Metals – FX- Indices – update – close 5 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 5 July: 1398 (1409)
Trend Direction Up (Up) Down (Up) Down (Down)
Risk Weight 70-85 (65-75) 80-90 (80-90) 75-80 (75-80)
Allocation 60% (60%)

Market talk is bulllish, but technical indicators and market behavior are telling us to be very cautious. Risk weight and trend at this moment shows higher risk of possible further correction, the extend of which is always unknown. No change.

(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)


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

Gold/EUR Month Week Day
Close 5 July: 1245 (1237)
Trend Direction Up (Up) Down (Up) Down (Down)
Risk Weight 80-90 (75-85) 75-80 (75-85) 75-85 (75-85)
Allocation 60% (60%)

Technical risk favors same caution. No change.

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

Gold/GBP Month Week Day
Close 5 July: 1115 (1110)
Trend Direction Up (Up) Down (Down) Down (Down)
Risk Weight 85-95 (75-85) 85-95 (85-95) 75-85 (80-85)
Allocation 60% (60%)

Same risk caution appliers to this pair. No change.

(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)


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 5 July: 14.97 (15.28)
Trend Direction Up (Down) Up (Up) Down (Down)
Risk Weight 25-35 (25-35) 60-70 (50-65) 50-65 (65-75)
Allocation 100% (100%)

The technical position for Ag/USD still looks stronger than gold, but we have short term doubt about not having reduced our risk. Silver still gets hit hard on every opportunity which remains extremely suspect of large scale manipulation. Given our lower risk stance of Gold we prefer holding full allocation in Silver as a long term low risk play.

(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)


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

Silver/EUR Month Week Day
Close 5 July: 13.33 (13.43)
Trend Direction Down (Down) Up (Up) Down (Down)
Risk Weight 40-45 (40-50) 60-65 (50-60) 50-65 (60-65)
Allocation 100% (100%)

The uptrend which started in May has not shown any high risk development in spite of a ST downtrend in force. We hold the fully allocated position.

(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)


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

Silver/GBP Month Week Day
Close 5 July: 11.94 (12.02)
Trend Direction Up (Up) Down (Up) Down (Down)
Risk Weight 40-50 (35-45) 75-80 (70-80) 60-80 (70-80)
Allocation 100% (100%)

A pause in the rally that started early May and a further ST price decline is entirely possible. The LT trend however still shows strong support for an advance towards the end of Q3. No change.

(GBP Silver has cleanly broken above the resistance trend line sloping down from the 2016 high 15.97. 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 5 July: 93.03 (91.80)
Trend Direction Up (Up) Up (Up) Up (Down)
Risk Weight 90-100 (90-95) 85-95 (85-95) 80-85 (75-85)
Allocation 50/50 AU/AG (50/50 AU/AG)

The incredibly persistant and slow advance higher of the ratio is not at all supported by Risk weight position from ST to LT. It tells us to be patient and stay with the more or less equal distribution between Gold and Silver holdings. Holding on fully to Silver ag fiat currency and with a lower risk allocation to Gold, the math would demand a slightly smaller Silver holding, but this risk aspect only applies to very large positions. The true calculated exposure therefore is now 37.5/62.5 Au/Ag. The 50/50 allocation is a guideline for all positions, old and new.

(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)


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 5 July: 1.1220 (1.1366)
Trend Direction Up (Up) Up (Up) Down (Down)
Risk Weight 10-15 (5-15) 60-65 (50-65) 35-45 (80-85)
Allocation 100% (100% hedge)

Last week's range showed a relative large drop (USD strength). The rapid ST risk weight reduction supports staying fully hedged on long Dols.

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


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

USD/CHF Month Week Day
Close 5 July: 0.9910 (0.9775)
Trend Direction Down (Down) Up (Down) Up (Up)
Risk Weight 50-65 (65-75) 10-20 (10-20) 50-55 (15-25)
Allocation 100% (100%)

Unless the USD breaks that imaginary 8 year resistance we continue to advise a fully hedged long dollar exposure. This market, from a more speculative point of view, looks it may test the 1.01 level again in the near future. It may be appropriate therefore to hold new long dollar exposures and achieve a 1 to 2% higher value vs CHF.

(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)


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 5 July: 1.2515 (1.2678)
Trend Direction Down (Down) Up (Up) Down (Down)
Risk Weight 15-20 (20-30) 15-20 (10-20) 20-30 (60-70)
Allocation 100% (100%)

It looks like Cable may test the early January low at 1.24. Risk weight however shows very potential bullish divergence against price. This risk position demands staying with a fully hedged long dollar exposure.

(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 5 July: 97.17 (96.13)
Trend Direction Down (Down) Down (Down) Up (Up)
Risk Weight 75-90 (80-90) 25-35 (30-40) 50-55 (10-20)
Allocation 100% (100%)

The picture is changing a little in favor of the USD this week but the LT risk weight and trend still require to manage risk based on a fully hedged long dollar exposure. The 95-98 broader range needs to be broken to change or confirm our current allocation. No change.

(LT and MT downtrend and risk weight favor fully hedged long dollar position. 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 5 July: 1.1151 (1.1154)
Trend Direction Down (Down) Up (Up) Down (Up)
Risk Weight 25-50 (45-65) 0-10 (0-10) 20-25 (10-20)
Allocation 100% (100%)

Sterling still has strong 3 year support at 1.07 with the upper range resistance at around 1.1800. We stay with the fully hedged short GBP exposure as initiated middle of June.

(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)


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

BITCOIN BTC/USD Month Week Day
Close 5 July: 10985 (12413)
Trend Direction Up (Up) Down (Up) Down (Down)
Risk Weight 55-75 (35-65) 75-85 (85-90) 30-40 (70-80)
Allocation 0% (0%)

The past full week for this 24/7 traded crypto has been as wild as before with another 30% price trading range. Technically this looks like a pause in the wider risk weight spectrum with some (significant) price erosion before another attempt to rally with fierce momentum presents itself. This remains a no risk zone for us and only for speculators that can afford to loose 30 or 40% at these levels or at any level for that matter.

(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)

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 5 July: 26922 (26600)
Trend Direction Up (Down) Up (Up) Up (Down)
Risk Weight 80-85 (75-85) 85-95 (65-85) 90-95 (65-75)
Allocation 0% (0%)

Bearish divergence in all time frames makes this index a high risk affair at these levels. We simply must not participate until a more realistic risk weight and trend position ensues.

(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)


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

Standard & Poor 500 Month Week Day
Close 5 July: 2990 (2942)
Trend Direction Up (Up) Up (Up) Down (Up)
Risk Weight 85-90 (80-90) 80-95 (70-85) 90-100 (65-70)
Allocation 0% (0%)

Except for the daily ST chart, bearish divergence risk weight in MT and LT also makes this index a high risk affair at these levels. We simply cannot participate until a more realistic risk weight and trend position develops.

(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)


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

Brent Month Week Day
Close 5 July: 64.44 (64.55)
Trend Direction Down (Down) Up (Up) Up (Down)
Risk Weight 35-45 (40-50) 25-35 (20-30) 50-55 (80-90)
Allocation 0% (50%)

Poor technical risk also leads to potential opportunity loss, but the oil market is not showing any clear direction at which can only lead to wilder swings in a broader price range. This market like some other pairs above are now more speculative tradeable markets based on hourly and ten minute indicators. From the position of a more MT risk management approach with only weekly updates the more speculative approach is not covered.

(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)

Posted in A - All Financial Blogs | 2020 Forecast.

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