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.
- EURUSD is coming up against a huge resistance. USD Index is coming up against a huge support.
- Copper is extending its winning streak to 16 consecutive days, a new record.
- Bitcoin is still making higher highs, so still a bullish pattern.
- There is an extremely strong inverse correlation between USDJPY and gold.
4 pm: Big resistance for Euro, big support for USD.
EURUSD is coming up against its previous high. This is a massive resistance. EURUSD will soar if it breaks above this resistance in a meaningful way (e.g. by more than 1 cent). Here’s the weekly bar chart.
Likewise, the USD Index has fallen to a massive resistance. Here’s the weekly bar chart.
Likewise, a USD breakdown below this level will result in a massive breakdown. In such a case, USD Index’s consolidation over the past 3 years is officially over.
I do not expect the USD Index to break down until the second half of 2018. Hence, I expect the EURUSD’s resistance and USD Index’s support to hold.
*The EURUSD is definitely in a bull market over the long term. Do not expect EURUSD to retest e.g. $1.05. EURUSD is making higher highs and higher lows.
Notice how EURUSD has turned previous resistance ($1.15) into support on the weekly bar chart.
3 pm: Copper is extending its winning stream to 16 consecutive days.
Copper is on track to close higher for the 16th day in a row. This is a new record. The second longest streak was November 10, 2016 when copper went up 14 days in a row. Here’s what happened next.
Copper made a small pullback before grinding higher over the next 1-2 weeks. This is a classic pattern. When momentum is extremely strong, the market usually makes a pullback before grinding higher. The market rarely goes from “extremely strong momentum” to “a sizable correction”. The market needs time to digest such bullish momentum.
8 am: Bitcoin is making higher highs, so still a bullish pattern
*I do not trade Bitcoin because I don’t touch bubbles.
The best Bitcoin traders I know are bullish on Bitcoin in the short term and the long term.
Bitcoin is making higher highs on the 4 hour bar chart. So the short term bullish trend is still intact.
More importantly, the overall head-and-shoulders pattern’s “neckline” has not been decisively broken. These traders think that Bitcoin’s long term is still bullish as long as Bitcoin does not significantly break below this neckline.
Here’s a 4 hour bar chart for Bitcoin.
Bitcoin’s 50 daily moving average is still main support.
8 am: there is an EXTREMELY strong correlation between USDJPY and gold.
Gold has the strongest inverse correlation to the USDJPY pair.
Here’s the 20 daily rolling correlation between YCS (short Yen ETF) and GLD (gold ETF)
This means that there is a strong inverse correlation between gold and USDJPY.
This means that if gold and silver breakout from their current ranges in the second half of 2018, then the USD Index will significantly break down below 90 (USD’s main support) in the second half of 2018.
I only trade stocks. These are just my thoughts/outlook on other markets.
- Gold and silver will remain within their wide range during the first half of 2018. Then gold and silver will rally strongly in the second half of 2018.
- The USD Index will remain within this range (i.e. 90-96) during the first half of 2018. Then the USD will crater below this range in the second half of 2018.
- The best traders I know are still bullish on Bitcoin in the short and long term. I agree with them only to the extent that this bubble has a few months left. See “the pigs are flying” in this post.