Metals – FX- Indices – update – 27 Jan 2019

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


Gold/USD

Monthly and Weekly risk and trend are still dominant. No change.

(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)

Gold/USD Month Week Day Hour
25 Jan close 1303
(1282)
Trend Direction Up (Up) N (Down) Up (Down) Up
Risk Weight 35-50 (35-55) 90 (85-90) 35-50 (55-70) 90-95
Allocation 100% (100%)

Silver/USD

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

(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)

Silver/USD Month Week Day Hour
25 Jan Close 15.70
(15.30)
Trend Direction Up (Up) Down (Down) Up (Down) Up
Risk Weight 20-30 (15-30) 80-85 (80-85) 30-45 (30-50) 90-95
Allocation 100% (100%)

Gold/EUR

Trend and Risk weight still favor full investment in Gold. Eur starting to show some bias towards a short term pause. We keep a check on that.

(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)

Gold/EUR Month Week Day Hour
25 Jan Close 1142
(1127)
Trend Direction Up (Up) Up (Down) Up (N) Up
Risk Weight 60-80 (60-80) 90-95 (85-90) 60-75 (75-80) 75-85
Allocation 100% (100%)

Silver/EUR

Trend and risk weight favor a low risk fully invested position. Remain fully invested.

(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)

Silver/EUR Month Week Day Hour
25 Jan Close 13.78
(13.50)
Trend Direction Up (Up) Down (Down) Up (Down) Down
Risk Weight 30-40 (25-40) 80-85 (80-85) 35-50 (40-55) 5-15
Allocation 100% (100%)

Gold/GBP

Relative weakness as indicated last week did materialize. ST weakness and low risk weight points towards short term strength, the extend of which is still hard to predict.

(Jan 20: 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)

Gold/GBP Month Week Day Hour
25 Jan Close 990
(994)
Trend Direction Up (Up) Down (Down) Up (N) Down
Risk Weight 60-75 (60-75) 65-75 (70-85) 5-10 (10-15) 60-65
Allocation 100% (100%)

Silver/GBP

Silver continued marginally weak last week but finished with a strong recovery. No change in being fully invested.

(Silver has lost 5% from the 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/GBP Month Week Day Hour
25 Jan Close 11.92
(11.90)
Trend Direction Up (Up) Down (Down) Up (Down) N
Risk Weight 30-40 (30-40) 65-75 (75-85) 5-15 (10-25) 85
Allocation 100% (100%)

Gold/Silver Ratio

Silver is more likely to strengthen against Gold given the risk weight on LT (monthly) and ST (Daily) overruling then Weekly (MT) which is kind of Neutral in a lower risk weight position. From a pure risk perspective we prefer not to increase the silver above 50% in such situation.

(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)

AU/AG Ratio Month Week Day Hour
25 Jan Close 82.55
(83.35)
Trend Direction Down (Down) N (Down) Down (Up) Down
Risk Weight 75-85 (75-85) 20-25 (20-30) 65-75 (60-75) 5-10
Allocation 50% AG (50% AG)

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

Euro/USD

Eurt has difficulty breaking the 1.13-1.15range decisively. Overall risk remains in favor of a weaker USDollar MT. NO change maintaining 100% hedge on short dollar exposures.

(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)

EUR/USD Month Week Day Hour
25 Jan Close 1.1400
(1.1360)
Trend Direction Up (Up) Up (Up) Up (Down) Down
Risk Weight 10-15 (10-15) 45-50 (40-50) 20-25 (35-45) 90-95
Allocation 100% (100% hedge)

USD/Swiss franc

This pair continues in the upper 1/3rd of the broad 0.90-1.05 5 year range. The Monthly higher risk weight and trend direction must now be considered leading risk, hence long dollar exposures fully hedged.

(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)

USD/CHF Month Week Day Hour
25 Jan Close 0.9935
(0.9950)
Trend Direction Down (Down) Up (Down) Down (Up) Down
Risk Weight 75-80 (75-85) 35-45 (35-40) 80-90 (80-95) 10-15
Allocation 100% unch

British Pound/USD

Cable showed good strength last week. We still recommend a fully hedged short cable exposure.

(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)

Cable Month Week Day Hour
25 Jan Close 1.3190
(1.2865)
Trend Direction Up (Up) Up (Up) Up (Down) Down
Risk Weight 10-20 (10-15) 50-70 (35-50) 90-100 (85-90) 90-95
Allocation 100% unch

British Pound/Euro

GBP showed good strength last week and now at the top end of last years trading range. Daily risk is high whilst weekly may start to see some price (higher) risk weight (lower) divergence. We continue with 50% hedge either way.

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

GBP/EUR Month Week Day Hour
25 Jan Close 1.1570
(1.1315)
Trend Direction Up (Down) Up (Up) N (Down) Up
Risk Weight 50-55 (40-45) 45-65 (30-45) 95 (90-95) 60-70
Allocation 50% (50%)

Bitcoin/USD

Short term increase in risk weight, albeit modest, without real price change still makes this crypto suspect of further near term weakness. One major factor that can have negative influence on all crypto currencies is the expected 2019 paradigm shift in the use of blockchain technology to tokenize a whole variety of private assets.

(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.

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
25 Jan Close 3570
(3600)
Trend Direction Down (Down) Down (Down) Up (Up) Up
Risk Weight 0-10 (0-10) 5-15 (10-15) 40-50 (25-30) 80-90
Allocation 0% (0%)

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

Dow Jones

This Index has now recovered 50% of the drop since Sept. However, we see no reason to deviate from our No risk position as initiated last year.

(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)

US30 Month Week Day Hour
25 Jan Close 24737
(24706)
Trend Direction Down (Down) Up (Up) Down (N) Down
Risk Weight 50-65 (50-65) 50-60 (35-50) 85-90 (95) 50-60
Allocation 0% (0%)

Standard & Poor 500

S&P shows the same fundamental higher risk as DJII. Owning this Index simply looks high risk and we do not invest in a broader index under these conditions.

(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)

S&P500 Month Week Day Hour
25 Jan Close 2664
(2670)
Trend Direction Down (Down) Up (Up) Down (Up) Down
Risk Weight 45-55 (45-55) 45-60 (35-50) 80-85 (95-100) 65-75
Allocation 0% (0%)

Dollar Index

The larger 1% drop reversal last week was largely influenced by strong Sterling. Risk weight and trend continues to favor full hedge on Long dollar exposures.

(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)

USDIndex Month Week Day Hour
25 Jan Close 95.81
(96.35)
Trend Direction Down (Down) Down (Down) Down (Up) Up
Risk Weight 85-90 (85-90) 35-45 (45-65) 65-75 (10-20) 5-10
Allocation 100% unch

Crude Oil

The Weekly (MT) and Daily (ST) did show risk weight price divergence around year end and drove a fairly strong countertrend rally. From a pure risk perspective we must follow the continued LT downtrend. We do not invest in Oil until this market shows a serious LT bottom, the level of which has yet to be determined. This could take a long time.

(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)

Brent Month Week Day Hour
25 Jan Close 61.50
(62.50)
Trend Direction Down (Down) Up (Up) Down (Up) Down
Risk Weight 15-35 (20-35) 25-35 (20-30) 70-80 (85-90) 65-70
Allocation 0% (0%)

Posted in A - All Financial Blogs | 2020 Forecast.

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