A Tale of Three Kings:: USD/EURO/GOLD - ep 1
Analyzing 2021 markets using Fundamental and Technical Analysis
The market functions as one cohesive unit; a cosmos of transactions all influencing each other. happy New Year to all. I hope you are able to enjoy with friends and family. I appreciate so much all the support I have received on trading views by the amazing community. I will be giving a full market overview and analysis for how I think this year will play out. I love studying the economic machine and sharing my insight to help other traders/investors. Enjoy....
ep 1. Pagans in Vegas
- - tldr - - Gold is dollar denominated (i.e oil) . When the value of USD drops, Gold can be purchased at a “cheaper” price. If you compare the three charts you can clearly see the relationship. USD is inversely correlated with GOLD and EURO. This relationship transcends these 3 “assets” and influences the entire economy (yes, even BTC, Tesla). Notice how TLT (“risk-off”)moves with this. GOLD usually is inversely related to the stock market but in recent times they have moved together. A relationship that will not last. When the USD/TLT/VIX move up at the same time like what happened in March, signals weakness in stocks. Short term - USD goes down/ stocks go up. Then, USD/TLT/VIX spike as the stock market falls 10%-50%. When USD/TLT/VIX top out, stocks become a buying opportunity.
——-
Using Technical Analysis and Fundamental Analysis, we can form a hypothesis of what may happen in the economy in the next 3-5 years. Analyzing price action is a great way to remove bias from analysis. Patterns that have formed before in history are bound to repeat themselves. Fundamental analysis by itself is usually to much of a macro approach great for those just studying the overall shape of the economy or investing for the super long term. Technical Analysis provides a micro view, a zoomed in look at events as they are happening. A requisite for Traders and Asset managers.
Anyways...... The falling wedge is apparent in the USD. Wedges represent an imbalance between buyers and sellers. There is a smaller falling wedge forming in the daily and another occurring in the weekly. I believe USD will rally a little causing a dip in the price of GOLD/EURO (Market Manipulation). The short term prediction is not for certain, gold and euro could just continue to rise and the dollar falls without a move up. the prediction for the next 6 months, is the USD will lose value. A opportunity for Emerging markets and assets to rise in value. The USD is set to rally coming off of the falling wedge but the extent is to be determined with time.
USD is rapidly losing volume due to the large amount of injections/QE caused by an increase in the money supply. The increase in money supply means there is more money flowing into stocks. Money is pouring into assets and metals. Interest rates will not rise anytime soon. The world is slowly becoming less dollar denominated, countries preferring to transact in their own currencies or others (RMB,RUS,EURO,IND). As we move away from the dollar, Metals and Alternative Energy are set to skyrocket in value, Uranium, Lithium, Copper, Silver,etc. The put/call ratio is at an all time low as this rises we will see investors moving to “risk off” strategies. Selling their stocks for cash, a sell off such as this usually brings short term volatility to all holdings even TLT/Metals however, there is usually a quick stabilization. People move to cash as they foresee a stock market drop and increased uncertainty. This move to cash signals strength in the VIX and TLT. Stocks have seen a crazy run up lately and this is to continue for the first two weeks of July. I believe stocks are working on their last legs up to finish up the bull run which started in late March last year. SPY and Tesla all have rising wedges in their charts, when these rising wedges start to break down TLT/USD/VIX will see a sharp rise. Here is also where metals will disconnect with the stock market and move higher.
BTC will sell off along with Stocks as it has in 2018 and 2020.
The market functions as one cohesive unit; a cosmos of transactions all influencing each other. happy New Year to all. I hope you are able to enjoy with friends and family. I appreciate so much all the support I have received on trading views by the amazing community. I will be giving a full market overview and analysis for how I think this year will play out. I love studying the economic machine and sharing my insight to help other traders/investors. Enjoy....
ep 1. Pagans in Vegas
- - tldr - - Gold is dollar denominated (i.e oil) . When the value of USD drops, Gold can be purchased at a “cheaper” price. If you compare the three charts you can clearly see the relationship. USD is inversely correlated with GOLD and EURO. This relationship transcends these 3 “assets” and influences the entire economy (yes, even BTC, Tesla). Notice how TLT (“risk-off”)moves with this. GOLD usually is inversely related to the stock market but in recent times they have moved together. A relationship that will not last. When the USD/TLT/VIX move up at the same time like what happened in March, signals weakness in stocks. Short term - USD goes down/ stocks go up. Then, USD/TLT/VIX spike as the stock market falls 10%-50%. When USD/TLT/VIX top out, stocks become a buying opportunity.
——-
Using Technical Analysis and Fundamental Analysis, we can form a hypothesis of what may happen in the economy in the next 3-5 years. Analyzing price action is a great way to remove bias from analysis. Patterns that have formed before in history are bound to repeat themselves. Fundamental analysis by itself is usually to much of a macro approach great for those just studying the overall shape of the economy or investing for the super long term. Technical Analysis provides a micro view, a zoomed in look at events as they are happening. A requisite for Traders and Asset managers.
Anyways...... The falling wedge is apparent in the USD. Wedges represent an imbalance between buyers and sellers. There is a smaller falling wedge forming in the daily and another occurring in the weekly. I believe USD will rally a little causing a dip in the price of GOLD/EURO (Market Manipulation). The short term prediction is not for certain, gold and euro could just continue to rise and the dollar falls without a move up. the prediction for the next 6 months, is the USD will lose value. A opportunity for Emerging markets and assets to rise in value. The USD is set to rally coming off of the falling wedge but the extent is to be determined with time.
USD is rapidly losing volume due to the large amount of injections/QE caused by an increase in the money supply. The increase in money supply means there is more money flowing into stocks. Money is pouring into assets and metals. Interest rates will not rise anytime soon. The world is slowly becoming less dollar denominated, countries preferring to transact in their own currencies or others (RMB,RUS,EURO,IND). As we move away from the dollar, Metals and Alternative Energy are set to skyrocket in value, Uranium, Lithium, Copper, Silver,etc. The put/call ratio is at an all time low as this rises we will see investors moving to “risk off” strategies. Selling their stocks for cash, a sell off such as this usually brings short term volatility to all holdings even TLT/Metals however, there is usually a quick stabilization. People move to cash as they foresee a stock market drop and increased uncertainty. This move to cash signals strength in the VIX and TLT. Stocks have seen a crazy run up lately and this is to continue for the first two weeks of July. I believe stocks are working on their last legs up to finish up the bull run which started in late March last year. SPY and Tesla all have rising wedges in their charts, when these rising wedges start to break down TLT/USD/VIX will see a sharp rise. Here is also where metals will disconnect with the stock market and move higher.
BTC will sell off along with Stocks as it has in 2018 and 2020.
