Select Page

The Fed raised 25 basis points as expected which indicates a possible slowing in the rate of increases. As a result, we have had an ongoing softening of the Dollar after its recent disorderly descent. The US Dollar/Chinese Yuan, was in a head and shoulders structure which pointed to a high possibility that the dollar was going to be soft and continue to go down further.

Our Premium Community had a heads up on this development early on which was later posted on Twitter.

USD/CNH 12H Head and Shoulders

With a bid in the Euro, we have had trades to the long side on the Euro/ Norwegian Krona. The Euro typically has a seesaw relationship with the Dollar – strength for the Dollar usually means weakness for the Euro. As a result, the Euro/Norwegian Krona has made good progress. Norway has had a couple of concerns of its own that has seen the Krona soften and it’s made for a nice HVF trade. Note in the chart below, we have traded this pair to the upside before.

EUR/NOK 2H Target in sight

It’s a very interesting time on the gold silver ratio because the ratio is actually going up. Normally this is bearish for the precious metals market. However, in this instance, gold has been dominating due to Central Bank buying and the shedding of US Treasuries. It has been the highest rate of gold buying by Central Banks since 1967! As shown in the chart below, we had a volatile period and we could be looking at a turn down on the gold silver ratio. The up leg in the ratio had silver holding its own in and around the $23.50 to $24 level and gold continuing to walk higher on those central bank purchases.

If this ratio reverses and starts to head down, we could potentially see the beginning of catch up for silver against gold in percentage terms. 1.5% move up on gold and could result in a 5% corresponding move on silver. This head and shoulders is suggesting a downside target for the gold silver ratio which apart from being very bullish potentially for precious metals generally, it could be very, very bullish for silver particularly. Watch out for plays on miners that have a high percentage of silver output.

This all could be pointing to Central Banks buying and the loss of faith in the Dollar seeking other alternatives needing to lean on to win confidence for new alternatives to the Dollar being proposed by the BRIC nations, CBDC’s, etc. As a result, the paper price is moving up. If this head and shoulders triggers, the paper price, as real or unreal as it may be, will likely move very strongly on silver too.

XAU/XAG 1D Head and Shoulders

Tech earnings reporting season has been in full sway and markets had positioned quite bearishly for this event. As a result, we’ve seen Tesla now up 70-80% from its lows. It almost made $100 to the downside on our head and shoulders – see the Tesla short that we referred to on YouTube and Twitter – and said why you should take profits on the targets as suggested. Since then, it has seen a very strong rally.

Generally, this is a risk-on environment where the market is now moving to the upside, mostly on the Dollar weakness. The Dollar may potentially enter a slightly disorderly phase before ending its bearish period.

For Cryptos, Dollar weakness has given a grinding bid under Bitcoin which has seen, generally, some elements of cautious short-term bullishness. I would caution against losing our heads too much over this, but tentative, short timeframe set ups have availed themselves which have given small to medium size returns for the time frame under review.

We will look at the Non-Farm data and how it will affect the Dollar in the first session of our Live Trading Day.

During our second, Crypto-focused session, we will also look at the some interesting cryptos that have begun some fairly impressive moves.