FX CURRENCY WATCH
We are forecasting a further decline to retest 58.10 strong medium-term support through September in a now neutral medium-term outlook through the first quarter of 2019 [58.10 – 72.85]. Only a monthly close back below 58.05 (nudging medium- term techs back to neutral/bearish and commencing a decline to retest 49.55 over two months) or a monthly close above 72.85 (resulting in a rally to 80.80 over three months) would alter the now neutral medium-term outlook for the next eight 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 and a half. In part, it was a question of whether the “tail [Crude Oil] is wagging the dog [ U.S. Dollar]”. I continue to believe that the weak rally in Crude Oil to 69.20 was the result of and correlated with the further weak decline in the Dollar against the Euro into April 2018. I also believe that the extended consolidation of the U.S. Dollar, now into the first quarter of 2019, will result in oil remaining neutral and continue to normalize the correlations that were lost in the volatility and uncertainty that had been trademarks of the previous three years.
BITCOIN/USD
As stated in the last two quarters of articles of our Bitcoin forecasts, the emergence of Bitcoin has been intriguing to me as a 37-year veteran of the currency markets. I have been able to provide technical
34 FX TRADER MAGAZINE July - September 2018
market forecasting for all assets for these many years, but I have always steered clear of highly illiquid assets due to their high volatility. Without condoning crypto-currencies or giving them more credence than they deserve in their infancy, I have decided to provide an initial forecast.
The amount of data and only a two- and-a-half-year timeline of data is insufficient to make the type of longer-term forecasts to which I am accustomed. Nonetheless, after the meteoric rise to 18720, our forecast decline to retest 9425 strong shorter- term support for March 2018, and now decline shy of 5975 forecast for May 2018 has left medium-term techs
and momentum waning to
neutral. We are forecasting a weak retest again of 8875 through August 2018, still within the resulting very broad but now lackluster medium- term outlook [5975 – 11780] into November 2018. Only a monthly close above 11780 (yielding 16460 strong medium-term resistance over the subsequent two months) or a monthly close below 5925 (increasing bearish momentum and yielding a retest of 4030 strong medium-term support over a month) would alter the now neutral from ongoing bearish medium-term forecast.
SUMMARY
The U.S. Dollar continues to build its long-term top, with the last quarter being a typically sharp move
down followed by consolidation. The key feature of this last quarter was the significant extension of the Dollar
top-building process, now
extended an additional nine months. Any significant bearish U.S. Dollar momentum will not develop until the next move through the middle of 2019 to 1.3190. In addition, after the forecast rally in USD/JPY to 110.20, we continue to forecast the subsequent decline again to 104.30, reinforcing the imminent new leg down in the Dollar.
In commodities, Gold, which completed its longer-term bottom in 2017, will
continue
to consolidate into late this year before higher to 1525 into the beginning of 2020, in consort with the EUR/USD rally. Crude Oil will now flounder in a broad range [58 – 72] after achieving the long-term objective of 69.20.. Lastly, and in the big picture, USD/CHF and EUR/CHF both continue to indicate that the final stages of the forecast seven-year bull market occurred as forecast in the last quarter of 2017. After a
continuation of the year-long
top building in the Dollar and bottom building in commodities into 2019, we continue to forecast an emergence of a new bull market in commodities out to late 2019, reversing recent trends. Good luck and good trading!
Keith Raphael President
Crosscurrents Investment Advisory
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