Forex & commodities on February 22, 2018: outlook


Here are my discretionary thoughts on forex and commodities. I only trade the stock market.
Go to the homepage for my latest thoughts on forex and commodities.

Thoughts

  1. Short term gold & silver bearish sign persists.
  2. EURUSD is going up with the German 10 year bund yield
  3. Some traders expect oil to fall to its 200 weekly moving average ($55)

4 pm. Short term gold & silver bearish sign persists
Silver continues to underperform gold. This is not normal in a healthy precious metals rally.

I expect gold and silver to fall a little more before making a medium term bottom. But let’s be clear: the medium term bottom is near. The gold:silver ratio is capped at a long term resistance. I expect the ratio to break down soon (gold & silver prices to go up).

3 am: EURUSD is going up with the German 10 year bund yield
The correlation between the USD and 10 year Treasury yield isn’t as strong as the correlation between EURUSD and the German 10 year bund yield.

  1. The 10 year bund yield rallied from mid-December to the beginning of February. EURUSD rallied from mid-December to the beginning of February.
  2. The 10 year bund yield has been flat since the beginning of February. EURUSD has been mostly flat since the beginning of February.



This correlation is a medium-long term bullish factor for EURUSD and bearish factor for the USD Index. (EURUSD accounts for more than half of the USD Index). As German interest rates go up over the medium-long term, EURUSD will be pushed higher and the USD Index will be pushed lower.
German & European interest rates are rising for the long term as the ECB turns away from QE.
3 am: Some traders expect oil to fall to its 200 weekly moving average at $55 (WTI).
Oil is facing resistance on its 200 monthly moving average. This moving average has been useful in the past.

I think oil will fall a little more to its 38.2% retracement ($57) before making a medium term bottom. 38.2% fib retracements are very standard for corrections in bull markets.
Some of the oil traders that I know think oil will fall to its 200 weekly moving average at $55.7. This isn’t very far from my $57 target.

Read Forex & commodities on February 21, 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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