Metals – FX- Indices – update – close 15 March 2019

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

Gold/USD Month Week Day Hour
Close 15 March: 1302 (1298)
Trend Direction Up (Up) Down (Down) Up (Up) Down
Risk Weight 65-75 (65-75) 60-70 (70-80) 35-45 (10-15) 30-40
Allocation 100% (100%)

If a long term (Monthly) trend turns bullish, which was the case in October 2018, any high risk weight typically generates a serious secondary reaction after risk weight to price divergence in the MT (weekly) timeframe. Without such divergence, the opportunity risk of a large price move in the direction of the LT trend remains highly possible. Similar to the period 2005-2011. This not only applies to Gold/USD but to most, not all, Precious metals vs major currency pairs.In all of these cases we prefer to stay fully invested and not miss the potential opportunity.

(Charting statistics favor a fresh convergence between ST Daily and MT weekly risk weight. Weekly risk has not yet shown a risk weight to price divergence which is more typical for an intermediate top. We therefore stay with the LT trend)

Chart by GoldBroker

Silver/USD Month Week Day Hour
Close 15 March: 15.29 (15.35)
Trend Direction Up (Up) Down (Down) Down (Up) Down
Risk Weight 40-50 (40-50) 50-65 (60-75) 30-35 (5-10) 85-90
Allocation 100% (100%)

The same applies to Silver which shows stronger potential yet because the LT trend has ways to go. We remain fully allocated.

(Price is holding after two weeks of relative weakness. No change in full allocation. Divergence between Daily (oversold) and Weekly (a higher risk level price reaction) and Monthly in a low to medium risk Uptrend supports the risk position taken many months ago.
Hourly divergence with daily may put a little pressure on price at open Monday)

Gold/EUR Month Week Day Hour
Close 15 March: 1146 (1155)
Trend Direction Up (Up) Down (Down) Up (Up) Down
Risk Weight 85-90 (80-85) 65-75 (70-85) 40-45 (10-30) 40-55
Allocation 100% (100%)

The same applies to Gold/EUR. Similar technical properties emerged in the period 2005-2011 and still being some 10% above the lows from September last year supports staying fully invested.
LT trend Monthly turned back up last week. This is intra-month and only a month-end trend change determines the final call which can often be pre-empted via the Weekly and Daily risk weight levels. Price recovered 50% of the recent decline and present divergence between Daily and Weekly/Monthly favours a no change full allocation.

(LT Monthly trend turned down on the first trading day. Divergence between Daily and Weekly risk weight is reason to expect decent upward pressure and stay with allocation)

Silver/EUR Month Week Day Hour
Close 15 March: 13.50 (13.65)
Trend Direction Up (Up) Down (Down) Down (Up) Down
Risk Weight 55-60 (55-60) 55-65 (65-80) 30-35 (10-20) 85-90
Allocation 100% (100%)

Same opportunity in play as Gold/USD. No change.

(Similar to Gold/EUR the expected price support did materialise. Current risk weight levels support staying fully allocated)

Gold/GBP Month Week Day Hour
Close 15 March: 980 (997)
Trend Direction Down (Down) Down (Down) Down (Up) Down
Risk Weight 65-75 (70-80) 30-50 (50-70) 20-25 (15-20) 10-15
Allocation 100% (100%)

This week, price weakness without clear divergence indicating a possible change of LT trend rather supports staying with a fully allocated position. Risk only arises nearer the entry level around 925.

(Price weakness and found support followed by recovery last week together with a low risk ST Uptrend favours staying fully allocated)

Silver/GBP Month Week Day Hour
Close 15 March: 11.50 (11.80)
Trend Direction Down (Up) Down (Down) Down (Up) Down
Risk Weight 45-55 (50-55) 30-50 (50-65) 10-25 (10-15) 10-15
Allocation 100% (100%)

All time frames are in down trend, but rather in lower risk weight territory meaning trends can easily change. LT trend only validates end of month. A bit more silver price weakness is possible but we will again hold the position given relative risk weight suppport.

(There is no technical evidence that the LT rally that started to take shape since early November is ending with the recent price reaction. No change)

GOLD/SILVER Ratio Month Week Day Hour
Close 15 March: 85.15 (84.50)
Trend Direction Up (Up) Up (Up) Up (Down) Up
Risk Weight 70-80 (70-75) 65-80 (45-65) 85-90 (90-95) 85-90
Allocation 50% AG (50% AG)

Risk weight supports staying with a 50/50 Gold/Silver allocation. THE SILVER price navigates so far outside of equilibrium that a fair allocation to silver in the precious metals space is justified.

(The risk weight and price picture remains somewhat mixed. The intra-month LT Uptrend is not a signal further upcoming relative Silver weakness. ST HOurly may push prices a little higher on Monday but Daily favours ratio weakness which could drag the MT weakly with it. We stay with a 50/50 Gold silver risk allocation)


EUR/USD Month Week Day Hour
Close 15 March: 1.1325 (1.1230)
Trend Direction Down (Down) Up (Down) UP (Down) Up
Risk Weight 10-15 (10-15) 25-30 (25-30) 50-60 (20-35) 45-55
Allocation 100% (100% hedge)

No change. Dollar long exposures to remain fully hedged.

(Last week's Dollar strength has now driven all relevant times frames into support zones. The risk analysis still favours long dollar exposures to remain fully hedged)

USD/CHF Month Week Day Hour
Close 15 March: 1.0025 (1.0080)
Trend Direction Up (Up) Up (Up) Up (Up) Down
Risk Weight 80-85 (80-85) 75-80 (75-80) 50-65 (70-80) 15-25
Allocation 100% unch

N0 change, Dollar longs to remain fully hedged.

(USD/CHF has crossed par again for the umpteen'd time the past 12 months. All time frames are Up with relatively high risk weight but without much price change. We continue to call for fully covered long dollar exposures)

GBP/USD (Cable) Month Week Day Hour
Close 15 March: 1.3275 (1.3015)
Trend Direction Up (Up) Up (Up) Down (Down) N
Risk Weight 30-45 (30-40) 75-80 (70-75) 65-75 (45-60) 85
Allocation 100% (50%)

Sterling advanced a little more strongly vs USD last week. Being fully covered was the correct call. ST divergence may cause a slight price pause again during the coming week, but we recommend staying fully covered on long dollar exposures.

(We expected some Cable weakness again which primarily was caused by general strength of the USD. Recent actions were mixed but current level and risk weight positions across time frames favours a fully covered long dollar exposure. I.e. we return short Cable exposure to fully hedged from 50%)

GBP/EUR Month Week Day Hour
Close 15 March: 1.1735 (1.1590)
Trend Direction Up (Up) Up (Up) Up (Down) Down
Risk Weight 65-85 (65-80) 80-85 (75-85) 65-75 (70-80) 70-80
Allocation 75% (75%)

Both trend and risk weight are putting us on alert. We stay with 75% short sterling exposures hedged, but this percentage may need to be lowered if LT and MT trends turn negative.

(No change. Bias remains for short Sterling exposures to be 75% hedged. This call, like every market call is where the lowest risk outcome can be expected)

BITCOIN BTC/USD Month Week Day Hour
Close 15 March: 3923 (3865)
Trend Direction Up (Up) Up (Up) Up (Up) Up
Risk Weight 0-10 (0-10) 45-70 (30-50) 70-80 (35-40) 35-40
Allocation 0% (0%)

This market remains very high risk. A price level under USD 5000 developing very potential bearish divergence between Shorter Term and Longer Term time frames could easily develop that expected next major down leg.

(BTC clearly has a positive technical tone ST, MT and LT. Due to relative low liquidity controlled (it seems) activity this market remains very high risk)

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, Dollar Index, Brent crude oil
US30 Month Week Day Hour
Close 15 March: 25848 (25473)
Trend Direction Up (Up) Down (Down) Up (Down) Down
Risk Weight 60-75 (60-75) 90-95 (90-95) 45-55 (25-40) 75-80
Allocation 0% (0%)

We recognize the recent opportunity loss as Indices have shown strength almost everywhere, but the picture is different today than it was in September of last year. Thge higher risk is that this rally is indeed a countertrend rally and must therefore be treated with caution. We will not recommend participation in this Index.

(Continued Central Bank favoured low rates together with continued liquidity support still drives this and almost all equity indices around the globe. Afterr some weakness late last week we could see a bit of strength into the coming week, but MT and LT risk weight do call for an extremely cautious approach to fresh investment)

Standard & Poor 500 Month Week Day Hour
Close 15 March: 2822 (2749)
Trend Direction Up (Up) Up (Up) Up (Down) Down
Risk Weight 60-70 (50-70) 90-95 (90-95) 80-95 (25-45) 65-75
Allocation 0% (0%)

Time frames trend are up, but risk weight should put investors on high alert again. Same comment as for DJII.

(The same call for S&P. These Indices of course usually move in tandem which is relevant confirmation of the Risk calls in these markets)

USD Index Month Week Day Hour
Close 15 March: 96.50 (97.35)
Trend Direction Down (Up) Up (Up) Down (Up) Down
Risk Weight 80-85 (80-85) 60-65 (60-65) 40-50 (70-80) 5-20
Allocation 100% (100%)

The USD is holding its own. It has been trading in a relatively tight 2% range since the middle of 2018. The fact that LT risk weight is currently as high as the higher Index peak of 103 in Jan 2017, but a price of 96.50, is reason to expect Dollar weakness ahead.

Whilst all times frames show a positive price-trend for the USD. Problem is that this trend is not supported by a significant price move. We have seen these 1% moves back and forth for quite a while with Risk weight remaining relatively high in ST, MT and LT. Long dollar exposures to remain fully hedged.

(Mixed picture with LT down trend and high risk weight prevailing. We stay with fully covered long dollar positions)

Brent Month Week Day Hour
Close 15 March: 67.00 (65.80)
Trend Direction Up (Up) Up (Up) Up (Down) up
Risk Weight 25-40 (25-30) 85-90 (80-90) 75-85 (50-55) 50-60
Allocation 0% (0%)

Crude appears to to be running into heavy resistance at current levels. We still see this price action as countertrend and expect renewed weakness before a more sustained rally develops. How far that will be into the future is yet to be determined. No entry into this market for the time being.

(The technical picture remains a little mixed and we are carefully watching the divergence between MT Weekly and LT Monthly. This divergence increases the risk of renewed price weakness)

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