Here are my discretionary thoughts on forex and commodities (oil, gold, silver, etc). I only trade the S&P 500.
Go to the homepage for my latest thoughts on forex and commodities.
- USDCAD: a bullish sign for the USD Index
- Gold and silver are killing both longs and shorts
- If Bitcoin has already topped, where will its major bounce be?
- Bitcoin’s seasonality in early-2018.
*I do not trade Bitcoin because I think it is an insane bubble. These are just some thoughts.
4 pm: USDCAD is a bullish sign for the USD Index
There is an inverse correlation between USDCAD and oil because Canada’s export economy is driven by oil.
Oil spiked today and made a new high.
USDCAD fell a little bit today, but did not make a new low.
This is a bullish price action on the USDCAD’s part. Traders frequently regard the USDCAD to be a leading indicator for the USD Index. So this is a small bullish sign for the USD Index as well.
4 pm: Gold and silver are killing both longs and shorts.
I did not expect gold and silver to rally in the second half of December 2017. I expected them to make lower lows before bottoming at the end of December. This discretionary outlook was wrong.
From a price action perspective, precious metals are killing both longs and shorts.
- When the gold/silver went down, their price action was very bearish. Gold/silver reacted in a bearish way to every single correlation.
- But now that gold/silver are going up, their price action is very bullish. Gold/silver are reacting in a bullish way to every singe correlation.
When gold and silver fall the way they did in early December, they typically make a divergence before bottoming. There was no divergence this time.
Precious metals’ current rally has triggered the stops of a lot of traders who were going short gold/silver into year-end.
This market is killing both longs and shorts. The best course of action is to wait. Gold and silver are being compressed into a tiny range, and the next breakout / breakdown will be huge.
5 am: Where will Bitcoin’s major bounce occur?
Bitcoin is in a bubble that has nothing to do with fundamentals. Bitcoin was 240% above its 200 daily moving average, which makes it the fastest bubble in history.
Bitcoin’s first big support was $10,000. This is a massive round # and is also close to the 50% retracement level.
Bitcoin is dominated by speculators and traders. As a result, Bitcoin’s bounce on the 50% retracement was front-run (too many traders were looking to buy here). So if Bitcoin continues to go down, then there will not be another big bounce at $10,000.
Instead, the 61.8% retracement support is where most traders have drawn their “final line in the sand”. This is where a lot of profesisonal Bitcoin traders that I know will go heavily long ($7600). Traders in all markets frequently regard the 61.8% retracement as the final bull-bear fight. If the market doesn’t break below the 61.8% retracement, then the bull market can resume. But if the market breaks below the 61.8% retracement, then the bull market is dead and the bubble is dead.
The next few days will be key for Bitcoin. Bear market rallies frequently retrace 38.2%-61.8% of the decline. Bitcoin has already retraced 50% after bouncing off its 50 daily moving average.
So if Bitcoin’s bubble is indeed over, then it should not bounce above $16400.
5 am: Bitcoin’s seasonality in early-2018.
Bitcoin’s history is short. However, Bitcoin tends to perform poorly in January. Bitcoin went down during the first few weeks of each year from 2011-2017. 2013 is the only year in which Bitcoin did not selloff at the beginning of the year.
This is a small and relatively unimportant factor that could extend Bitcoin’s decline.