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Implications of Gold's Rise Relative to Oil
In recent months, I warned of the ominous implications of a rebounding gold/oil ratio. Yesterday, gold further outpaced oil in relative terms, giving more credence to the thesis of intensifying declines in US fundamentals.
US Mint halts sale of gold coins due to soaring demand
I might go long on a very small lot with tight stops. If the 107.3 mark can be broken there is no resistance to 122 which would form a classic double top.
Still placing main focus on GBP/USD ready to short - hard resistance is being encountered at 1.863/64 range possible reversal beginning with shooting star formation on 240 minute chart
Regarding your wanting to long CADJPY based on further gains in oil, I would not jump on this trade due to the increased possibility of a BANK OF CANADA RATE CUT at the October 21 meeting. With the US economy increasingly strained, North of the Border is struggling across the board with the exception of oil driven Alberta. Yes, they did have a few stronger than expected job reports, but combining risk aversion, yen strength and US weakness, CAD may be in for some hard times.
WEELY CADJPY CHART looks technically toppish, with gains limited at 103, but ample downside room towards 100 and 99.30.
WILLIAMS % R looks BEARISH both in Daily and Weekly.
Have you recently traded the CAD/JPYcross? It is currently in consolidation of recent bullish trend and at the low range of yesterdays highs. Also sensitive to the volatility of Oil.
Thinking of going long if there is a dip to 101.60 - 101.70 range.
Any effect on the GBP from rising Oil?
Nat Gas is still relatively unchanged vs. Oil and GBP is a high prodcer of Oil, and Cosumer of Nat Gas.
Also, will the U.S political climate further drag on the Dollar - Taliban/Pakistani Army Terror upswing in Pakistan, Electoral discomfort and Lame Duck CEO at Home?
240 Minute Chart shows potential Evening Star - Tweezer top foming at new highs, potential reversal formaing.
I agree with Steve about GBPUSD being a great sell at $1.86 and remains so until $1.8480s. We will get the CIPS surve from the UK this week, and these may prove GBP negative. AUD longs may also be looking at 87 cent as a medium target. Yes, USD is deeply negative, but it is the least negative against GBP.
Alternatively, GBPAUD and GBPJPY may be good shorts too.
Fundamentals are still suporting a bullish sentiment on GBP/USD: Carry and Bond trades, combined with expectations of Fed easing and possible commidity inflationary pressures.
The Fed and Treasurey is basically caught in a vice between maintaining capital inflows (Treasury sales pricing) and maintaining credit markets through easing.
Foreign investment is viewing US Treasuries as relatively more risky leading to demand for better pricing on Yields. At the same time LIBOR rates are climbing, inducing credit disruption in the commercial markets.
Technicals show that GBP/USD could reach as high as 1.87 (2 day old highs), before Bear correction, a break below 1.84 would indicate possible shifting sentiment. However sentiment is very Bearish on the USD so caution is advised.Given the record incease in WTI today, I think that Ashraf's advice on Gold is sound.
USD/JPY should go down to target 104.45. Happy trading.
GLD - Gold ETF up target $100 coming period.