Metals – FX- Indices – update – 7 Oct 2018

GOLD & SILVER vs US Dollar, Euro, GBP, Ratio

Gold / USD

Risk has further diminished with weekly turning up and daily in uptrend. Allocation increased to 60%.

Gold/USD Month Week Day Hour
Oct 5 close 1202
(1192)
Trend Direction N (N) Up (N) Up (Down) Up
Risk Weight 15-20 (15-20) 25-35 (25-35) 60-65 (20-25) 60-70
Allocation 60% (50%)

Silver / USD

Last week’s rapid change of trend will develop more volatility short term whilst seeking firm direction. Allocation increase to 20% from 15%.

Silver/USD Month Week Day Hour
Oct 5 close 14.60
(14.60)
Trend Direction Down (Down) Up (N) D (N) N
Risk Weight 10-20 (10-20) 10-20 (15-20) 65-70 (70-75) 55-60
Allocation 20% (15%)

Gold / EUR

Divergence between daily and LT risk may cause a pause. LT risk is low henced no change in allocation.

Gold/EUR Month Week Day Hour
Oct 5 close 1038
(1015)
Trend Direction Up (N) Up (Up) Up (Up) Up
Risk Weight 5-10 (5-10) 5-15 (5-10) 85-90 (25-30) 65-70
Allocation 75% (75%)

Silver / EUR

Anticipate a smaller divergence between short and LT time frames. Low risk weight LT then warrents an allocation increase to 25%.

Silver/EUR Month Week Day Hour
Oct 5 close 12.66
(12.62)
Trend Direction Down (Down) Up (Up) Down (Up) Down
Risk Weight 10-20 (10-20) 10-20 (10-20) 70-80 (75-80) 50-55
Allocation 25% (20%)

Gold / GBP

Last week’s rapid strength dued to a stronger dollar has slightly increased risk of short term reaction. LT remains in favor of trend change. No change in allocation.

Gold/GBP Month Week Day Hour
Oct 5 close 916
(914)
Trend Direction N (N) 10-20 (Up) Down (Up) Down
Risk Weight 10 (5-10) 10-20 (10-20) 65-75 (15-25) 10-20
Allocation 70% (70%)

Silver / GBP

Sideways price expected due to short term turning towards LT low risk. No change in allocation. (Risk weight turning positive. Allocation increase to 40%)

Silver/GBP Month Week Day Hour
Oct 5 close 11.12
(11.20)
Oct 1
Trend Direction Down (Down) Up (Up) Down (Up) D
Risk Weight 10-15 (10-20) 10-20 (10-25) 60-70 (70-75) 20-30
Allocation 40% (40%)

Gold / Silver Ratio

Ratio shows indiciveness. Returning to Flat allocation looking for firm direction. (Weight can remain on holding Silver. Short term price reaction up followed by further downward pressure most likely)
All time high: 1941 = 97, 1991 = 90

AU/AG Ratio Month Week Day Hour
Oct 5 close 81.95
(81.15)
Trend Direction Up (Up) Down (Down) Up (Down) Down
Risk Weight 60-70 (60-70) 60-75 (60-75) 20-30 (5-15) 40-50
Allocation Flat

EUR/USD, USD/CHF GBP/USD, GBP/EUR, Bitcoin

Euro / USD

A more rapid USD advance last week calls for caution. We reduce our hedge to 40% from 70%. (Turned down last week as ST diverged from LT. The picture looks to turn in favor of USD for a while shifting weight to a 70% EUR hedge)

EUR/USD Month Week Day Hour
Oct 5 close 1.1525
(1.1745)
Trend Direction Down (Down) Down (Down) N (Down) Down
Risk Weight 20-30 (25-30) 60-65 (65) 10-15 (20-40) 50-60
Allocation 40% hedge
(70% hedge)

British Pound / USD

The long term risk increasingly pictures a stronger pound vs USD. Early weakness coming calls for entry to a 70% hedge for Sterling shorts. GBP longs risk is lower. (Still undecided. Risk of imminent larger hedge either way is too early to call)

Cable Month Week Day Hour
Oct 5 close 1.3120
(1.3055)
Trend Direction Down (Down) Up (Up) Up (Down) Down
Risk Weight 20-25 (20-30) 50-55 (35-45) 15-25 (30-40) 85-90
Allocation 70% hedge GBP shorts

USD / Swiss franc

No change allocation. Could see bit of initial strenght beginning of week then weakness as daily divergence kicks in. Dollar uptick last week bit too quick. (USD up against all majors. Risk weight still calls for larger USD hedge vs CHF especially if price reaches the 1.00 level which has proven peak territory the past 5 years.

USD/CHF Month Week Day Hour
Oct 5 close 0.9900
(0.9807)
Trend Direction N (Down) Up (Up) Down (Down) Down
Risk Weight 70 (65) 25-40 (20-40) 90-95 (80-95) 5-10
Allocation 70% hedge
(70% hedge)

British Pound / Euro

GBP risk looks it could advance a bit further vs EUR. Hedge allocation for GBP longs reduced from 80% to 50%. (In spite of a slightly stronger GBP, the risk weight remains N on avg and demands prudence with no change in hedge allocation)
80% short means long exposures should have risk cover of 80% (and vv))

GBP/EUR Month Week Day Hour
Sept 28 close 1.1380
(1.1215)
Trend Direction Up (Down) Up (Up) Up (Up) N
Risk Weight 50-60 (50) 50-60 (45-50) 80-90 (60-65) 85-90
Allocation 50% long edge
(80% hedge)

Bitcoin / USD

No change. (This market still gives little clue. Could be lack of liquidity with traders on the sidelines. Following daily risk, no change, stay out)
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 5 close 6615
(6635)
Trend Direction Down (N) N (N) Up (Up) Up
Risk Weight 20-25 (20-25) 30-35 (30-35) 50-60 (65-70) 25-30
Allocation

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

Dow Jones

Very high risk market. No change as weekly has turned down (The short picture, like all summer, is for this market to push and push, But LT risk for imminent turn down is higher again. 0% allocation to avoid ultimate risk)

US30 Month Week Day Hour
Oct 5 close 26447
(26458)
Trend Direction Up (Up) Down (N) Down (Down) Up
Risk Weight 80-90 (75-90) 80-90 (95) 70-80 (70-75) 25-35
Allocation 0% (0%)

Standard & Poor 500

0% allocation. Market looks higher risk this week than last with a 2% price slide. (Another quarterly high close. LT Risk has become outside category and this market is only for short term traders with back up liquidity)

S&P500 Month Week Day Hour
Oct 5 close 2885
(2933)
Trend Direction Up (Up) Down (N) Down (Up) Up
Risk Weight 90-95 (85-95) 90-95 (90-95) 45-60 (65-75) 30-35
Allocation 0% (0%)

Dollar Index

Although the USD looks toppish vs majors, the index may continue to show relative strength. No change in allocation. (The index strengthened and still looks it may continue in the coming week. Risk is short term range bound with LT risk increasing every month, but not yet critical)

USDIndex Month Week Day Hour
Oct 5 close 95.60
(95.15)
Trend Direction Up (Up) Up (Down) Up (N) N
Risk Weight 70-80 (70-80) 35-40 (30-35) 60-80 (15) 20-30
Allocation 50%

Crude Oil

Further push up this week has only increased the same risk. 0% allocation. (The 2 1/2% upward price movement caused monthly, weekly and daily risk weight levels to show high a risk price alert. Allocation down from 30% to 0%)

Brent Month Week Day Hour
Oct 5 close 84.11
(82.73)
Trend Direction Down Down) Up (Up) Down (N) Down
Risk Weight 90-95 (90-95) 85-90 (85-95) 80-90 (85) 15-20
Allocation 0% (30%)
Posted in A - All Financial Blogs | 2020 Forecast.

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