Dollar, Indices, Metals, Oil and Bitcoin

2020年7月24日

I will give a brief analysis on all the major assets + charts with my TA

-The Euro is getting somewhat overbought, but technically it is really strong. Most people are long USD and most people are bearish on Europe. With US rates falling so much and Europe most likely coming to an agreement about debt, as well as the potential of the Dollar cycle having turned (we have seen several off them through the last 50 years)... the Euro might be on the verge of a massive break out. That would happen above 1.185 based on my analysis. For now there is room for more upside but I'd be cautious. As for the USD it is clear that it has broken many major MAs like the 200 WMA and several horizontal and diagonal support levels. EURUSD could stay around 1.15-1.167 before having its next leg up.

-US indices have gotten really high and both had some interesting SFPs. The one on NDX happened before the one on SPX. With Tesla getting into the SPX with such a high valuation definitely played an interesting role in the way the market reacted (it was like a buy the rumour sell the news). I can see the SPX having some more room to the downside although its trend is clearly up and it is near support. The NDX is at a strong support combo of its 10+ year log channel, a current diagonal and a horizontal. I could also see the NDX go to 10150, but for me to be really bullish I'd have to see it climb above 10500 pretty quickly. My opinion is that we are at the beginning of a massive bubble where the NDX will hit 19k. This goes well with the dollar being weak and a massive risk on sentiment. Of course this could be extremely wrong and this scenario would be invalidated if we close below 10k. Pretty good R/R

-Gold is on a massive rally and is now near its ATHs vs the USD. It already was making new ATHs vs pretty much every other fiat currency out there so the USD is the last one left and it is pretty close. There might not be that much resistance here as the ATH was many years ago. Of course it could pull down to 1800 before pushing even further, but the consolidation in the 1650-1750 area was long enough and the breakout pretty strong. If it does pullback it is definitely an opportunity to buy the dip. Silver is on monster rally and has doubled since its March 2020 bottom. Silver has turned most resistance into support and has reclaimed other than 3, 2 of which have been since its massive breakout which led to a 20% rally in just a few days. Silver is getting out of its massive accumulation zone, which I'd dare to say it is textbook Wyckoff accumulation coupled with a perfect Wall St Cheat Sheet. The shakeout which took out its quadruple bottom and with a massive spring it started rallying hard. On the one side I am thinking that both are overextended and a pullback should come... However when I look at the USD, stocks etc, I am realising that the trend is super strong and everything is aligning together. Most people are in disbelief, most people are short most other assets and are long the USD. Copper also made a massive come back, but its chart and fundamentals are definitely not as good as Silver's. Low rates, the potential of negative rates and QE definitely benefit these asset. Those coupled with a weak dollar are the perfect storm for metals.

-Oil had a massive capitulation. Probably a double one depending on how you look at it and I believe it has bottomed for good. Right now it is even pushing above its massive gap, as it is slowly closing above the 41.5 level which has turned into support. With so many wells closing, with so many people being short oil and so on... it looks like there is even more juice to this move. China has been accumulating cheap oil, demand is coming back and the shakeout was too large to ignored. A massive capitulation to end an 11+ year beark market on Oil. Bull market end with catrastrophic rallies and bear markets end with insane capitulation. Both Oil and Copper are definitely affected by money printing when it comes to the state intervening and spending money for infrastructure. I think we have reached a point where the private sector, especially off small business is so bad that the State will start printing and spending. Based on several analysis I've seen, oil at 42$ is a pretty fair value... but it doesn't account for all the potential wars and crisis in Venezuela, Iraq, Syria, Libya and I dare to say Iran. So low oil production, bearish sentiments, money printing and potential wars will boost oil massively.

-Finally Bitcoin is definitely showing signs of strength after 2+ months of underperfomance. Up until early May Bitcoin was the best performing asset in the year 2020 and the one to recover the fastest after Gold. Before Covid it was up 46% on the year and then fell 64%. With the current massive on going alt season... A lot of that money will eventually flow back into Bitcoin. Digital money, digital payments, hard assets, high yielding assets and all that are definitely benefiting from the current Covid situation. Crypto assets had a massive bear market where they dropped 90%+ and then accumulated for quite a while. The whole process laster 2+ years and it was really brutal. Bitcoin had its halving 2+ months ago and it is in volatility compression period as the game is altcoins. Eventually the tables will turn and Bitcoin will have an incredible performance. I have no doubt in my mind that it will be the best performing asset in 2020.