Forex & commodities on March 1, 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 bullish sign for gold and silver.
  2. The U.S. Dollar has hit its resistance range.
  3. Oil’s support trendline is at $55.

4 pm. Short term bullish sign for gold and silver
There is a moderately positive correlation between the stock market and gold/silver right now.
Here’s the correlation between the S&P 500 and gold.

Here’s the correlation between the S&P 500 and silver.

The stock market fell today but gold and silver were relatively flat. Based on this correlation, gold and silver’s price action today was bullish. Gold and silver are stronger than the U.S. stock market.
It’s also worth noting that the U.S. Dollar Index is falling today after hitting its resistance range.
6 am: the U.S. Dollar has hit its resistance range.
I said that the U.S. Dollar Index has a lot of resistances from 90.5-91. The USD Index hit this resistance range zone yesterday.

92 = the USD Index’s bearish resistance trendline. This means that any further bounce in the USD will be limited.

3 am: oil’s support trendline is at $55
Some traders expect oil to retest its bullish trendline at $52 a barrel (WTI). I disagree.
Using an absolute value scale doesn’t make sense. Oil has surged more than 100% over the past 2 years, so of course oil is going to seem “extremely overextended” on an absolute scale!
Log scales are much better. Using a log scale, we can see that oil’s support trendline is actually at $55. I think $55 is maximum downside risk.

Read Forex & commodities on February 28, 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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