Currencies And Gold
Jack Davis | Mar 21, 2017 11:03
Originally published by Chamber of Merchants
Good morning everyone.
We want to know whether gold is head up or down in the short term to plan our entry points in the miners.
Let’s see what the currencies are up to in order to gain some perspective…
h2 Dollar / DXY/h2The dollar bounced off the 78.6% Fibonacci support…. That is often a bearish signal in that the correction shows a lack of demand… however, I wouldn’t place too much value on that observation… Much depends on Trump/ Economic news etc…
For now, the dollar has shown the intention of bouncing. The critical support is at 100 and 99.5.
h2 USDJPY/h2
Yesterday I entered at 112.54 and exited 112.87….
The yen doesn’t look like the weakening is playing out…if the Yen fails to hold 112.50+ then gold is going higher… Unfortunately this trade is being painted in a way that makes it ambiguous. I can see a case for both bullish and bearish trades here.
Economically, the Bank of Japan would prefer the Yen remaining above 112. Taking that into account, it may be worth repeating yesterday’s trade with a tight stop, however, further downside is likely and in the event that the Yen does not hols 112.50, then gold likely to test previous resistance (which is a good thing for gold miners.)
Gold. Gold. Gold.
This is a clear bull flag that failed to break to the upside. What gold requires is an exogenous event: an unexpected event that draws capital into safe haven assets.
Or we require a severe disappointment for the US dollar.
In the absence of such an events, we may find gold topping out around $1237 before the bears start rolling the ball down the hill.
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I’ve mentioned it in the comments section.
Trade your stock according to its own support and resistance zones. That means that if Gold Miner “X” is at a super bargain price historically, but you still don’t enter because you’re anticipating a drop on gold, then consider what the downside risk is. Perhaps, just perhaps, the price your stock is at is an emotional overselling.
To compare this historically, check your stock’s RSI on a day chart :
To buy at the oversold areas is to increase your probability of success. Not guaranteed, but certainly improved.
|the Merchant
Also. It may be round about this time that I took my first breath.
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