Forex & commodities on February 13, 2018: outlook


Here are my discretionary thoughts on forex and commodities. I only trade the S&P 500.
Go to the homepage for my latest thoughts on forex and commodities.

Thoughts

  1. Silver continues to underperform gold
  2. USDJPY is starting to break down. Will lead the next leg of the U.S. Dollar’s decline.
  3. Oil continues to be weaker than gold and silver.
  4. Not enough follow through on gold and silver’s bullish price action from yesterday.
  5. The U.S. Dollar resumes its downtrend.

2 pm: Silver continues to underperform gold
This morning I said that silver’s underperformance vs gold = short term bearish. This problem just got a little worse. Silver is now negative for the day while gold is still positive. The gold:silver ratio is rising.

This short term bearish price action suggests that gold and silver will fall a little more in the short term before making a medium term bottom. Perhaps silver will touch its support trendline at $15.8.

2 pm: USDJPY is starting to break down. Will lead the next leg of the U.S. Dollar’s decline
USDJPY is at a 1 year support level and is starting to break down.

There is very little support between here and 100. I expect USDJPY to lead the next wave of the U.S. Dollar’s bear market. The Japanese Yen lagged the Euro in the previous wave of the USD’s bear market.
Remember that the “smart money” commercial hedgers are bullish on the Yen and bearish on USDJPY.

6 am: Oil continues to be weaker than gold and silver
There is an inverse correlation between oil and the U.S. Dollar Index right now. There is a positive correlation between oil and gold/silver. Oil’s price action today is weak, just like yesterday.

  1. The U.S. Dollar is down significantly today. Oil is barely up.
  2. Gold and silver are going up today. Oil is up less than both of them.


Oil’s price action continues to be weak. Oil might face some short term weakness and retrace a little more to 38.2%. But its medium and long term outlook is definitely bullish.

6 am: No follow through on gold and silver’s bullish price action.
Gold and silver’s price action yesterday was bullish. Silver outperformed gold.
Their price action today is bearish, which suggests that precious metals will fall a little more before resuming their medium & long term uptrend. Silver is rising less than gold today. Silver should rise much more than gold in a healthy uptrend.

6 am: the U.S. Dollar resumes its downtrend
The U.S. Dollar is in a bear market. Yesterday I said that the U.S. Dollar Index’s historical bear markets had very small and weak bounces.
The U.S. Dollar made a weak bounce and it is already starting to roll over.

I still think the U.S. Dollar Index might bounce a little more to 91 and turn prior resistance into support. The USD’s short term is slightly bullish, but the medium and long term are definitely bearish.
Read Forex & commodities on February 12, 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.

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