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CURRENCY WATCH


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


rally in Crude Oil through 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 subsequent sustained residual strength of the U.S. Dollar in that Crude


Oil rally greatly


contributed to the recent collapse back to 42.35. As the U.S. Dollar weakens in our forecast, oil will recover to the 64.40 medium- term corrective objective 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


technical 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 forecasting.


The amount of data and only a nearly four-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 5975 for May 2018, corrective rally to 8875 for August 2018, and now strong decline through the 5270 medium-term objective for November to 3120 has produced strong complex medium-term divergences. We are forecasting a weak


rally to retest 6370


strong short-term resistance into March 2019 before another broad, volatile, medium-term consolidation [3110 – 7360] through September 2019. Only a monthly close back above 7360


medium-term resistance over the


subsequent


(yielding 11530 strong two months)


or a monthly close below 3110 (increasing bearish momentum and yielding a retest of 2255 weak long-term support over a month) would alter


the now


neutral/bullish from ongoing bearish medium-term forecast.


SUMMARY


The U.S. Dollar has built its long-term top, with the typical, one year ago, sharp move down followed by consolidation. The key feature of this last quarter was


the failure to complete a


monthly close below 1.1305 in EUR/USD. Significant bearish U.S. Dollar momentum will not develop until the next monthly


FX


close above 1.2090 [through the middle of 2019] in the rally to 1.3190. In addition, after the failure to complete a monthly close above 113.40 in USD/ JPY, we continue to forecast the subsequent decline again to 104.30 through mid- 2019, reinforcing the imminent new leg down in the Dollar. Lastly in the big picture, USD/CHF and EUR/CHF both indicate that the final stages of the forecast seven-year bull market occurred as forecast in the last quarter of 2017 and continue to erode for a decline to the .9445 critical monthly close.


In commodities, Gold, which completed its longer-term bottom in 2017, will commence its rally to 1525 into the beginning of 2020, in consort with the EUR/USD rally. Crude Oil will now flounder in a lower, broad range [42.05 – 64.40] after achieving the long-term objective of 69.20. 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 into early 2020, reversing recent trends. Good luck and good trading!


Keith Raphael President


Crosscurrents Investment Advisory FX TRADER MAGAZINE January - March 2019 23


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