Metals – FX- Indices – update – 21 Oct 2018

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

Gold / USD

Both weekly and Monthly trends are Up whilst daily has turned neutral. From a risk point of view this market can strongly advance or move sideways short term.
If sideways it will take time for LT time frames to show a fresh turn down, hence no change in allocation.

Gold/USD Month Week Day Hour
Oct 19 close 1226
(1221)
Trend Direction  Up (Up) Up (Up)  N (Up) Down
Risk Weight 20-25 (20) 40-55 (30-40)  (80-85) 40-45
Allocation  80% (80%)

Silver / USD

This pair still cannot make up its mind with daily turning down again. But with weekly still Up and Monthly in Low risk territory, no change in allocation as downside risk appears limited.

Silver/USD Month Week Day Hour
Oct 19 close 14.58
(14.54)
Trend Direction  Down (Down) Up (Up)  Down (Up) Down
Risk Weight 10-20 (10-20)  25-30 (20-30)  50-60 (35-40) 30-40
Allocation  30% (30%)

Gold / EUR

Fairly strong market supported by USDollar strength. Hourly divergence from Daily and with weekly in a strong uptrend, the most we can expect is a pause in the uptrend with larger risk being higher prices. No change in allocation.

Gold/EUR Month Week Day Hour
Oct 19 close 1064
(1044)
Trend Direction Up  (Up) Up (Up) N (Up) N
Risk Weight 10-20 (5-10) 35-60 (15-30) 90-95 (70-75) 10-15
Allocation  75% (75%)

Silver / EUR

No change in overall picture from last week. Still hovering around 2014 and 2015 lows. Downtrend change from 2016 yet to be confirmed (Silver vs Euro appears to be finishing a downtrend soon. Risk picture positive but not fully confirmed No change in allocation.)

Silver/EUR Month Week Day Hour
Oct 19 close 12.66
(12.58)
Trend Direction Down  (Down)  Up (Up)  Down (Up) Down
Risk Weight  10-20 (10-20) (30-35) 60-65  (50-55) 10-20
Allocation (25%)

Gold / GBP

Monthly frame at last week's close shows trend change and may now confirm the higher allocation since two weeks. No change in allocation due to low risk Weekly and Daily trend. This market may touch the 925-927 level before resuming uptrend due to gap opening Oct 15.

Gold/GBP Month Week Day Hour
Oct 19 close 938
(925)
Trend Direction Up (Up) Up (Up) Up (Up) Up
Risk Weight  10-15 (10-15)  35-50 (20-30) 85-90 (35-60) 20-25
Allocation 70% (70%)

Silver / GBP

With Monthly still down, a slowing weekly uptrend and an intra-week high of 11.30 we prefer to reduce allocation back to 40%.(Daily upturn supports a lower risk scenario. Continuation is likely and will turn the monthly up as well. We increase allocation to 50%)

Silver/GBP Month Week Day Hour
Oct 19 close 11.14
(11.04)
Trend Direction Down  (Down) Up  (Up)  Up (Up) Down
Risk Weight 10-15 (10-15) 25-30 (20-25)  50-55 (25-30) 10-15
Allocation 40% (50%)

Gold / Silver Ratio

The ratio peaked at 84.35 last week. With weekly turning up, Risk does not favor Silver overweight yet (Ratio turned up quite aggressively last week with low risk daily diverging from weekly and monthly time frames. Risk weight not clear yet and we remain flat. One should not yet be tempted to short this ratio. Two weeks ago the ratio at this level did look higher risk than at last week's close)
All time high: 1941 = 97, 1991 = 90

AU/AG Ratio Month Week Day Hour
Oct 19 close 83.45
(83.08)
Trend Direction Up (Up) Up (Down) N (Up) Down
Risk Weight 60-75 (65-75) 60-70 (60-65) 80-85 (65-75) 20-40
Allocation Flat

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

Euro / USD

No change from prev week's observation (Direction and risk weight indicates the USD is slowly losing momentum, but may still try to push a bit higher. No change in hedge allocation)

EUR/USD Month Week Day Hour
Oct 19 close 1.1510
(1.1548)
Trend Direction  Down (Down)  Down (Down) Down (Up) Down
Risk Weight 20-30 (20-30) 40-50 (50-60) 25-30 (30-35) 30-35
Allocation 40% hedge
(40% hedge)

British Pound / USD

Risk picture drives more range trading. A more rapid turn on daily and continued uptrend weekly no change from last week's allocation. (Short term risk and volatility should see the pound strengthen a little on Monday but Daily stark risk increase weighs towards more of a sideways picture into next week. Short Pound positions should remained hedged at 70%)

Cable Month Week Day Hour
Oct 19 close 1.3055
(1.3100)
Trend Direction Down (Down) Up (Up) Down (Up) Down
Risk Weight 20-25 (20-25) 60-65 (55-60) 40-50 (70-80) 45-55
Allocation 70% (70%)

USD / Swiss franc

Around the Par level has been resistance for a very long time. More sideway expected , but this market leans towards a stronger CHF longer term. No change. (Long USD/CHF hedged at 70%)

USD/CHF Month Week Day Hour
Oct 19 close 0.9950
(0.9913)
Trend Direction N (N) Up (Up) N (Down) Down
Risk Weight 70 (70)  60-75 (40-65) 90 (85-90) 40-60
Allocation 70% hedge
(70% hedge)

British Pound / Euro

After crossing above 1.14 early in the week Cable was pushed down a full point at the end. Brexit jitters may keep this market in a range for a while longer. No change. (GBP was dumped towards the end of last week. Very short term an advance is the most likely risk. No change in hedge allocation)

GBP/EUR Month Week Day Hour
Oct 19 close 1.1317
(1.1334)
Trend Direction Up (Up) Up (Up)  Down (Up) Down
Risk Weight 50-55 (50-60) 70-80 (60-75) 55-65 (70-85) 15-30
Allocation 50%
(50%)

Bitcoin / USD

Look at this hourly picture of manipulated prices.

Starting on Sunday 14/10 making a huge intra-hour move towards 7,700 at NY open on 15/10 then dropping back sharply with clear and failed attempts to hold it at the 7,000 level. It is/was Tether losing peg with BTC. Who's peg one wonders. Until these markets become very mature and consolidate on sound fundamentals, one should stay clear. Maybe a small speculative position could be taken if risk weight favors this and only short term, but not right now.
(Market turned down last week and appears a bit stronger over the weekend. As long as weekly and monthly remain in down trend direction any shorter term upticks will diverge and resume that LT down trend)
Potential gaps to fill at 5838, 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
Oct 19 close 6534
(6238)
Trend Direction Down (Down)  Down (Down)  Down (Up) Up
Risk Weight 20-35 (20-25) 25-30 (30-35)  30-35 (35-45) 70-75
Allocation 0% (0%)

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

Dow Jones

Both major US Indices consolidated in a more narrow range. The daily turned up early in the week and down again at the close. Strong weekly downtrend and no divergences. NO change. (Daily appears to diverging from both weekly and monthly time frames. However this picture is different from previous divergences causing an extremely lengthy advance. The narrowing monthly risk weight at 85 looking to follow a down path fairly soon and a stronger weekly downtrend make this market still high risk although we may see a little pause again during the week)

US30 Month Week Day Hour
Oct 19 close 25444
(25339)
Trend Direction Up (Up) Down (Down) Down (Down) Up
Risk Weight 80-85 (80-90) 45-70 (70-85) 30-35 (10-20) 40-50
Allocation 0% (0%)

Standard & Poor 500

The exact same picture as DJII except the monthly has turned down 2 weeks ago. Strong weekly downtrend still favors complete exit. (Intra month time frame turned down. Weekly in strong downtrend. Daily divergence may cause the downtrend to pause or reverse temporarily. Risk weight must be on weekly and monthly, hence no allocation change)

S&P500 Month Week Day Hour
Oct 19 close 2768
(2767)
Trend Direction  (Down) Down (Down) Down (Down) Down
Risk Weight 85-90 (85-90)  45-65 (65-80) 30-35 (10-15) 15-25
Allocation 0% (0%)

Dollar Index

This index is clearly seeking direction. No change. It's the Central banker's hedge: 50% either way. (It feels like the dollar uptrend is losing momentum. Risk weight still unsettled with LT trend pointing up. No hedge allocation change)

USDIndex Month Week Day Hour
Oct 19 close 95.65
(95.25)
Trend Direction (Up) Up (Up) Up  (Down) Down
Risk Weight 70-80 (70-80) 45-55 (40-50) 60-70 (60-70) 20-30
Allocation 50% (50%)

Crude Oil

Lots of media jitters. With weekly in strong downtrend, Monthly in high risk and daily reaching low risk, it is too early to consider a small allocation on the long side short term. (Prior to the strong reversal last we signalled a very high risk. Even though ST weight is rapidly decreasing the weekly trend appears high risk although monthly time frame went Neutral at overbought level. No change in 0% allocation to Oil)

Brent Month Week Day Hour
Oct 19 close 80.00
(80.43)
Trend Direction N (N) Down (Down) Down (Down) Up
Risk Weight  90 (90) 65-80 (80-85) 10-15 (25-50) 40-50
Allocation 0% (0%)

Posted in A - All Financial Blogs | 2020 Forecast.

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