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FX CURRENCY WATCH 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 continue to 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. Any increase above 64.40 will likely be due to the forecast long- term decline in the U.S. Dollar.


BITCOIN/USD


As stated in the last five quarters of articles of our Bitcoin forecasts, the emergence of Bitcoin has been intriguing to me as a 39-year veteran of the currency markets. I have been able to provide 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 continue to provide forecasting for crypto to my clients.


16 FX TRADER MAGAZINE April - June 2019


The amount of data and only a five-year timeline of data is really 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 continue to forecast the weak rally to retest 6370 strong short- term resistance, out to May 2019 from March 2019, before another broad, volatile, medium-term consolidation [3110 – 7360] through October 2019. Only a monthly close back above 7360 (yielding 11530 strong medium- term resistance over the subsequent 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 still neutral/ bullish medium-term forecast into the third quarter of 2019.


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 1.1215 in EUR/USD, but also the failure to complete a monthly close back


above 1.1555. Significant bearish U.S. Dollar momentum


will not develop until a monthly close back above 1.1555 [through the middle of 2019] in the rally to 1.3190 through 2020. In addition, after the failure to complete a monthly


USD/JPY and decline shy


close above 113.40 in of


104.30, we continue to forecast the subsequent decline again, now to only 107.75 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 $CHF as well as decline to 1.0710 in EUR/ CHF.


In commodities, Gold, which completed its longer-term bottom in 2017, will continue its rally through 1355 to 1525 through the first quarter of 2020, in consort with the EUR/USD rally. Crude Oil will now flounder in a lower, broad range [42.05 – 64.40] as it approaches our 64.40 objective. After a continuation of a one and a half


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


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