Gold – FX- Dow – 30 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 30 August: 1520 (1526)
Trend Direction Up (Up) Down (Up) Down (Up)
Risk Weight 80-90 (80-90) 90-95 (90-95) 65-75 (70-75)
Allocation 100% (100%)

Gold peaked last Monday at the Sydney opening reaching $1555/oz and closed at the lows. The current rally that started just over one year ago is of such proportion that the risk scenario will be based on best expectation of risk weight impact where short term risk weight is more likely to diverge vs MT and LT risk weight levels causing this market to advance until a major top is reached. Such early signal is more likely to appear in a MT time frame. Even though MT and LT risk weight level is rather high experience learns it can remain high as long as the price trend is not broken whilst a price advance can be significant. As of now only Gold vs USD and vs CHF have not yet reached new all time highs. That can happen very quickly once the US$ starts to depreciate towards a better equilibrium level which appears to be close to a US$Index of 85 compared to 99.00 today. If that starts to materialize Gold vs US$ is likely to accelerate higher and quickly reach new all time highs and (well) beyond. the wealth preservation strategy is to simply stay with the long term trend and sit tight at least into 2020. Our general risk approach is of lT nature and therefore No Change to our allocation. From a trading perspective it is correct to immediately take out between 30 and 40% at a decent profit with a view to reverse and re-enter if the ST risk weight trend turns back up from a bullish divergence position. The current correction could be a full 8-10% from the recent high into the low 1400's level.

(The gold market shows incredible resilience and finds strong market support in ST time frames nearly every day. Last week's analysis still applies and we stay invested with full allocation)


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

Gold/EUR Month Week Day
Close 30 August: 1375 (1360)
Trend Direction Up (Up) Up (Up) Down (Down)
Risk Weight 85-95 (85-95) 85-95 (85-95) 75-85 (70-75)
Allocation 70% (100%)

The August close was 1 Euro shy of the 2012 monthly high close whilst we set a new all time high close on Tuesday 27 August 2019. Our LT risk analysis however calls for a reduction of risk and we take out 30% of the position until we see a bullish divergence appearing between the ST and MT time frame or if another event calls for a reversal. The 30% exit will protect the remainder of the investment allocation at a price level well below the entry level.

(Gold came within €10 of the 2012 all time high and now appears toppish due to a US$ peaking. The overall strength however of this strongest major asset class during the past 12 months favours holding the full risk position even through the event of a $70 market reaction. The cushion from entry and returning short term support on every dip is a signal to hold the full allocation)


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

Gold/GBP Month Week Day
Close 30 August: 1248 (1241)
Trend Direction Up (Up) Down (Down) Down (Down)
Risk Weight 85-95 (85-95) 85-95 (90-95) 65-70 (55-60)
Allocation 60% (60%)

Gold vs GBP did reach a new all time monthly high close and signals a LT further advance. Otherwise the same risk anaylis applies as with EUR and since our position is 'only' 60% allocation we will be looking to a full entry in the ST once we see clear signals of a pause in the advance ending which could be in the 1150-1200 price range. No Change.

(Gold has risen 77% since the 2015 low. The ST Daily risk weight is rapidly moving into Bullish divergence vs Weekly and Monthly. We will likely allocate to 100% if that happens and Daily turns up. For now just on action alert and No change)


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 30 August: 18.33 (17.37)
Trend Direction Up (Up) Up (Up) Down (Up)
Risk Weight 45-65 (45-70) 85-95 (85-90) 85-90 (70-80)
Allocation 100% (100%)

Silver outperformed Gold substantially last week which shows in the ratio dropping nearly 6%. The LT trend is still strong and any pause will mean that the ST elastic moves towards the LT and then continue a fresh stretch upward. This could take several weeks if it happens but the LT risk picture is a directive to stay with a full allocation aiming initially for the 2016 high at 21.15. No Change.

(A market that appears have found a bottom is most likely to develop bearish divergence in the MT and LT time frames before turning down for a MT reaction if at all. The risk profile therefore is in favor on holding the full allocation)


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

Silver/EUR Month Week Day
Close 30 August: 16.68 (15.57)
Trend Direction Up (Up) Up (Up) Down (Up)
Risk Weight 60-80 (60-80) 90-95 (85-95) 85-95 (80-85)
Allocation 100% (100%)

Equally Silver/Eur appears on its way to the 2016 high of 19.11. As against Gold, EUR looks technically a little stronger and we may see a pause in this advance of unknown length. That possible pause shows in the wider risk weight range in the LT Monthly time frame. Because LT moves are finished until they are we will stay with the full allocation, so No Change.

(Risk weight trends across time frames still favours No Change in spite of higher risk in ST and MT weight. The initial objective is the July 2016 high at 18.96)


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

Silver/GBP Month Week Day
Close 30 August: 15.06 (14.12)
Trend Direction Up (Up) Up (Down) Down (Down)
Risk Weight 60-80 (60-80) 85-95 (85-90) 85-90 (60-65)
Allocation 100% (100%)

The ST/MT objective is breaking the 2016 high at 16.00. The risk analysis is very similar to that of Silver/EUR and we stay with the LT allocation. No Change.

(Having broken the 3 year downtrend in June there is clean sky till the July 2016 high at 15.97. The ST down trend is more likely to develop bullish divergence with a strong LT uptrend in play. No change to full allocation)


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

GOLD/SILVER Ratio Month Week Day
Close 30 August: 82.52 (87.42)
Trend Direction Down (Down) Down (Down) Down (Down)
Risk Weight 60-80 (70-85) 15-30 (25-35) 0-10 (15-30)
Allocation 50/50 AU/AG (50/50 AU/AG)

The LT correction which we have been expecting for a long time has acceleterated by 5 big figures last week and this trend is not finished. Price also penetrated a MT uptrend support line by several days now. Daily risk weight is getting oversold and we may see a pause sometime soon, but the LT trend prevails at this stage. No Change.

(The LT downtrend is leading. Given the manipulative technical character we cannot exclude another attempt towards the recent highs. Experience then would raise the expectation of a massive drop in this ratio in a very short period of time. We are most likely to stay with a balanced Gold and silver allocation until the ratio trends towards the 50-55 level. 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 30 August: 1.09.86 (1.1128)
Trend Direction Down (Up) Down (Up) Down (Up)
Risk Weight 5-15 (10-15) 15-25 (25-30) 10-20 (15-25)
Allocation 100% (100%)

EUR reached a new low reaching a LT support range since 2015. We believe the US$ is technically peaking and to hold naked long US$ is much higher risk that being fully hedged. Last week's reversal day was challenged on Thursday and Friday creating a fresh ST downtrend. Of course we cannot exclude further pressure whatever its fundamental cause but Risk weight analysis still demands a fully hedged transaction exposure. In the final analysis the average price movements against the hedged position are relatively small and the biggest risk still favors a reversal of US$ strength. No Change.

(Another bounce of off the recent lows shows typical peaking action of the US$ technically. Friday's close was an outside day trading range and above the previous day's high possibly calling a bullish reversal. No change)


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

USD/CHF Month Week Day
Close 30 August: 0.9892 (0.9734)
Trend Direction Down (Down) Up (Down) Up (Up)
Risk Weight 45-55 (35-50) 20-30 (15-20) 75-85 (60-65)
Allocation 100% (100%)

Since the Swiss Central bank remove the peg ag EUR in 2014 this clearly is the most boring pair in the Foreign Exchange space with the current price at a 5 year equilibrium level. Over par is likely to prove hard to sustain and we stay with the LT trend whilst ST is developing possible bearish divergence vs MT Weekly. No Change.

(Friday's turnaround is bearish for the buck whilst the ST Daily is moving into bearish divergence. Risk favours a fully hedged long dollar transaction exposure. 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 30 August: 1.2136 (1.2215)
Trend Direction Down (Down) Up (Up) Down (Up)
Risk Weight 10-15 (10-15) 10-20 (5-15) 50-70 (70-75)
Allocation 100% (100%)

Bearish divergence between ST and MT is driving cable down again. MT and LT oversold risk weight condition demand to remain fully hedged on Long Dollar exposures vs GBP. No Change.

(Thursday's and Friday's Up and Down moves are typical for emotional sales near a market bottom (Cable bottoming). The developing bearish divergence between ST and MT is quite normal under these circumstances. Risk weight favours a fully hedged long dollar exposure. No change)


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

USD Index Month Week Day
Close 30 August: 98.81 (97.26)
Trend Direction Up (Down) Up (Down) Up (Down)
Risk Weight 80-90 (75-85) 65-75 (55-65) 80-90 (60-70)
Allocation 100% (100%)

The US$ Index is a nice example of markets defying gravity. There is something fishy about markets that turn Up from Down in all time frames in a matter of one week. Surely the Index can push higher and extend its rather unnatural risk behavior, but it smells like manipulation by large operators such as sovereign traders. Risk weight analysis makes it harder as a result of the change last week, but the technical picture continues to show heavily contested dollar pressure. Equilibrium is around the 85-90 level and we know from the last 4 years that a dollar move is likely to go substantially beyond that level and it would not surprise to see a test of the 2008-2010 dollar lows. No Change.

(Friday's bearish reversal action put the Index back where it technically belongs. All timeframes are trending down and have plenty room to develop in that direction. Risk favours a fully hedged long dollar exposure. 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 30 August: 1.1035 (1.0990)
Trend Direction Down (Down) Up (Up) Down (Down)
Risk Weight 20-35 (20-30) 20-40 (10-20) 80-85 (80-85)
Allocation 100% (100%)

This pair reached an intermediate low 3 weeks ago at 1.0725. The LT trend is still down but the upward widening risk weight range to 20-35 indicates this market could turn up more decisively. It may be hard to comprehend given the absurd Brexit related events in the UK. Yet no one really knows the ultimate 'price to pay' outcome. We stay with a positive full hedge on short GBP exposures vs EURO. No Change.

(Divergence between ST and MT/LT may pause this early advance of GBP having bounced off the 3 year bottom line. Given the low risk weight in MT and LT, this market favours a fully hedged short GBP exposure. No change)


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

BITCOIN BTC/USD Month Week Day
Close 30 August: 9585 (10389)
Trend Direction Down (Up) Down (Down) Down (Up)
Risk Weight 60-65 (60-70) 40-55 (50-60) 15-25 (25-35)
Allocation 0% (0%)

This crypto pair has now lost over 30% from the high three month ago, which is substantial by any comparison and compares to 45% relative the the current sub 10k level. The high volatility in this market is still unhealthy by any risk standard. This is a LT hold for people with sub 1000 entries and a ST hold for 'all or nothing' casino players. No Change.

(After a relatively slow sideways week, BTC (or its participants) is showing signs of getting tired of the huge weekly swings we've seen since April. Market looks technically heavy MT and LT. We are still a long way from participating but keeping a close eye on its progress. 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 30 August: 26403 (25628)
Trend Direction Up (Up) Down (Down) Up (Up)
Risk Weight 80-85 (80-85) 45-60 (45-60) 60-65 (60-65)
Allocation 0% (0%)

August ended on a high note with 4 weekly moves of around 1000 points down and up. The Dow still has not managed to penetrate the slightly uptrending resistance line with highs from Jan 2018 via Sept 2018 and July 2019. Technically this market has become tricky because the Weekly MT risk weight around 50% may turn up from strongly down and although this does not violate our risk position of not being invested we could see another attempt to reach new highs if that happens. The August close does not give a clear signal in that direction and we cannot but stay out of this market for now. No Change.

(The 1000 point swing action these past three weeks and ending on a weak note is adding pressure to further reallocation of equity assets. It is a tough call even though this index looks more risk now even than last year when we departed. 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 30 August: 2926 (2847)
Trend Direction Up (Up) Down (Down) Up (Up)
Risk Weight 85-90 (80-90) 50-60 (50-65) 60-75 (65-75)
Allocation 0% (0%)

The August range is 2800-2940. We have not experienced this high volatility since dropping to the one year low at 2334 during Xmas 2018. The likelyhood of the same happing again this time is far from clear but the risk weight levels still favor bearish divergence potential with a volatile drop as a result. Risk analysis demands no risk and no position. No Change.

(A similar to Dow and 150 point swing action these past three weeks whilst ending on a weak note is adding pressure to further reallocation of equity assets. The S&P index looks equily more high risk than last year when we departed. No Change)


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

Brent Month Week Day
Close 30 August: 59.19 (58.94)
Trend Direction Down (Down) Up (Down) Down (Up)
Risk Weight 35-40 (30-40) 15-20 (10-20) 60-65 (55-65)
Allocation 0% (0%)

We have remain on the sidelines ever since the 2018 highs and missing an opportunity to participate in the rally towards 75 in April. Yet we avoided the risk of losing on such position which was the correct Risk analysis application in our view. We are again at levels where Oil could find some speculative support, but risk analysis tells us that it all it is. Our analysis favors low 40's as opposed to a fresh LT rally and only war could possibly change that. Whilst LT Monthly risk weight is in downtrend we cannot (yet) participate as a low risk investor in this market. No Change.

(Daily ST timeframe moved upo fairly rapidly following the rally towards 61.50 this week.
This rally looks to be ending and our technical picture favours LT risk weight and trend to be leading still. Of course this market is highly sensitive to ST news, which it just is: Short Term News. No Change)

Posted in A - All Financial Blogs | 2020 Forecast.

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