Metals – FX- Indices – update – close 26 July 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 26 July: 1418 (1425)
Trend Direction Up (Up) Up (Up) Down (Up)
Risk Weight 70-85 (70-85) 80-85 (80-85) 45-55 (65-75)
Allocation 100% (60%)

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.

(A very strong week for precious metals saw Gold vs USD break the 6 year high on Thursday and close above the August 2013 highs in consecutive days. This and the fact of a visible continued uptrend, as well as a very strong move in Silver, was reason to lift our allocation to 100% again on Friday morning. Due to the continued uncertainty in other main asset classes, Gold and Silver, across the board, have become more strategic allocations in the overall portfolio)


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

Gold/EUR Month Week Day
Close 26 July: 1267 (1269)
Trend Direction Up (Up) Up (Up) Down (Up)
Risk Weight 80-90 (80-90) 80-85 (75-85) 65-70 (80-85)
Allocation 100% (60%)

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.

(In spite of relative high risk weight, the same really applies to Gold vs EUR. We believe that holding allocated physical Precious metals in a secure location and away from immediate systemic risk is favoured over bank deposit)


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

Gold/GBP Month Week Day
Close 26 July: 1144 (1139)
Trend Direction Up (Up) Up (Up) Up (Down)
Risk Weight 85-95 (85-95) 85-95 (85-90) 60-70 (80-90)
Allocation 60% (60%)

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 change.

(Even though Gold vs GBP looks a little more overbought there is no sign of bearish divergence except for ST Daily. This could mean a short pause in the uptrend and we have held back on full allocation for this pair for now. Gold is now within just 3% of the all time high close, whilst many active western style economies have already seen new all time highs for gold. Because Gold typically is a relatively small allocation of total assets, it is prudent to not risk against the primary LT trend and we would be looking to go full allocation if the all time high breaks or if ST and MT show bullish pricce risk divergence. 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 26 July: 16.35 (16.18)
Trend Direction Up (Up) Up (Up) Down (Down)
Risk Weight 30-45 (30-45) 70-80 (65-70) 85-95 (85-90)
Allocation 100% (100%)

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.

(Last week's very strong rally was overdue and we were absolutely right to hold on and follow the technical picture. The LT trend only just started and Silver usually lags Gold if demand picks up in earnest. This move is a sign that the LT trend in metals has ways to go and silver could benefit substantially. Furthermore silver trading has experienced unusual high volume prior to this move indicating a potentially more substantial investment, possibly by a sovereign buyer even. No change)


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

Silver/EUR Month Week Day
Close 26 July: 14.41 (14.41)
Trend Direction Up (Up) Up (Up) Down (Down)
Risk Weight 45-60 (45-55) 70-80 (65-75) 85-95 (85-95)
Allocation 100% (100%)

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 looks a little overbought ST. Last week's rally meant breaking a 3 years downtrend with plenty room to further advance on risk weight. No change)


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

Silver/GBP Month Week Day
Close 26 July: 13.20 (12.93)
Trend Direction Up (Up) Up (Up) Up (Down)
Risk Weight 45-65 (45-60) 80-90 (75-80) 90-95 (85-95)
Allocation 100% (100%)

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.

(Silver also broke a 3 year downtrend and closed above it the entire week. We cannot exclude a potential pause, but remain fully allocated in Silver versus GBP)


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

GOLD/SILVER Ratio Month Week Day
Close 26 July: 86.45 (87.75)
Trend Direction Down (Down) Down (Down) Up (Down)
Risk Weight 85-90 (85-95) 50-70 (75-85) 0-10 (5-15)
Allocation 50/50 AU/AG (50/50 AU/AG)

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.

(The knock in the ratio took it back to the level of 8 weeks ago.The trend is down and we see an as yet unconfirmed bullish divergence between ST and MT/LT risk weight. So, No change to holding at 50% in 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 26 July: 1.1124 (1.1217)
Trend Direction Up (Up) Down (Down) Up (Up)
Risk Weight 5-15 (10-15) 30-45 (40-55) 10-15 (20-25)
Allocation 100% (100% hedge)

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.

(The dollar continues to look very vulnerable in spite of the almost weekly attempt to prop up the dollar. We can only wonder who the buyers are as we cannot believe it is sovereign. A high risk play. Remain fully hedged on long dollars)


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

USD/CHF Month Week Day
Close 26 July: 0.9922 (0.9830)
Trend Direction Down (Down) Up (Up) Up (Down)
Risk Weight 50-65 (45-65) 25-30 (20-30) 60-80 (30-50)
Allocation 100% (100%)

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.

(Trend and Risk weight still favor 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 26 July: 1.2370 (1.2490)
Trend Direction Down (Down) Down (Down) Down (Up)
Risk Weight 10-20 (15-20) 10-15 (10-15) 30-35 (20-35)
Allocation 100% (100%)

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.

(Hovering near the 1 and 3 years lows, Cable is clearly seeking a bottom. Risk weight is closer to getting seriously overbought than ever, thus a fully hedge short cable exposure is the only strong recommendation to make)


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

USD Index Month Week Day
Close 26 July: 97.90 (97.07)
Trend Direction Down (Down) Up (Up) Up (Down)
Risk Weight 80-90 (75-85) 45-60 (35-50) 85-95 (55-65)
Allocation 100% (100%)

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.

(The dollar Index is in the process of making a LT right shoulder which, if materialized, suggests an eventual drop to 75. That won't happen tomorrow of course, but prudence requires staying out of dollars at this moment)


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

GBP/EUR Month Week Day
Close 26 July: 1.1120 (1.1130)
Trend Direction Down (Down) Up (Up) Down (Up)
Risk Weight 25-45 (30-45) 5-10 (0-10) 60-75 (25-40)
Allocation 100% (100%)

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.

(The ST trend is clearly bottom building. MT is oversold and LT could easily turn up again within two months and at higher price level. No change)


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

BITCOIN BTC/USD Month Week Day
Close 26 July: 9821 (10509)
Trend Direction Up (Up) Down (Down) Down (Up)
Risk Weight 55-70 (55-75) 55-65 (65-70) 20-30 (30-40)
Allocation 0% (0%)

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.

(Another 20% range week just behind us. This is not the right investment if managing a wealth preservation portfolio. Small specs only in this totally controlled environment. What may become interesting in the very near future are the crypto exchanges that offer merchant services and where any crypto currency can be exchanged into fiat. With systemic risk somewhere on the horizon, these exchanges may become our banks of the future. No change otherwise)

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 26 July: 27192 (27154)
Trend Direction Up (Up) Down (Up) Down (Down)
Risk Weight 80-85 (80-85) 90-95 (90-95) 75-85 (75-85)
Allocation 0% (0%)

High risk weight and changing MT trend direction indicates (very) high risk. No change.

(New all time high territory and still high risk-weight with clear bearish divergence. Of course interest rates are now widely expected to be lowered again which is nothing short of a tricky sovereign play. Lower rates are expected to generate more stock buy backs, yet this market cannot be technically traded from the long side with so many indicators in high risk zones. 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 26 July: 3025 (2977)
Trend Direction Up (Up) Down (Up) Up (Up)
Risk Weight 85-90 (80-90) 90-95 (90-95) 75-85 (50-65)
Allocation 0% (0%)

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.

(The exact same picture for S&P which atb the 19 July close looks a little more vulnerable than INDU due to a downturn in the weekly trend. No change)


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

Brent Month Week Day
Close 26 July: 63.39 (62.65)
Trend Direction Down (Down) Down (Down) Down (Down)
Risk Weight 35-45 (35-45) 25-35 (30-35) 30-35 (20-30)
Allocation 0% (0%)

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.

(Fundamentally the situation in the Street of Hormuz normally is a short across the bow and should have taken Oil much higher. It hasn't and this is a warning that our technical analysis may be correct. We haven't seen a serious bottom yet since the September 2018 high. We need patience before stepping back in and we feel comfortable with having unwound our brief long position a few weeks back)

Posted in A - All Financial Blogs | 2020 Forecast.

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