) Up (Up) Up (Up) Down
Risk Weight 20-35 (15-35) 20-30 (10-20) 85-90 (90-95) 15-20
Allocation 0% (0%)

Posted in A - All Financial Blogs | 2020 Forecast.

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