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Are Gold & Silver Poised To Make Fresh Lows? August 4th 2015 Fx Commentary

August 04
05:16 2015

Both gold and silver have started another aggressive charge towards potential fresh lows. I’ve never been more torn on the subject of gold and silver. While I think that everyone should have at least some gold or silver as a worst case scenario protection, I do believe lower prices are likely. In fact I wouldn’t be surprised to see gold at $700 and silver below $10 per ounce by mid 2016 which is less than a year away. The case for a deflationary recession is becoming more and more likely vs the inflationary recession every gold bug has been worried about. If that is the outcome then commodities will continue to remain under pressure for the next few years. I’m still as big of a fan of precious metals today as I have been at any other time. That being said timing is critical, and as long as you at least have a “worst case scenario stash” of gold or silver then I would personally wait a while longer as lower prices are very likely to keep coming.

Slow Decline In The EUR/USD

The EUR/USD produced one of the tightest range days we have seen in quite a while, moving only 55 pips from high to low. Overall the tight market did drift ever so slightly to the downside. The question in my mind is the real meaning of Friday’s move. Was Friday’s move the ultimate rejection of higher prices and thus we are going to signal more continuation down? On the EUR/USD I think that has a higher probability of being the case as the COT data has shown no significant buying pressure in the Euro among smart money. As a result I do have a greater bias to the downside on the EUR/USD. With that being said I will still be open on direction should a valid long setup from one of the lower manipulation points. The stronger bias down will make me more aggressive with any short trade setups that do occur from any level that may develop through the day.

EUR/USD Chart - August 4th 2015

GBP/USD Compresses Near Major Range Lows

Neither the Pound nor the Euro produced a valid DTFL setup yesterday from any pre-selected manipulation points. While both pairs moved down overall, the Pound did so more aggressively than the Euro. With that being said the major range lows are still holding on the GBP/USD and the 1.5550-60 area is the best place for a long setup to occur in my opinion. Because smart money puts positions on and closes positions over the longer term, today’s move in no way weakens my belief that the move up is the higher probability direction this week. Having said that any stop run of the recent lows in the Pound will be a valid setup for me. 

As you can see in the chart, all of the upper manipulation points I would consider a trade from are major day highs. The final upper level on the chart that I selected is without a doubt the strongest as it has been tested and rejected multiple times. A break and hold above that level would definitely signal higher prices. Today the plan remains the same as most other days. Wait for the market to come into a valid manipulation point and then take the trade should a valid confirmation entry come together at that level.

GBP/USD Chart - August 4th 2015

Forex News For August 4th 2015

UK Construction PMI 4:30 AM Eastern: Another piece of UK data that has the ability to create a spike large enough that I would not hold a trade going into it. Long term this news is very shaky. Some months this news will start the trend for the rest of the day, while others it will spike and then completely turn the other direction. This months number is expected at 58.5 with a full 2 point deviation +/- being required to create a reliably large spike.


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1 Comment

  1. Dimadjo
    Dimadjo August 04, 05:33

    EURUSD produced a nice set up from the preselected level from Friday (31st Jul). The 1.0986-88 level was preselected last friday but that day the proce blew thru the level and came back to close the day below. On monday we saw the usual Asian consolidation and with the frankfurt open, SM did a nice set up of the level, where we had the 200 ema as a confluence as well. Nice trade and i got the full 4% profit. 😉

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