Metals are approaching serious support levels

18. November 2015 · Write a comment · Categories: Uncategorized · Tags: , , ,

I personally don’t trade precious metals like gold or silver, or industrial metals like copper. As a currency trader I watch them very carefully since currencies like the AUD, NZD, NOK and CAD tend to be very sensitive to them.

As you know, gold, silver and copper have been under tremendous pressure as of late. The Strong USD as of late has been an added thorn to their side as well in the last year. Frankly, I am not too sure how much lower they can go, or when they will bottom. But the charts you see here, could argue we are at levels that may provoke a bounce.

Take a look:

11-18-15bloggold

As you can see with gold, we are trading very close to a 50% retracement near the 1070 level. We have probing above and below this level the last couple weeks.

11-18-15blogsilver

Silver shows we are sitting on a multiyear trend line, which suggests that the $14 level is a very big support.

11-18-15blogcopper

Copper is also trading at a multiyear trend line. However, one could argue that we connect the tip of the candle back in 2008 and you could take support closer to 1.95 which is also the 78% retracement. Take a quick look at the MONTHLY RSI oversold conditions!

Regardless of how you feel about the commodity markets and precious metals in particular, one could argue that they are getting close to a bounce. It may not be the ultimate low, but I think value players will be looking soon at these commodities.

The next question is how the AUD, NZD, NOK and CAD react to some of these commodities if they do bounce soon. I suspect they could also see a bounce higher as well. If you take a look at the AUD below (which has a strong correlation to copper and gold) has not been following the metals market lower the last couple months. We could be setting the stage for a bounce here too.

11-18-15blogAUD

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I have been long the AUD/USD for the last 2 days, and I am looking to add to current exposure.

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The AUD/USD is +/- 100 pips from major support, should we be long?

03. August 2015 · 1 comment · Categories: EDGE Chart of the Day · Tags: , ,

The AUD/USD has been in a relatively strong decline since mid 2013, and now we are approaching some critical “confluence” of major support. As you can see on this monthly chart, we are very close:

8-3-15AUDUSD

The lows in 2001 to the highs in 2011, we are at the 61.8% Fibonacci retracement near .7200. The lows post financial crisis in 2008 to the highs in 2011, we are near the 78.6% retracement near .7100. The 127% extension of the lows in 2010 to the highs in 2011 come in just below where we are currently at, near .7230. if you draw a trend line across all the lows that comes in near .7100. Normally, from a risk reward perspective, I would typically get long near here. The risk is manageable in relation to the upside reward for a bounce. However, I am hesitant. Here are some reasons why, compare the S&P to the AUD/USD:

8-3-15AUDUSDSPX

If you add the SPX futures (yellow) to the chart, you will notice until 2013, the AUD/USD and SPX had a very tight correlation. One would argue that because of the slowdown in China and the divergent central bank policies of the RBA and FOMC the two had diverged. The SPX has benefited from continuous loose monetary policies of the FOMC and other central banks in recent years. As you know, this may be coming to an end here in the US. I also believe the SPX is attempting a rounded top formation due to a tighter monetary policy in the coming months. If I am correct, what will the AUD/USD do? With the potential of the FOMC raising rates this year, and at best, the RBA on hold, the AUD/USD may continue lower, especially if US equities head that direction too.

In addition, take a look at the AUD/USD vs. Copper (Copper is the candle chart, AUD/USD is yellow line). Copper looks as if it wants to test the 2.00 level.

8-3-15CopperAUD

This is a big week for the USD and for the AUD. Tonight we have retail sales and the RBA decision (RBA is expected to leave rates unchanged), Wednesday evening is the Australian jobs report. On Friday we are expecting our own employment report in the US, and most are expecting a steady showing of more than 200K jobs again. I suspect after this week we may have a better idea if this is the level we want to be long the AUD/USD, or perhaps we start a new leg lower?

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I have no position in the AUD/USD, but may towards the end of the week.

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Copper is Consolidating in Break Down Territory

03. June 2015 · Write a comment · Categories: EDGE Chart of the Day · Tags: , ,

A trader I follow, @faaaal , brought to my attention the pivotal level that Copper is at. I found the daily chart to be particularly interesting as we are consolidating below the daily triangle breakdown point. You can see the longer term here:

6-3-15HG

If you focus in a little closer, this is what you see:

6-3-15HG1

I don’t trade copper, but I do trade the AUD currency, which tends to be influenced by copper from time to time. Currently, I am long the AUD on a cross, so I will be watching copper very closely.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I have no position in copper and do not plan to in the coming days.

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Copper Breakdown Suggests a Lower AUD/USD Rate

28. November 2014 · Write a comment · Categories: Uncategorized · Tags: , ,

One of the stronger correlations (over time) between currencies and commodities is the strong Australia Dollar and Copper correlation:

11-28-14AUDHG

Today, copper made a significant surge lower breaking key technical support at 2.88. At minimum, copper looks set to test the 2.50 (Fibo) support:

11-28-14HGweekly

If you take a good look at the AUD/USD weekly chart, it looks set to test below .8000:

11-28-14AUDWeekly

For the last couple years I have been looking forward to getting on the long side of the AUD/USD below .8000, and it looks like this time it could actually happen. However, one has to wonder….If the Dr. (Copper) has a PHD in economics, what is this current move suggesting? Some would think that the good doctor has either failed a few classes on the way to getting the PHD or royally screwed up his/her dissertation. But with China continuing sluggish growth (relatively speaking) and global deflationary pressures mounting, perhaps we should pay a little closer attention to what the doctor is telling us.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I am short the AUD/USD from 2+ weeks ago.

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