Metals – FX- Indices – update – close 28 June 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 28 June: 1409 (1399)
Trend Direction Up (Up) Up (Up) Down (Up)
Risk Weight 65-75 (65-75) 80-90 (75-90) 75-80 (85-95)
Allocation 60% (60%)

We removed 40% of our gold position after a 15% advance as there is potential risk of a larger correction. We now wait for a clean break of 1434 or a re-entry point at lower levels. Especially weekly indicators show a clear potential bearish divergence if the weekly risk weight turns down, which isn't the case yet of course. No change.

(As we analysed in our interim update 20 June, the more critical level to be taken out decisively is 1434. Thus far this market has performed as expected but there is a risk of mild pause or even strong reaction into recent MT support levels now at 1200. That risk can increase very rapidly as both the ST (Daily) risk weight and the MT (Weekly) are showing potential bearish divergence, i.e risk weight is lower at higher current price than previous with a lower price peak. If ST risk weight turns down from this relatively overbought condition, still a LT uptrend but a ST downturn would be reason to lighten the 100% position to 60%. If executed, a clean break upward of 1434 would re-initiate back to 100%)


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

Gold/EUR Month Week Day
Close 28 June: 1237 (1230)
Trend Direction Up (Up) Up (Up) Down (Down)
Risk Weight 75-85 (75-85) 75-85 (70-80) 75-85 (85-90)
Allocation 60% (60%)

We removed 40% of our gold position after a similar 15% advance as there is potential risk of a larger correction. Gold/EUR has blue sky to the 2012 high but needs a few days closing above 1240 for re-entry or a re-entry point at lower levels. Especially weekly indicators show a clear potential bearish divergence if the weekly risk weight turns down. No change.

(Gold vs EUR shows similar divergence in ST and MT timeframes. The high close of 27 June 2016 needs to be taken out decisively for this market to find unhindered advance towards the 2012 high at 1386. Pure risk demands a (temporary) reduction of the position to 60%. This can be done some time on Monday morning as Hourly risk is trending up (for now))


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

Gold/GBP Month Week Day
Close 28 June: 1110 (1096)
Trend Direction Up (Up) Down (Up) Down (Down)
Risk Weight 75-85 (75-85) 85-95 (85-95) 80-85 (85-90)
Allocation 60% (60%)

Gold vs GBP is reaching a fairly big resistance area between 1110 and the 2011 high of 1195. Of course if Gold turns temporarily weaker vs USD and EUR we must expect weaker gold vs GBP. No change from last week.

(Following on from last week GBP eyes stronger technically. We reduce to 60%)


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 28 June: 15.28 (15.31)
Trend Direction Down (Down) Up (Up) Down (Up)
Risk Weight 25-35 (25-35) 50-65 (35-55) 65-75 (80-90)
Allocation 100% (100%)

The technical formation of Silver looks stronger than Gold at this moment. Historically Silver lags by about 6 months or so following the metals rally like we've just seen since April. With that in mind we could expect a stronger rally starting from August/September even from lower price levels. No change in full allocation.

(No change: Silver still lagging Gold in the metals rally but risk weight analysis shows substantially more potential whilst a higher ST risk weight shows no imminent divergence)


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

Silver/EUR Month Week Day
Close 28 June: 13.43 (13.46)
Trend Direction Down (Down) Up (Up) Down (Down)
Risk Weight 40-50 (40-50) 50-60 (35-55) 60-65 (80-85)
Allocation 100% (100%)

MT trend remains dominant and we may expect an earlier break of the down trend resistance line now at 13.64. No change to full allocation.

(A strong rally last week followed by a reversal on Friday. Similar lag vs Gold as against USD but ST Daily trend now turning down. It is a trading toss whether to reduce and come back in later, but we prefer to hold the position and stay with the MT trend in this case)


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

Silver/GBP Month Week Day
Close 28 June: 12.02 (12.03)
Trend Direction Up (Up) Up (Up) Down (Down)
Risk Weight 35-45 (35-45) 70-80 (60-80) 70-80 (80-90)
Allocation 100% (100%)

GBP Silver has cleanly broken above the resistance trend line sloping down from the 2016 high 15.97. No change to full allocation.

(In spit of ST Daily trend turning down with higher risk weight, we stay with the MT and LT trends. A weekly resistance line from June 2016 broke marginally last week and should provide support. 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 28 June: 91.80 (90.98)
Trend Direction Up (Up) Up (Down) Down (Up)
Risk Weight 90-95 (90-100) 85-95 (85-95) 75-85 (60-65)
Allocation 50/50 AU/AG (50/50 AU/AG)

The change of this ratio following through seems low given the independent technical positions of Gold and Silver vs major currencies. Somehow the market decides is must defy gravity. So we wait for this ration to turn as when it does it will reap benefit.

(A flat week ended strong again for the Ratio. With multiple divergence building in Daily timeframe and high risk MT and LT timeframes, we need patience with the shared allocation. Because we are reducing various gold positions the virtual allocation of silver is a bit higher than 50/50. The principle now is not to touch silver which still shows more potential to advance)


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 28 June: 1.1366 (1.1365)
Trend Direction Up (Up) Up (Up) Down (Up)
Risk Weight 5-15 (5-15) 50-65 (40-55) 80-85 (55-70)
Allocation 100% (100% hedge)

Sideways price action last week after strong rally the previous week. A correc tion again may be on the cards, but the technicals point towards maintaining full hedge on long dollar exposures.

(No change. Our technical analysis is confirmed by market action with nice 1.5% drop in the dollar. The present risk weight indicates a more prolonged weakness of the USD)


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

USD/CHF Month Week Day
Close 28 June: 0.9775 (0.9750)
Trend Direction Down (Down) Down (Down) Up (Down)
Risk Weight 65-75 (65-80) 10-20 (10-20) 15-25 (10-15)
Allocation 100% (100%)

The $/CHF maginot line is around par. LT looks very bearish for dollars, MT is in low risk weight territory and could provide some support as does the ST. The dominant LT risk is now critical for staying with the full hedge on long dollars exposures.

(Same picture as EUR. Stay fully hedged)


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 28 June: 1.2678 (1.2730)
Trend Direction Down (Down) Up (Up) Down (Up)
Risk Weight 20-30 (20-30) 10-20 (10-20) 60-70 (50-75)
Allocation 100% (100%)

No change. Full hedge on long dollar positions.

(No change. Full hedge on long dollar positions)


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

USD Index Month Week Day
Close 28 June: 96.13 (96.10)
Trend Direction Down (Down) Down (Down) Up (Down)
Risk Weight 80-90 (80-90) 30-40 (35-50) 10-20 (15-35)
Allocation 100% (100%)

LT and MT downtrend and risk weight favor fully hedged long dollar position. No change.

(No change. Long dollar positions against the other majors to remain fully hedged)


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

GBP/EUR Month Week Day
Close 28 June: 1.1154 (1.1200)
Trend Direction Down (Down) Up (N) Up (Up)
Risk Weight 45-65 (50-65) 0-10 (0-5) 10-20 (15-25)
Allocation 100% (100%)

GBP has been weak but holding the 1.1150 level. GBP risk weight in ST and MT is oversold and ready to start the next move up in spite of LT downtrend still in play.
Last week we increased the hedge to 100%. No change.

(The slight drop below 1.1200 and current timeframes risk weight lowers the risk of being fully hedged on short GBP exposure. We increase to full hedge at 100%)


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

BITCOIN BTC/USD Month Week Day
Close 28 June: 12413 (10160)
Trend Direction Up (Up) Up (Down) Down (Up)
Risk Weight 35-65 (40-70) 85-90 (85-90) 70-80 (90-95)
Allocation 0% (0%)

What an amazing week for BTC rallying up 40%! then down 30%! and holding volatile steadiness in a 10% range the last three days. We will not change our position as it does not conform to wise portfolio risk management, but the activity is nothing short of stunning. BTC has become synonym for new technology and can more likely than not play an important role in the paradigm shift towards rapidly increasing blockchain applications showing up in the most important public (Binance and Bitpanda) and private exchanges launching tokens.

(The high this weekend is $11,120. This market is so incredibly speculative with 2 or 3 major market makers driving crypto bugs into potential fast money again. This is possible because there is no proper regulation against this type of consumer directed market manipulation and these same market makers apparently have a huge windfall and can afford to fight this mental battle. From a risk perspective this crazyness must not part of our programme until it becomes properly regulated. The wrong perception and normal human greed drives small investors into a high risk long position where as usual most people buy high and sell low. For existing long BTC holders this is of course great, but only if they are setup to also sell again vs fiat currency)

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 28 June: 26600 (26719)
Trend Direction Down (Down) Up (Up) Down (Down)
Risk Weight 75-85 (80-85) 65-85 (50-75) 65-75 (90-100)
Allocation 0% (0%)

Dow came within 53 points of the all time high. Both LT and MT risk weight is showing divergence which means that one should not be invested in this market, in spit of an unprecedented follow through since the beginning of June. No change.

(We remain uninvested in this index as technical risk simply demands it. It clearly has been a major opportunity loss the past 6 months in what can be considered unprecented times and events. As long as opportunity loss is not a real loss, even after inflation considerations, we feel comfortable staying out)


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

Standard & Poor 500 Month Week Day
Close 28 June: 2942 (2950)
Trend Direction Up (Up) Up (Up) Up (Down)
Risk Weight 80-90 (80-90) 70-85 (55-75) 65-70 (90-100)
Allocation 0% (0%)

S&P reached a new high last week and shows potential bearish price to risk-weight divergence in MT and LT time frames. The participants that are responsible for this incredible strength are the major investment banks as well and certain Central banks. It must be a struggle for decision makers to maintain such a high risk position. No change.

(No change. Of course the S&P risk analysis usually runs symmetrical to INDU. It has been an amazing ride for hardcore index investors, but the risk is simply not attractive at all. Something needs to change in the long term risk position for us to deliver a new long position)


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

Brent Month Week Day
Close 28 June: 64.55 (65.35)
Trend Direction Down (Down) Up (Up) Down (Up)
Risk Weight 40-50 (40-50) 20-30 (20-25) 80-90 (50-75)
Allocation 0% (50%)

We are reversing our 50% hold back to 0% with just a small profit. It is unclear how to read the ST risk due to the price reversal on Friday and a high risk ST risk weight with some divergence relative to MT, hence the position is at risk.

(On Thursday we took a 50% and slightly opportunistic allocation in Brent crude based on an upturn of ST risk weight in Wednesday. This is purely technical and not based on Strait of Hormuz activity. If Daily diverges strongly from Weekly in the coming days we may reduce the position again.)

Posted in A - All Financial Blogs | 2020 Forecast.

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