Tuesday, November 19, 2013

Good anticipation on the Euro | The gold canary moves closer to falling off the perch

No sooner had we sent out the OmiCronFX email subscribers’ morning email yesterday (Monday Nov 18th), which took the view that the Single Currency was set for a rise, than there was significant movement in exactly the right direction for our call:
Now, we are not suggesting, for a moment, that the boys and girls who place the orders at 09:00 GMT in the morning, or who design the algo routines in the hedge funds that take care of the business, are waiting with bated breath for our pronouncements of a  morning, but we are very pleased that our anticipation is such that just 16 minutes after we hit the send button on Monday morning’s OmiCronFX latest email (Register here to get it yourself each week day), the EURUSD pair started a very significant move for the day, in the direction we had indicated.

In the event we were able, at around 15:30 PM that afternoon, to take off a profit worth about 1% of equity by closing half the position when the pair approached the main resistance at the 1.3547 level, while leaving the other half in place with its Stop-Loss order at the entry, or Break-Even price.

Gold is now grappling with its strong support level at 1270 USD per Oz. There was a marked mood yesterday morning in favour of a delay in tapering, in contrast to the situation at the end of last week when it seemed that the end of QE in the USA was coming ever closer.

That changed again when the chairman of the New York Federal Reserve, William Dudley, spoke. This man has been one of the strongest supporters of QE, and in fact remains so. However, it seems that yesterday he was forced, almost reluctantly, to admit that all kinds of leading indicators, such as employment, inflation and economic growth, were better than they had been. These “admissions” from an inveterate supporter of monetary easing were enough to cause a considerable fall in gold, in particular, which we see as the pit canary of the economy, particularly as far as the end of QE is concerned. (Before the advent of equipment that could detect dangerous gases, coal miners used to bring canaries underground. If the unfortunate bird fell off the perch the miners knew something was likely to be wrong, and headed for the surface).

Gold is equally sensitive to even the slighted suggestion that tapering might be on the way in the US.

1 comment:

  1. Wonderful analyses got opportunity to learn new things.thanks for this.