Metals – FX- Indices – update – 25 Nov 2018


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

Gold/USD

Our gold allocation vs USD remains 60%. This pair has still not confirmed a full allocation even though other asset classes remain more vulnerable and would justify a higher allocation to Gold. Within any asset allocation policy Gold must play an important enough role, simply because a minimum range of around 5% protects better than no allocation in any institutional portfolio. (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%)
Gold/USD Month Week Day Hour
Nov 23 close 1223 (1221)
Trend Direction Up (Up) Down (Down) Up (Up) N
Risk Weight 20-25 (20-25) 65-75 (70-80) 30-45 (70-75) 30-35
Allocation 60% (60%)

Silver/USD

LT trend risk is narrowing. This is an indication of an ending Downtrend. Next weekend is month end. A trend change to Up is required to call a LT trend change. Weekly and daily risk weight cannot yet confirm an early LT, hence allocation remains at 40%. (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)
Silver/USD Month Week Day Hour
Nov 23 close 14.24 (14.37)
Trend Direction Down (Down) Down (Down) Up (Up) Down
Risk Weight 10-15 (10-15) 25-30 (30-35) 50-55 (25-35) 25-30
Allocation 40% (40%)

Gold/EUR

The LT trend prevails without imminent divergences. Hourly overbought range may give just a little ST pressure early in the week. Stay with allocation at 75%. (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)
Gold/EUR Month Week Day Hour
Nov 23 close 1079 (1069)
Trend Direction Up (Up) Up (Down) Up (Up) Up
Risk Weight 20-40 (20-35) 70-75 (70-75) 65-75 (30-40) 90=100
Allocation 75% (75%)

Silver/EUR

No change in risk patterns. Same allocation. (Similar trend timeframe behavior as Gold/EUR. And whilst trading in a four year range of lows the allocation remains unchanged at 45%)
Silver/EUR Month Week Day Hour
Nov 23 close 12.58 (12.59)
Trend Direction Up (Up) Down (Down) N (Up) Up
Risk Weight 15-20 (15-20) 40-45 (40-50) 50-55 (20-35) 50-55
Allocation 45% (45%)

Gold/GBP

Medium term higher risk vis a vis LT favors a no change position at 50% allocation. (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)
Gold/GBP Month Week Day Hour
Nov 16 close 953 (930)
Trend Direction Up (Up) N (Down) Down (Down) Down
Risk Weight 20-35 (10-20) 65 (30-35) 80-90 (30-50) 75-85
Allocation 50% (50%)

Silver/GBP

If end of Nov (next week update) show an uptrend in Monthly whilst Medium term indicators are positive or low risk we will increase allocation from current 50%. (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)
Silver/GBP Month Week Day Hour
Nov 23 close 11.12 (11.18)
Trend Direction Up (Up) Down (Down) Down (Up) Down
Risk Weight 10-15 (10-20) 30-35 (30-35) 65-75 (30-50) 35-40
Allocation 50% (50%)

Gold/Silver Ratio

The Ratio is semi-volatile range bound closing above 85.00 again. Whilst the nominal price sill hovers around highs of the last 25 years there is no clear signal of an ending uptrend with monthl;y still is clear uptrend with increading risk similar risk weight. Next week's close may turn out crucial. We remain flat for now. (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) All time high: 1941 = 97, 1991 = 90
AU/AG Ratio Month Week Day Hour
Nov 23 close 85.33 (84.50)
Trend Direction Up (Up) Up (N) Down (Down) Down
Risk Weight 75-85 (75-85) 80-75 (80) 50-55 (60-80) 65-70
Allocation Flat

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

Euro/USD

Weekly turned Up. This is a signal for the beginning of Eur down trend hesitation. Dollar top in sight btherefore but not quite. Stay with 70% hedge on long dollar positions vs EUR. (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%)
EUR/USD Month Week Day Hour
Nov 23 close 1.1340 (1.1410)
Trend Direction Down (Down) Up (Down) Down (Up) Up
Risk Weight 10-20 (10-20) 15-20 (15-20) 50-55 (35-50) 10-15
Allocation 70% hedge (70% hedge)

USD/Swiss franc

Divergence between daily and Weekly willlikely push this pair above par again. Same range outlook. No change in hedge for 70% long dollar positions. (Same range bound outlook. LT Trend near exhaustion with weekly turning down but an acceleration of daily. Maintain a 70% hedge on Long $ positions)
USD/CHF Month Week Day Hour
Nov 23 close 0.9970 (1.0000)
Trend Direction Up (Up) Down (Down) Up (Down) Down
Risk Weight 75-85 (75-85) 80-85 (85-90) 20-25 (50-65) 70-75
Allocation 70% hedge (70% hedge)

British Pound/USD

Daily turning up last week indicates bottoming action LT but not quite finished. Stay with 70% short cable hedge. (With Monthly downtrend moving into exhaustion And more range trading expected no allocation change. Short cable cover 70%)
Cable Month Week Day Hour
Nov 23 close 1.2824 (1.2830)
Trend Direction Down (Down) Down (Down) Up (Down) Up
Risk Weight 10-15 (10-20) 30-35 (40-45) 20-25 (75-80) 20-30
Allocation 70% (70%)

British Pound/Euro

This pair saw a slight increase in price last week but looks speculative whilst Trend and Risk are leaning towards a 'potential' move for a weaker pound. Prudence, so no change in short sterling hedge of 60%. (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)
GBP/EUR Month Week Day Hour
Nov 23 close 1.1310 (1.1240)
Trend Direction N (N) Down (Down) Up (Down) Down
Risk Weight 55 (50-55) 60-70 (70-75) 20-30 (40-60) 65-70
Allocation 60% (60%)

Bitcoin/USD

A very strong depreciation again closing Friday 23 at 4415. Market turned further south over the weekend with a low of 3653 creating a gap from last Friday's close. We could see a rally into the 4,415+ again which could last severeal days but this market still looks extremely vulnerable given the scare for the vast no of smaller participants. They were likely sellers over the weekend. Interesting that there is just one gap left to fill at 2828. Whilst the LT trend is down any size price move is possible. This is the kind of market where many wealthier non professional investors will be forced out at lower levels still. (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) [monthly chart 2016-to 16 Nov, 2018] Potential 'opening up' gaps still to fill at 2828. We excluse weekend action to determine opening gaps as major players are not partipating in size. 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 23 close 4415 (5655)
Trend Direction Down (Down) Down (Down) Up (Down) Up
Risk Weight 15-20 (15-20) 15-25 (25-30) 5-10 (20-30) 75-90
Allocation 0% (0%)

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

Dow Jones

Mwrket dropped 1000 points last week and remains hig risk even though daily shows an oversold risk weight. With Weekly in down trend and Monthly in established downtrend Daily risk may give some short term relief but Risk is Down. MT and LT. No change; zero % allocation. (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)
US30 Month Week Day Hour
Nov 23 close 24286 (25413)
Trend Direction Down (Down) Down (Up) Down (Down) Down
Risk Weight 70-80 (75-85) 40-45 (40-50) 0-5 (50-55) 20-30
Allocation 0% (0%)

Standard & Poor 500

100 point drop last week. No Change; 0% allocation. Same risk analysis as DJII. (Weekly uptrend looks like a correction in longer down trend. S&P looks as suspicious as INDU. No change in 0% allocation)nthly down trend appears firmer. Same risk as DJII)
S&P500 Month Week Day Hour
Nov 23 close 2632 (2736)
Trend Direction Down (Down) Down (Up) Down (N) Down
Risk Weight 60-80 (70-80) 30-35 (30-45) 0-10 (50-55) 30-50
Allocation 0% (0%)

Dollar Index

Index up 0.5 point last week. With hourly oversold, expect some upward pressure very short term. Index starting show some exhaustion. No change. Long dollar positions to remain 70% hedged for now. (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)
USDIndex Month Week Day Hour
Nov 23 close 96.94 (96.43)
Trend Direction Up (Up) Down (Down) Up (Down) Down
Risk Weight 80-90 (80-85) 80-85 (80-85) 50-55 (50-65) 90-100
Allocation 70% (70%)

Crude Oil

Another 13% drop during the week may have come a little early. Daily and weekly risk is low. whilst monthly risk weight has widened. This gives room for a rally short term. We'd feel comfortable with a fresh 30% allocation from 0%. (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)
Brent Month Week Day Hour
Nov 23 close 59.20 (67.10)
Trend Direction Down (Down) Down (Down) Down (Up) Up
Risk Weight 60-80 (65-80) 5-15 (10-25) 5-10 (10-15) 15-25
Allocation 30% (0%)

Posted in A - All Financial Blogs | 2020 Forecast.

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