Forex & commodities on February 12, 2018: outlook

Here are my discretionary thoughts on forex and commodities. I only trade the S&P 500.
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  1. Oil might retrace a little more. But it is becoming increasingly bullish.
  2. Gold and silver’s price action is bullish today.
  3. The U.S. dollar is making a standard bear market bounce. EURUSD is making a standard bull market pullback. This bounce won’t last for much longer.

3 pm: oil might retrace a little more, but it is becoming increasingly bullish.
*I don’t trade oil, so take this with a grain of salt.
The commodities family (gold, silver, oil) is in a bull market. Pullbacks and corrections in bull markets frequently retrace 38.2%.
Oil has retraced more than 23.6%. Its 38.2% retracement is at $57.3.

I think oil will fall a little more to its 38.2% retracement. Its price action is still weak. Oil only went up a little today while gold and silver went up a lot.
*There’s a positive correlation between oil and gold/silver.
Remember that this is short term weakness. Oil has already made its much needed correction. The medium and long term are bullish.
1 pm: Gold and silver’s price action is bullish today
Gold and silver went up today. But more importantly:

  1. Silver went up a lot more than gold today, which brings the gold:silver ratio down. This is important because silver should rise more than gold in a sustainable precious metals rally. Silver continues to make new intraday highs this afternoon while gold has not yet made a new intraday high.
  2. There’s an inverse correlation between the USD and gold/silver. This means there’s a positive correlation between EURUSD and gold/silver. EURUSD did not make a new intraday high this afternoon but silver did.

These are medium term bullish signs.
Here’s silver’s 5 minute bar chart.

Here’s gold’s 5 minute bar chart.

Here’s EURUSD’s 5 minute bar chart.

7 am: the USD is making a standard bear market bounce.
The U.S. Dollar Index’s recent bounce is completely normal for a bear market bounce. The USD Index was at its 200 monthly moving average, so a bounce was not out of the ordinary.

The EURUSD was almost at its 50% retracement resistance. EURUSD accounts for 57% of the USD Index.

I don’t expect the U.S. Dollar’s bounce to last for much longer. The USD is in a bear market. Historically, USD bear markets had very small bounces.

Read Forex & commodities on February 9, 2018.

Bottom line

I only trade stocks. These are just my thoughts/outlook on other markets.

  1. Gold and silver will break above their tight range in the first half of 2018.
  2. I’ve decided to buy some gold and silver as long term investments.
  3. The U.S. Dollar is in a bear market.

2 comments add yours

    • Silver is a much smaller market than gold (market cap). So when prices rise, silver rises more than gold. When prices fall, silver falls more than gold.

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