Forex & commodities on February 8, 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. The U.S. dollar’s bearish price action continues
  2. Gold’s long term bottoming pattern.
  3. China continues to push the U.S. dollar down, Yuan up, and gold up.

4 pm: the U.S. dollar’s bearish price action continues
The U.S. dollar’s price action is consistently bearish based on the USD’s inverse correlation with the stock market.
The USD Index only went up a little on Monday when the U.S. stock market crashed. That was bearish enough. The USD should have spiked, especially since it’s been falling for the past few months.
The USD Index did not go up at all today despite the S&P falling more than 2%. This is bearish price action (again). I’m medium-long term bearish on the U.S. dollar.

7 am: gold’s long term bottoming pattern.
Gold is making a multi-year “bowl” pattern. This is a long term bottoming pattern.

This pattern implies that gold/silver will break out and surge in the summer or fall of 2018.
3 am: China continues to push the USD down, Yuan up, & gold up.
USDCNY (USD-Yuan) is leading the U.S. Dollar Index lower. China is slowly winning its currency war against the U.S. dollar.

The People’s Bank of China (Chinese central bank) skipped open market operations for the 10th consecutive day on Wednesday, thereby draining $19 billion USD in liquidity. This is a short-medium term bearish factor for USDCNY, which makes it a short-medium term bearish factor for the U.S. Dollar.
There is an inverse correlation between the USD and gold/silver. Hence, this is a short-medium term bullish factor for gold and silver.
Here’s the inverse correlation between UUP (USD Index etf) and GLD (gold etf).

Here’s the inverse correlation between UUP and SLV (silver etf).

Read Forex & commodities on February 7, 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. The USD Index will crater below its final support (90-91) in the first half of 2018.
  3. The best traders I know are still bullish on Bitcoin in the short and long term. I don’t know when the crypto bubble will end.

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