FX TECHNICAL OUTLOOK
the correlations through early 2018, lost in the volatility and uncertainty that have been trademarks of the last two and a half years.
SUMMARY OIL
techs within neutral/bearish. We continue to forecast a subsequent decline to retest 1044, out to July 2017 from January 2017, to complete the long-term decline. We continue to forecast
a subsequent medium-
term consolidation [1044 – 1310] through February 2018. We continue to stress that this consolidation is the formation of the long-term bottom for Gold, reinforced by the expected divergences from the further rally in the Dollar through June 2017. Only a monthly close back above 1338 would terminate the forecast further decline, and commence a rally to retest 1525 strong long-term resistance over the subsequent six months.
OIL
As discussed in the last five quarters of articles in FX Trader Magazine, the plunge in Crude Oil from 108, through the 33.20 long-term objective for January 2016 to 26, produced the strongest medium-term divergences in 15 years [stronger than from the
24 FX TRADER MAGAZINE July - September 2017
plunge in 2009]. As a result, we have rallied shy of the 56.55 medium-term corrective objective for November 2016. Aſter a prolonged irregular top building extended through the first quarter of 2017, we continue to forecast the corrective decline to 39.20, out to August from May 2017, still in the broad, medium-term consolidation [33.20 – 56.55] into February 2018. Only a monthly close above 56.55 would avert the decline to 39.20, and commence a rally to 77.90 over nine months.
Te impact of the price of Crude Oil on other assets has varied and diverged from normal levels of correlation for the past year. In part, it is a question of whether the “tail [Crude Oil] is wagging the dog [ U.S. Dollar]”. I continue to believe that, like the Crude Oil rally slightly dampened the bullish view for the USD through calendar year 2016, the decline in Crude Oil will benefit the remaining Dollar rally against the Euro. Te third and fourth quarter trends will begin to normalize
Although a similar summary to the prior quarter, the U.S. Dollar, though still bullish through the third quarter of 2017, continues to lose bullish long-term momentum in a typically complex and less volatile bottoming process. Aſter the volatile, incongruous decline in USD/ JPY from 118.65 to our 109.20 medium- term corrective objective [as EUR/ USD maintained stability], the forecast medium-term consolidation in USD/JPY [108.15 – 116.05] will further dampen bullish momentum in the U.S. Dollar.
In commodities, Gold, which completed its forecast corrective rally in consort with the EUR/USD corrective rally, continues its forecast decline to a final long-term low and bottoming formation through the middle of 2017. As the Crude Oil forecast remains fully intact, the forecast decline to retest 39.20 will support the Dollar as it completes its bull market. Lastly, and in the big picture, USD/ CHF and EUR/CHF both continue to indicate that we are in the final stages of the forecast seven-year bull market in the U.S. Dollar culminating through the first quarter of 2017. Aſter a probable year-long top building in the Dollar and bottom building in commodities through 2017, we continue to forecast an emergence of a new bull market in commodities beginning in 2018, reversing recent trends. Good luck and good trading!
Keith Raphael President
Crosscurrents Investment Advisory
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