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INTERIM UPDATE – February 9, 2018

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PREMATURE & FALSE BREAKOUTS

Below two paragraphs are taken from Peter L. Brandt’s Diary of a Professional Commodity Trader – Lessons from 21 weeks of real trading. “A premature breakout is different from an out of line movement in the sense that a premature breakout can close outside of a predrawn boundary line and even spend several days in breakout mode. Prices then return back to the geometric pattern. However, the initial breakout was only a harbinger of things to come, and within a few weeks a genuine breakout occurs. I call these subsequent breakouts secondary breakouts or pattern recompletions.” – Ch 3, page 38, Identifying the trades and the trading vocabulary Read More

SILVER and SOYBEANS

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Poor man’s gold might be setting up for a strong performance in the metal complex. SILVER/GOLD ratio is reversing from a historical support area. This level acted as a medium/long-term turning point for the ratio in 1997, 2003 and in 2008. Not only the relative performance of Silver is showing strength but also the price chart of Silver forming a possible base formation. Silver has been outperforming another precious metal that has industrial use; platinum. SILVER/PLATINUM ratio is on the rise with the latest chart development suggestion even more to come. In the metals, silver can be a winner.

SILVER VS GOLD WEEKLY SCALE RATIO

SILVER VS GOLD WEEKLY SCALE RATIO

SILVER VS PLATINUM WEEKLY SCALE RATIO

SILVER VS PLATINUM WEEKLY SCALE RATIO

Over the past year, Silver possibly formed a head and shoulder base with a neckline at 16.35 levels. Breakout above 16.35 will clear multi-year downward trend lines and also the year-long horizontal resistance. Weekly price closed at 16.21 levels.

SILVER

Another long-term opportunity might be developing on Soybeans price chart. Over the past few weeks, Soybeans reversed from an important inflection point. Two long-term trend lines overlapped around 850 levels. Last week’s strong weekly price bar suggests possible strength for the following weeks. Resistance area on the first month continuation chart is around 1070.

WEEKLY SCALE PRICE CHART

WEEKLY SCALE PRICE CHART

WHEAT, SOYBEANS & METALS

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SILVER VS GOLD

Silver is likely to outperform Gold prices in the coming months. Long-term chart of SILVER/GOLD suggests the ratio is at a major turning point. Multi-decade support reversed the ratio three times over the past two decades and this could be the fourth time. Reversal from the strong support in the past resulted in an approximately 1.5x-1.6x outperformance with the exception of 2.3x during 2009-2011 period.

SOYBEANS

Grains and beans complex is at a major turning point. Soybean price is trying to reverse from a multi-year trend support. Two long-term trend lines acted as support around 850 levels. Momentum indicator RSI formed positive divergence. This could prove to be a major low for Soybeans.

WHEAT

Similar price action can be seen on Wheat price. Last three year’s downtrend found support around 455 levels. Strong support can prove to be a turning point for the agricultural commodity.

SILVER and COPPER

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Both metals avoided sharp sell-offs by holding above critical support levels. Silver tested the strong support area between 18.3 and 18.8 for the 3rd time over the past year. Copper managed to hold above 3 levels which acted as strong support since 2012. Copper and Silver can rebound towards their long-term averages. 200-day average for Silver remains at 21.25 and for Copper at 3.2. Before we see decisive break downs of the strong support areas (Silver: 18.3-18.80, Copper: 2.85-3.0), we should expect neutral/positive technical action on Silver and Copper.

SILVER

COPPER II

Gold, Silver, USD and Unemployment

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Here are some of the charts that I shared on twitter today. U.S. weekly jobless claims chart is extremely important as I shared several updates on this topic. Year 2013 can prove to be a major low for weekly jobless claims figure.

Both Gold and Silver are now close to major support levels.

U.S. dollar index rebounded from a 2 year-long trend support.

and some other updates on EUR/TRY, USD/TRY and NIKKEI…