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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USD/CHF and Gold’s inverse relationship

20. July 2015 · 1 comment · Categories: EDGE Chart of the Day · Tags: , , ,

I would suspect this relationship would have been stronger if the Swiss/Gold referendum was passed back in November 2014 to bring up SNB reserves to 20%. Here is the chart:

7-20-15USDCHFGLD

Gold – Red Line

 

Blake Morrow

Chief Currency Strategist

 

Disclaimer: I am short CHF

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Gold sitting on critical support

19. March 2015 · Write a comment · Categories: EDGE Chart of the Day · Tags:

Gold is sitting at critical support on the weekly chart. As you can see below, the 61.8% retracement of the 2008 lows to 2011 highs are being tested once again:

3-19-15GC

On the daily chart, you can see that gold has been well bid despite the recent bounce back in US Dollar overnight. However, if gold breaks above 1180 (or so) we may start to see traders looking at long gold trade from a favorable risk/reward point of view. And if the FED and ECB are correct, and the deflationary forces we are feeling are transitory, perhaps inflation will tick up in the coming months, and provide a tailwind for gold.

3-19-15Gc2

Personally, I don’t think this is the bottom in gold, but from a technical perspective I don’t think we can rule out a move back to 1250 or 1300.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

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EDGE Chart of the Day – 1-21-2015 – Silver

21. January 2015 · 1 comment · Categories: EDGE Chart of the Day · Tags: , ,

Silver has broken a major down trend line, and like it’s sibling (the shiny yellow metal), it is breaking out. The downtrend line has been in existence since its peak in 2011, and we are now testing previous support at the 18.22 level (from 6/2013). This breakout could expose a retracement move towards the $26 (previous support 2012/3) or the $28 level which would represent the 38% retracement of the move from near $50 to the lows below $15.

Here is the chart:

1-21-15SI

 

Blake Morrow

Chief Currency Strategist, Wizetrade

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I hate buying gold

09. January 2015 · 2 comments · Categories: Uncategorized · Tags: , ,

I am not sure if it is the fact that I see no reason to actually own a metal that serves really no purpose other than looking good around Mr. T’s neck. Or, the fact that if I own gold I know I am probably on the same side of the trade as Peter Schiff. Whatever the reason, over the last 20 years I have had a difficult time wrapping my head around the idea. I know, I know….as an investor there is a right time and place to put some gold in your portfolio, and in an inflationary period I could see the case. But, as you know, that is not the case, hasn’t been the case, and probably won’t be the case for the foreseeable future.

But one can’t deny that despite the massive rally in the USD over the last few months, that gold should have continued its decline. See chart below:

1-8-15DXYGC

In addition to the fact that gold stopped falling, it is testing a downtrend line that has been in existence for the last couple years. Read my tweet yesterday here (quite a few comments on this chart).

And if you read here, you would know that the USD over the last couple days has rejected a key level of resistance. So, the question I am asking myself is “if the USD is to decline, pullback, or consolidate in the near term, will gold rally? And if it does, is it for any other reason that a squeeze or poor short positioning?”

If Gold decides to stage a rally from here, I am not sure I can get myself to actually buy it. However, I would like to participate “somehow” and a trader (JessieMacguire) today reminded me of a conversation we had yesterday on my daily webinar about Gold and the JPY. Take a look at the following “strong” correlation between the JPY (6J) and Gold:

1-9-156JGC

Looking at this chart, one would think if gold rallies, the JPY should rally. The 6J is the JPY futures contract, that chart is the “candlestick” chart.

I can argue that this is a tough trade. You would be fighting the BOJ, Mark Cuban, Kyle Bass and every other asset manager from here to Timbuctoo. But for me, that boat (long JPY) could be a little lopsided as well. With a whiff of risk aversion or volatility due to the possibility of the FOMC raising rates sometime this year, perhaps that is the trade I go with.

Go ahead, leave your comments on “why” we all should own gold. You won’t be able to convince me. But that’s okay, I have the JPY!

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I have been long some JPY against the AUD, NZD and CHF for the last couple weeks. I am looking to add to my JPY exposure in the future.

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