Forex & commodities on March 5, 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. The smart money is still very bearish on EURUSD
  2. The smart money is becoming very bullish on silver.
  3. A bearish sign for the U.S. Dollar

2 pm: The smart money is still very bullish on EURUSD.
Commercial hedgers (“smart money”) are still very bearish on the Euro in the latest COT Report.
This is a bearish sign for the Euro if the Euro was in a bear market or long term consolidation pattern.

However, you can see that this isn’t a bearish sign for the Euro if the Euro is in a bull market (and USD is in a bear market).
Commercial Hedgers were extremely bearish on the Euro from 2001-2007, but the Euro kept on going up.

I think the Euro is in a bull market and the U.S. Dollar is in a bear market right now. This is not a medium term bearish sign for the Euro.
3 am: the smart money is becoming very bullish on silver.
Commercial hedgers (“smart money”) are starting to become very bullish on silver. The following red line illustrates silver hedger positioning as a % of total open interest.

Historically, silver can fall a little more in the short term after commercial hedgers became this bullish. But this is certainly a medium term bullish sign.
Commercial hedgers are still somewhat bearish on gold.

3 am: A bearish sign for the U.S. Dollar
Last Friday I said that the U.S. dollar should be rising on trade war fears. Instead, the USD fell on Friday. Trump continued to talk about trade war threats over the weekend (e.g. slapping tariffs on European cars). The USD should go up on this news and EURUSD should go down.


Instead, the USD is completely flat and EURUSD isn’t going down either.
This is bearish price action for the USD. The U.S. dollar isn’t going up when it should be going up. Meanwhile the S&P 500 is falling in pre-market trading on Trump’s trade war threat, which is normal.
Read Forex & commodities on March 2, 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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