Forex & commodities on March 19, 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. Even if the U.S. Dollar breaks down right now, it will have a big bounce soon.
  2. Oil’s consolidation pattern is coming to an end.
  3. Commercial hedgers “smart money” are still bullish on the U.S. Dollar
  4. The smart money is rather ambivalent on gold and silver.

3 am: Even if the USD breaks down right now, it will have a big bounce soon.
The USD’s short term case is 50-50. The reasons for why the USD should rally even more right now and the reasons for why the USD should breakdown right now are equally compelling.
But in the event of a breakdown, the USD’s medium term downside is limited. The USD Index has a big support at 86.5. So if the USD Index breaks down right now, I expect it to make a big bounce once it falls to 86.5.

3 am: Oil’s consolidation pattern is coming to an end.
Oil has been stuck in a consolidation range since February 2018. This consolidation is coming to an end right now, and oil will either breakout or breakdown. I think the odds of an upside breakout are >50%.

3 am: Commercial hedgers “smart money” are still bullish on the U.S. Dollar
Commercial hedgers (the smart money) is still expecting a big rally in the U.S. Dollar, even though this is a USD bear market.
Here’s the USD Index.

Commercial hedgers are still extremely bearish on EURUSD in the latest COT Report.

Commercial hedgers are becoming neutral on the Yen (and neutral on USDJPY).

3 am: The smart money is rather ambivalent on gold and silver
With gold and silver swinging in a narrower and narrower range, commercial hedgers also don’t know where precious metals are heading in the medium term.
Commercial hedgers are slightly bearish on gold (although becoming less so).

Conversely, hedgers are still bullish on silver. This is odd because gold and silver tend to move together.

Read Forex & commodities on March 16, 2018: outlook

Bottom line

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

  1. Gold and silver are in bull markets.
  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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