Gold – FX- Dow – 13 September 2019

GOLD: Gold vs US Dollar, Euro and GBP

Gold/USD Price Live, Weekly risk position analysis relative to Hourly, Daily, Weekly and Monthly data
(Previous week in brackets)

Gold/USD Month Week Day
Close 13 September: 1488 (1507)
Trend Direction Up (Up) Down (Down) Up (Down)
Risk Weight 80-90 (85-90) 80-85 (85-95) 5-15 (50-65)
Allocation 100% (100%)

Hourly near oversold. ST Daily shows Bullish divergence versus MT Weekly.
The one year Gold uptrend in progress vs USD and all other fiat currencies did reach a temporary plateau 3 weeks ago. 90 years of technical analysis statistics learns that MT and LT overbought indicators are most likely to repeat themselves several times before a major trend ends and subsequently turns. Long term patience is likely to offer a big reward for any investor in insurance Gold and especially against USD once the Greenback finally starts that long expected downtrend and this pair reaches new all time highs. No Change.

Last week: The above chart shows a 15 year support line and a parallel resistance line just to get an idea where this market is targeted, which for now is around 2400-2500 on this linear scale chart. Since the Sept 1999 low of 253 up to the 2011 top at 1920 we have seen 8 serious LT risk weight tops. So far, since the Dec 2015 low at 1046 we have had 2 with the current move not yet finished and given the strength of the most recent 12 month advance the LT risk weight high looks weakish at this moment and will likely move much higher again in future. A finish of long term risk weight should not be expected until we see bearish divergence in LT time frame only. MT weekly is overbought at this moment and turning down whilst Daily ST is likely to reach a bullish divergence status. A very strong asset class typically continues for a long period of time and given the unprecedented monetary experiences since 2008 this is not a market to take for granted. Even though current weakness may continue technically with a potential price objective of 1400, which is the end of the previous consolidation range, we strongly recommend staying with the full allocation. Having seen every major currency making new lows versus gold except USD (!5% below all time gold high) and CHF (10% below all time gold high), it will just be a matter of time. The old high at 1920 is not so much a target anymore but may only act as a short term resistance shield once we get there.
If dollar weakness sets in, the old high wil quickly become history. That's the technical picture. No Change.


Gold/EUR Price Live, Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly data

Gold/EUR Month Week Day
Close 13 September: 1337 (1365)
Trend Direction N (Up) Down (Down) Down (Down)
Risk Weight 85-95 (85-95) 80-85 (85-90) 10-15 (55-70)
Allocation 70% (70%)

Hourly near oversold. And for the ST, MT and LT time frames the same analysis applies as for USD. The high risk of a steeper than average drop 2 weeks ago is now diminishing although we may still see further pressure. The irregular hourly reversal we saw Thursday due to the ECB lowering base rate to -0.5%, may indicate that the correction has further to go with potential to towards the 1275-80 level. We would seek to go back to 100% as soon as the Daily ST risk weight turns back up, now Neutral to Down in the 10-15% range. Technically, Gold seems to be one of the very few asset classes that has real potential of regaining above average strength. This means we can now wait for a low risk entry point to get back to 100% allocation probably during the coming week and as early as Monday September 16. However, if this market indicates further pressure to come in MT time frame and subsequently turns back up we have a cushion to re-enter below the recent sale.

Last week: Last week we took out 30% of our allocation because this pair looked a low risk trade to cash some profit with a view to fresh entry at lower level. The same argument applies to GOLD/EUR as GOLD/USD, but because the USD still looks highly vulnerable technically the risk of a larger drop vs EUR is an opportunity risk worth taking whilst giving some short term profit protection. We will re-enter our 30% unallocated if ST vs MT divergence is confirmed or just below 1300 if both ST and MT get to oversold risk weight again. No Change.


Gold/GBP Price Live, Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly data

Gold/GBP Month Week Day
Close 13 September: 1190 (1226)
Trend Direction Down (Down) Down (Down) Up (Down)
Risk Weight 85-95 (90-95) 75-85 (85-90) 5-15 (35-60)
Allocation 60% (60%)

Hourly oversold (0-5). Gold has reversed towards the 2011 all time high and may even drop into the July 2019 consolidation range at 1140. If that is to happen the move should be quick. If Monday's close shows a positive confirmation of the Friday's daily Daily Risk weight uptrend we will go full allocation. Next week's update may confirm that 100% allocation. No Change for now.

Last week: GOLD/GBP comfortably reached a new all time high at 1282 last week and for now stays well above the 1195 high from 2011 which now has become MT support. A similar ST risk as above applies to this pair potentially even reaching the end of the June/July consolidation range at 1140. We do not trade price targets, only risk levels and we are looking for a full allocation entry at some point in the (near) future. This could be on full bullish divergence trigger between ST and MT/LT risk weight. No Change for now.


SILVER: Silver vs US Dollar, Euro, GBP and Gold/Silver ratio

Silver/USD Price Live, Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly data

Silver/USD Month Week Day
Close 13 September: 17.41 (18.15)
Trend Direction Up (Up) Down (Down) Down (Down)
Risk Weight 60-75 (60-80) 70-85 (85-90) 20-35 (70-85)
Allocation 100% (100%)

Three months of relatively strong performance has abruptly found strong resistance at 19.50. The 11% highly volatile drop followed the steep advance of the last quarter. We feel confident that this most recent move is typical for markets that have just seen a major bottom and a profit to be taken. The cushion since entry is substantial and the risk small the remain fully allocated for an initial target of 21.00+. No Change.

Last week: We have ended the week marginally below last week's close having see a fast 6% rally and drop in the meantime. This is silver at its best with high volatility once we get some serious movement. Silver may attempt to frighten us again, but it will either be short term of medium term and temporary. This commodity is at the start of a move that first needs to hurdle 21 after which there is clean air into the 40.00 level which could be a parabolic move shooting off like a rocket. No Change because the technical cushion is strong at lower levels.


Silver/EUR Price Live, Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly data

Silver/EUR Month Week Day
Close 13 September: 15.72 (16.47)
Trend Direction Up (Up) Down (Down) Down (Down)
Risk Weight 70-85 (75-90) 75-85 (85-95) 25-35 (70-85)
Allocation 100% (100%)

We may see a bit more price pressure before this reaction finds a bottom. Here the cushion is also substantial and the potential for a major rally into the 20.00 level is strong once this volatile reversal finds fresh support. Happy to stay with the LT Risk weight trend. No Change.

Last week: The risk weight picture of Silver vs EURO is very similar and although the USD potential weakening argument also stands, Silver is more likely to break 19.00 and find clean air to double in price that to break the strong cushion at the 12.50 area of price low's about 12 months ago and the 1280 low as recent as last May. No Change.


Silver/GBP Price Live, Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly data

Silver/GBP Month Week Day
Close 13 September: 13.92 (14.76)
Trend Direction Up (Up) Down (Down) Down (Down)
Risk Weight 75-85 (75-85) 70-85 (80-90) 15-25 (60-80)
Allocation 100% (100%)

Hourly oversold (0-5). The ST trend may not be finished but the LT and MT risk weight is likely to require a lot more upward price pressure before the trend that started Sept 2018 is finished. No Change

Last week: This is the exact same technical picture for Silver as against EUR and whilst GBP has been relatively strong as a result of a higher chance of No Brexit, we would expect buyllkish divergence to emerge in the near future. The entry cushion at around 12 GBP per troy ounce is strong. Therefore risk to maintain full allocation is small. There will be more volatility for sure and the ST downtrend is not over. We feel confident to stay with a full allocation. See comment below on the Gold/Silver Ratio. No Change


Gold/Silver Ratio Price Live, Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly data

GOLD/SILVER Ratio Month Week Day
Close 13 September: 85.09 (82.70)
Trend Direction Down (Down) Up (Down) Up (Up)
Risk Weight 45-65 (40-65) 15-25 (15-25) 45-55 (10-20)
Allocation 50/50 AU/AG (50/50 AU/AG)

The 15% correction that started early July 2019 is different from the correction that ended in July 2016 in that the LT risk weight at that time was oversold at 20% together with a MT Weekly bullish divergence position. The present correction has more downward pressure in the bag whilst the MT weekly is making a single oversold bottom. The present correction to the upside also appears to be the net result of profit taking in the Silver space. The technical risk to maintain a full silver allocation, i.e. a minimum of 50% silver and possibly some platinum remains our preferred allocation. Platinum performance appears stronger relative to Gold recently and the ratio is likely to return to equilibrium which means at least a doubling of the platinum price versus Gold. No Change.

Last week: 3 months seems like ages ago when we reached a Gold/Silver ratio high of 93.44. In the meantime this ration has fallen 11.5% with a massive 3.5% further drop and reversal just in a matter of days. Our position looks low risk both ST technically whilst the recent drop is being absorbed and our LT expected shake out towards equilibrium nearer 45.00 is historically certain to happen. High volatility will be the natural image with this pair and we are confident that keeping an even or even slight overweight silver allocation in the precious metals asset class will prove a strong investment protection allocation in the Long Term. No Change


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

EUR/USD FX Price Live, Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly data

EUR/USD Month Week Day
Close 13 September: 1.1070 (1.1025)
Trend Direction Down (Up) Up (Up) Up (Up)
Risk Weight 5-10 (5-10) 15-20 (15-20) 50-55 (30-45)
Allocation 100% (100%)

Whilst the LT risk weight is trying to find it bottom, the ST and MT risk weight continue to indicate more potential dollar weakness ahead. The ECB move last week caused a quick dollar rally based on nothing and only lasted 2 hours. That is a very positive technical signal and we strongly recommend staying fully covered on long USD exposures. At this point in time we would see little investment risk in a larger currency diversification away from USDollars. Last week's 3 hour double reversal could indicate a rapid dollar mini crash in case the Fed follows with another rate drop of any size. No change.

Last week: We are technically fighting a very resilient USD even though the USD rally of the past 18 months looks tired at current risk weight levels compared to the EURO low reach in January 2017. In the final analysis risk is against the USD right now and has been for a while. No Change to maintaining a fully hedged long dollar transaction exposure


USD/CHF FX Price Live, Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly data

USD/CHF Month Week Day
Close 13 September: 0.9891 (0.9875)
Trend Direction Up (Up) Up (Up) Down (Down)
Risk Weight 45-55 (45-55) 45-60 (30-45) 80-90 (60-70)
Allocation 100% (100%)

CHF has been relatively strong holding below par vs USDollar and steadily increasing its value vs EURO for nearly 3 years. Technically CHF/EURO price may start to turn and reverse because the LT risk weight looks extremely overbought. The result of this could be that CHF shows a weaker hand relatively to USD. Nonetheless we propose No Change to CHF reporting companies with Long USD transaction exposures. From an investment perspective CHF looks less attractive at this moment.

Last week: Risk weight across time frames does no longer offer high confidence Short Term. Even though this pair has traded within a narrow range for many years the MT trend is now unclear. Experience learns that the odds are in favor of CHF, but Short term anything can happen, hence a higher risk preference to stay with a fully hedged long dollar exposure. In a more speculative investment scenario we would be flat. No Change


Cable GBP/USD FX Price Live, Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly data

GBP/USD (Cable) Month Week Day
Close 13 September: 1.2490 (1.2275)
Trend Direction Up (Down) Up (Up) Up (Up)
Risk Weight 10-20 (10-15) 25-40 (15-30) 85-95 (65-85)
Allocation 100% (100%)

NOTHING points towards imminent weakness of sterling or Cable for that matter. The ST Daily time frame is a little overbought but WITHOUT any price to risk weight bearish divergence. In fact the LT Monthly risk weight is turning up with bullish risk weight to price divergence. That means low risk and Long dollar exposures should remain fully covered. No Change.

Last week: Last week's reversal of Pound Sterling vs USD came technically as expected, although the move came as an immediate reaction to Boris Johnson's multiple defeat in the Commons and House of Lords. For now we see no reason to change the risk preferred full hedge of long dollar exposures


USdollar Index Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly price data

USD Index Month Week Day
Close 13 September: 97.86 (98.01)
Trend Direction Up (Up) Up (Up) Down (Down)
Risk Weight 85-90 (85-90) 70-80 (65-70) 35-50 (50-65)
Allocation 100% (100%)

The LT uptrend of USD vs the other majors appears to get really tired. ST is in downtrend and MT as well as LT can tip over anytime. Dollar weakness becoming a serious trend is a matter of time. No Change.

Last week: The USD Index is still leading the technical picture of what to expect from USD performance against individual major currencies. The dollar index still looks very vulnerable to changing its near 10 year direction downward in earnest. Why this hasn't happened yet is debatable at great length and looks to be just a matter of time. It is a bit similar to the Gold/Silver ratio, World reserve money against the other lot. That also seeks an equilibrium closer to the long term standard deviation median at lower levels. The technical picture still prefers a fully hedged long dollar exposure against the basket of majors. No Change


GBP/EUR FX Price Live, Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly data

GBP/EUR Month Week Day
Close 13 September: 1.1273 (1.1127)
Trend Direction Up (Up) Up (Up) Up (Up)
Risk Weight 25-30 (20-30) 50-70 (35-50) 80-85 (85-90)
Allocation 100% (100%)

As we expected GBP did become a low risk environment across the board. The 5% rally from recent lows does appear a little tired ST and new or expiring transaction exposures can be delayed for cover. In general, risk weight trend and levels demand short GBP exposures beyond 2 or 3 months to be fully covered.

Last week: We stay with our preferred position and remain fully covered on short GBP transaction exposures. This NOT our speculative position although even that appears lower risk. Companies with EURO denominated accounts Europe with short GBP transaction or even translation exposure must be covered. Equally British companies with a short EURO exposure can, for now, exchange on a spot requirement basis


BTC Bitcoin Price, Weekly risk position analysis based on Daily, Weekly and Monthly data

BITCOIN BTC/USD Month Week Day
Close 13 September: 10342 (10297)
Trend Direction Down (Down) Down (Down) Down (Down)
Risk Weight 60-70 (60-70) 40-45 (40-45) 55-60 (75-80)
Allocation 0% (0%)

Risk weight has not experienced an oversold condition since reaching the violent overbought conditions back in June July. Risk neutral means this market can go to 20,000 or back to this years lows and beyond. Highly speculative and we simply keep following developments with market interest but without investment interest. No Change.

Last week: Our favourite pair only because crypto will be the future for all of us. It is an unstoppable development that saves money for most participants except conventional Banks and traditional exchanges. Bitcoin however must mature first before it or many other crypto currencies become a stable medium of exchange. Technically Bitcoin is in a downtrend since June with narrowing volatility. In our view, and this is fundamental, it will take a few years before crypto currencies can shake hands with the regulated and monopolist fiat currency market. That is more likely to transpire at much lower levels. I.e sub 3,000 and more likely sub 1,000, but depending on whether hyper-inflation kicks into the fiat currency market due to massive digital money printing. We will follow this with much interest. No Change

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.


INDEX: US30, S&P500, Brent crude oil

Dow Jones Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly price data

US30 (Dow Jones) Month Week Day
Close 13 September: 27219 (26797)
Trend Direction Up (Up) Up (Up) Down (Up)
Risk Weight 85-90 (80-90) 60-80 (50-60) 90-100 (80-90)
Allocation 0% (0%)

Central Bankers worldwide or at least the Elite central bankers that do not allow everyone into their inner circle have a plan. Mainstreet financial media clearly love it and remain bullish. We don't know what the plan is but it is officially designed to take certain countries off the hook and to ensure the world economy remains robust. This could of course lead to much more stock for debt activity. Technically there is absolutely nothing to support a fresh upward price action into substantially higher levels. That technical risk is simply unacceptable and highly speculative. If anything both the Dow and S&P index are showing a succession of irregular tops with bearish divergence. We cannot begin to predict what will end this apparent madness in equities and only know that some day it will and will hurt many unaware participants creating a tsunami of sellers without bids. We stay out. No Change.

Last week: Not participating in an INDEX of a key world asset class can be frustrating if long term risk is the key concern. And LT risk has been high since at least 12 months ago. The upward pressure is clearly driven by the guarantee of continued substantial monetary accommodation. Short and Medium term risk favours a long position in this INDEX, but the LT risk remains highly suspicious. Risk management also requires avoiding outside normal range volatility. That volatility has been excessive since Dec 2017. No Change


S&P 500 Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly price data

Standard & Poor 500 Month Week Day
Close 13 September: 3007 (2979)
Trend Direction Up (Up) Up (Up) Down (Up)
Risk Weight 85-90 (85-90) 65-80 (55-65) 90-100 (80-95)
Allocation 0% (0%)

All tools we cover with most weight on Slow Stochastic, MACD and RSI show bearish divergence. And that means high(er) risk. Higher risk means get out, which we have been for more than a year. In previous years we have seen bullish divergence between ST, MT and LT time frames. That was not the case in 2018 and is not the case in 2019 until now at least. Thus, same story as Dow Jones. Staying out and No Change.

Last week: The all time high is only 6 weeks ago and we are only 40 points away. If that happens, which is clearly on the cards at this moment, Risk weight in all time frames will again show bearish divergence which is by definition very high risk. Both the Dow and S&P still drive stock markets around the globe simply because the investment power is greatest in North America. A big concern must be a world economic slowdown whatever its true cause. ST speculative active alert positions aside, this INDEX is high risk. No Change


Brent Crude oil Weekly risk position analysis based on Hourly, Daily, Weekly and Monthly price data

Brent Month Week Day
Close 13 September: 60.25 (61.78)
Trend Direction Down (Down) Up (Up) Down (Up)
Risk Weight 30-35 (30-40) 25-40 (20-30) 50-60 (60-80)
Allocation 50% (50%)

Our long position as per 10 days ago is already being challenged in ST and LT time frames. We wish to see a bearish divergence developing in the ST to determine whether the position should be abolished. This is not a matter of price movement. Only risk weight level and trend determines the length and size of a transaction.
Note: The effect of drone attacks on the Aramco refinery may or may not be fundamental to future price development but statistically such events only have short term to medium term effect unless they support an already established trend. If a trend is up any presumed negative influences will be very short lived and vice versa as there are always many more fundamental parameters to consider to make a reliable ST or MT forecast let alone LT. No Change.

Last week: The risk of taking a 50% allocation seems relatively small at the close on Sept 6. The ST turn came on Sept 4 with the MT weekly trend showing clear strength too. LT Monthly is still in a narrow downtrend but the shorter time frames favour a rally that could possibly bring a low risk return in excess of 5%

Posted in A - All Financial Blogs | 2020 Forecast.

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