Metals – FX- Dow- S&P – 2 August 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 2 August: 1440 (1418)
Trend Direction Up (Up) Up (Up) Up (Down)
Risk Weight 80-90 (70-85) 80-90 (80-85) 50-60 (45-55)
Allocation 100% (100%)

Uptrend in all time frames. There may be resistance at 1470 in the Daily timeframe if that coincides with an overbought risk weight level. Risk in favor of maintaining full investment.

(As the ST pause in this rally that started in October 2018 appears to be building bullish divergence vis a vis MT weekly and LT monthly which are still in uptrends, we prefer to stay with a fully allocated position. No change)


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

Gold/EUR Month Week Day
Close 2 August: 1288 (1267)
Trend Direction Up (Up) Up (Up) Down (Down)
Risk Weight 85-95 (80-90) 80-90 (80-85) 70-80 (65-70)
Allocation 100% (100%)

Gold vs EUR looks a little vulnerable ST and is be expected to lose a bit more on Monday. The trigger is likely a weaker USD across the board goin into the new week. As the MT and LT trends are still up and given the total asset risk position we stay with the LT trend. No change.

(Risk weight is still relatively high especially with US Dollar edging a little higher again. A weaker dollar, which we believe is the more likely technical scenario outcome, could start pushing gold lower vs EUR. ST has built bearish divergence, but MT and LT are still in an uptrend. Technically we must give this still more time to develop and will stay with the fully allocated position. No change)


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

Gold/GBP Month Week Day
Close 2 August: 1183 (1144)
Trend Direction Up (Up) Up (Up) Down (Up)
Risk Weight 90-95 (85-95) 85-95 (85-95) 80-85 (60-70)
Allocation 60% (60%)

GBP weakness last week has driven the price of Gold higher against our risk profile. The present risk profile is no different with strong divergence in both ST and MT time frames. Similar to EUR but the weaker technical picture for Gold/GBPO gives risk preference to staying with just the 60% allocation. However, just like the US equity markets for the past 6 months the market can continue. It needs a tweet or two these days.

(GBP was weaker last week and did not confirm our technical outlook. The price against gold was currency and primarily USDollar driven. Being this close to the all time high we prefer to stay with the slightly smaller position. No chang)


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 2 August: 16.17 (16.35)
Trend Direction Up (Up) Up (Up) Down (Down)
Risk Weight 45-65 (30-45) 75-85 (70-80) 70-80 (85-95)
Allocation 100% (100%)

Silver dropped a little further than we expected, but the potential based on risk weight in all time frames makes silver the metal to hold in any portfolio. No change.

(Except for the ST risk weight, MT and LT still point higher. The rally that started in earnest in May from a 14.30 low still has plenty potentital to continue for some time. No straight line as ever but it cannot be excluded either. No change)


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

Silver/EUR Month Week Day
Close 2 August: 14.55 (14.41)
Trend Direction Up (Up) Up (Up) Down (Down)
Risk Weight 55-75 (45-60) 75-85 (70-80) 75-85 (85-95)
Allocation 100% (100%)

This pair looks mildly undecided and a little nervous. With a leading LT uptrend we prefer to stay with the position that was entered to full allocation from 60% just before year end with an avg entry of 13.25. No change.

(A slightly different technical position than against USD but the LT rally appears to be in its early stages of upward price momentum. No change)


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

Silver/GBP Month Week Day
Close 2 August: 13.28 (13.20)
Trend Direction Up (Up) Up (Up) Down (Up)
Risk Weight 60-80 (45-65) 80-90 (80-90) 80-90 (90-95)
Allocation 100% (100%)

This pair looks a little vulnerable as it did last week. We would now expect the ST to move into a divergence vs MT and LT if the market drops. The entry buffer makes the fully allocated risk position acceptable and we stay as is.

(A pause looks imminent due to the high risk weight ST at 90-95. As bearish divergence is absent in ST we remain MT and LT positive on this pair. 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 2 August: 88.81 (86.45)
Trend Direction Down (Down) Down (Down) Up (Down)
Risk Weight 75-85 (85-90) 35-50 (50-70) 20-35 (0-10)
Allocation 50/50 AU/AG (50/50 AU/AG)

The ratio rallied further than we expected in a volatile space. We stay with the MT and LT direction which is down. This ratio, seeking LT equilibrium, will eventually be seen (well) below 60, the timing of which is impossible to predict. No change.

(The downtrend that started mid July is powerful. Bullish divergence is imminent in ST and we could see some leveling out between 86 and 87.50, but the LT downtrend is strong and appear dominant technically. No change to stay with a minimum of 50% or even slightly higher weight allocation to Silver)


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 2 August: 1.1104 (1.1124)
Trend Direction Up (Up) Down (Down) Down (Up)
Risk Weight 10-15 (5-15) 20-35 (30-45) 15-20 (10-15)
Allocation 100% (100%)

Powell, ECB Whatever it takes, Potus tweets and Millenial traders. In spite, Technical Risk remains in favor of a fully hedged Long Dollar exposure.

(Dollar strength this past week made par with the April and May EUR lows. The MT Downtrend may push it a bit further but the overall picture remains dollar suspect. Our risk management approach still requires a fully hedged Long dollar exposure)


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

USD/CHF Month Week Day
Close 2 August: 0.9812 (0.9920)
Trend Direction Down (Down) Down (Up) Down (Up)
Risk Weight 40-55 (50-65) 25-30 (25-30) 50-70 (60-80)
Allocation 100% (100%)

$/CHF keeps bouncing off that par level. CHF is still seen as a safehaven. The $ rally that started 2 weeks was wiped out in two days this week. We stay with a fully hedged Long Dollar exposure.

(Last week's dollar rally vs CHF and a rapid increase of ST risk weight requires No change in a fully hedged long dollar exposure)


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 2 August: 1.2150 (1.2370)
Trend Direction Down (Down) Down (Down) Up (Down)
Risk Weight 5-15 (10-20) 5-10 (10-15) 5-15 (30-35)
Allocation 100% (100%)

GBP is clearlt under pressure from political events. If there are fundamentals justifying this, they certainly are not confirmed by technical risk weight. We believe US$ strength is still temporary and simply demands a fully hedged Long dollar exposure.

(ST picture now indicates Cable may move towards the 2016 low at 1.2000. It does not change the MT and LT risk but whilst hedging long dollar is still the preferred position, any fresh exposure cover can be paused to see whether a lower entry is feasible. Otherwise No change)


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

USD Index Month Week Day
Close 2 August: 98.10 (97.90)
Trend Direction Down (Down) Up (Up) Down (Up)
Risk Weight 80-85 (80-90) 55-70 (45-60) 75-85 (85-95)
Allocation 100% (100%)

The 1.2% $ rally last week reversed on Thursday ending on a low for the week. The risk picture remains weak and long Dollar exposures should be fully covered elininating transaction risk against short term woes.

(Dollar strength has turned MT risk to 'low'. But Daily ST and LT risk weight is heavy. A b it like the picture of the major US equity indices. Overbought, high risk and defying gravity. The risk profile therefore simply requires fully hedged risk on long dollar exposures. 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 2 August: 1.0928 (1.1120)
Trend Direction Down (Down) Up (Up) Up (Down)
Risk Weight 10-30 (25-45) 5-10 (5-10) 15-20 (60-75)
Allocation 100% (100%)

The technical picture remains unchanged. Brexit jitters rule market sentiment. Hedge policy however is best served against the odds of a one way street for GBP. Price hovers around the lows of the last 3 years whilst the LT low sits at 102.00. Risk weight at these low level with ST and MT attempting to turn up demand a full hedged short GBP transaction exposure.

(The bottom and subsequent rally we expected did materialize but faded last Thursday with follow through on Friday. GBP will remain a tricky call against any other major fiat or Gold, but risk weight supports. We can have received false signals, but the risk position still favors a fully hedged short GBP)


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

BITCOIN BTC/USD Month Week Day
Close 2 August: 10521 (9821)
Trend Direction Up (Up) Down (Down) Up (Down)
Risk Weight 65-70 (55-70) 55-65 (55-75) 60-75 (20-30)
Allocation 0% (0%)

A strong week with another 10% rally. Highly speculative and fully controlled. For speculators only, not risk managers. We are monitoring the crypto market which appears to be building some momentum. The key issue is internationalisation and merchant services by allowing a compliance controlled exchange between an increasing number of crypto currencies, security and utility tokens as well as fiat currency. 2019 is likely to see this being realized which could see this space advance with a very substantial increase in number of account holders from millions to tens of millions. Major exchanges like Binance, Bitpanda in Europe and others may well become the biggest players in the not too distant future. Bitcoin, Ether and smaller crypto's may start to play a more important role , once the new exchanges become our bankers of the future.

(A relatively narrow range of 'just' 10% last week with further weakness during low volume weekend trading. This market of course can go anywhere being totally controlled by just a few big players. Not yet a risk profile that meets our primary risk management parameters.
Crypto currencies however are likely to become part of our daily lives but not until we see some kind of monetary reset that requires incorporation of different crypto's in our secure wallets)

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 2 August: 26485 (27192)
Trend Direction Up (Up) Down (Up) Down (Down)
Risk Weight 80-90 (80-85) 80-90 (90-95) 10-30 (75-85)
Allocation 0% (0%)

Market weakness has only one cause. A tweet about a relatively tiny 300B of goods from China. At least according to Mainstream media. At these elevated levels real risk is the sheer weight of value that is difficult to turn into a low risk hold from any other asset class, except perhaps precious metals which typically are not part of an institutional portfolio, much to the surprise of many hardened and experienced financial analysts. The very high risk overbought condition from a technical perspective plays an equally important role for us. At some point BTFD can no longer be justified by Institutional investors. But as long as this market appears to be lead by commission driven traders who have never experienced a real downturn, timing can be frustrated as it has done a few times already this year. We continue to see a high risk equity environment for investors in all index markets. Some individual equities can still stand out as they always do. A real financial or fiscal bloodbath may be around the corner or well down the timeline. Who's to say. No change.

(High risk weight and changing MT trend direction indicates (very) high risk. 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 2 August: 2932 (3025)
Trend Direction Up (Up) Down (Down) Down (Up)
Risk Weight 85-90 (85-90) 80-90 (90-95) 15-35 (75-85)
Allocation 0% (0%)

S&P still show a very similar picture as it almost always does. No change.

(The S&P MT risk weight was accompanied by a trend change. A slightly stronger performance of S&P does not confirm a reason to change the high risk picture. No change to 0 allocation)


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

Brent Month Week Day
Close 2 August: 61.17 (63.39)
Trend Direction Down (Down) Down (Down) Down (Down)
Risk Weight 35-40 (35-45) 15-25 (25-35) 25-40 (30-35)
Allocation 0% (0%)

A six month support broke last week with risk weight Down in all time frames. our risk management approach still does not allow a serious investment in OIL. No change since October of Last year. Only very short term and relatively small speculative longs may or may not offer some benefit. Still bad risk and no change.

(The LT downtrend still looks unfinished. With trend down in all time frames the risk is a price accelleration of this downtrend, hence remaining uninvested. No change)

Posted in A - All Financial Blogs | 2020 Forecast.

Leave a Reply