Gold Breaks To New Multi Year Low – July 20th 2015
This is going to be an important week in the the commodities market. Gold and silver have both broken multi-year lows. Gold has not been at this level since early 2010, while silver has not seen these prices since mid 2009. The question that still needs to be answered is whether or not this breakout to new lows will actually stick or not. Why is this happening? Obviously when your talking about long term market direction the answer is not singular. When your talking about the last year the amazing dollar strength has obviously helped. Another point is the markets are futures based and therefore often the price bottom long before things are at their worst and tops out long before things hit their best. With that being said, maybe the market sees the world economy as having turned a corner. At the end of the day your guess is as good as mine. There is a reason I don’t trade long term direction, and that reason is long term market direction often goes against common sense.
The bottom line in gold is I believe we will be seeing $1000 at least. The next logical bottom if $1000 doesn’t hold then $700 will be the next target. As far as silver is concerned I think $10 is very likely. Having said that I do still believe that if you own nothing at present then you should be buying some even at current prices. Its important to also remember why I talk about gold and silver. I don’t talk about it as a “trade”. Another words I’m not looking to buy low and sell high. If you want to do that then do it electronically not with physical. I buy physical as a hedge against a worst case scenario and therefore price becomes much less important because if there ever is a time you need it then buying silver at $15 or $20 an ounce will not make a difference. On to the markets!
EUR/USD Declines On Open
The Euro is approaching major daily lows and they are starting to break. The low of 1.0818 was set on May 27th 2015 and a break of this level would likely mean a retest of the overall lows from earlier in the year. On a short term scale the pressure is obviously still to the downside as well. In this type of the market we will often only catch trades that we term as backside of the level setups. We are looking for liquidity or where liquidity may be located for us to take a trade. In a market that is falling to the downside this often means no ONE specific level stands out. A good way to illustrate this is to look at the opposite like we have in the Pound currently. I can say for certain that there is a hell of a lot of liquidity sitting above both the range high and low on the Pound and therefore any stop run of those levels would be a solid trade. With the Euro however levels are much less dramatic and thus lower quality.
Today I will only be looking to short the Euro unless the market forms a major low and then creates a stop run on that level later in the trading day. As I mentioned before, if the market continues to slide we may only have an opportunity for a backside of the level stop run reversal.
3+ Day GBP/USD Range Continues
The Pound is in a rather simple situation. I personally love a range bound market as they tend to create high quality high probability manipulation points. It also gives us a clear starting point for when/if a cycle were to begin. At this point I obviously do not have a market cycle bias on the Pound and will simply be trading the manipulation points to either direction according to what sets up.
As I mentioned last week, the upper level on the Pound is rather important in my opinion. If we break higher and hold it signifies the market believes a future rate hike may be coming as it would be an extension of last weeks surge up on Carney’s rate hike comments. A push down will tell me the market still has some common sense left but time will tell.
Forex News For July 20th 2015
The only news that means anything today will be the Aussie Monetary Policy at 9:30 PM Eastern which is well outside of our trading times. Like always, keep an eye out for any Euro news as it is likely far from over.
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