Price is currently at MS2 heading into the second week of the month. Pivot theory tells us that if price is at a monthly reversal pivot early in the month we can expect price to make its way back to the monthly central by the end of the month. As we know Gold is the anti-Dollar and is a safe haven in risk-off markets. Therefore we would also observe price action in the US10Y and Dollar Index. Dxy is at the right price for a drop and the US10Y is at the right price for a rise (that means yields down). If US10Y yields move lower then that means stocks move lower which means we will see Yen and Chf strength.

We have FOMC this week and the Fed are expected to hike by 0.25 bps. We also have all the speculation surrounding the tax bill which has been driving the Dollar higher and helping with Yen weakness. What is the case for a weaker Dollar and lower yields? Perhaps a more Dovish Fed or a delayed sell-off in the Greenback from lower wages in Friday’s NFP report? Or are Euro Bulls about to enter the market ahead of the ECB meeting this week because they know that the ECB is going to cut their APP in half until next September? Some more evidence against Trump in the Flynn case? A failed tax plan? That’s a lot of what if’s and speculation.

The one fact I have is Gold is at MS2 and is going to move higher at market open. Will Bears sell the role reversal of the previous range? It is resistance and we would expect to see Bears sell there though we must keep in mind that if Bears are getting out at MS2 they would probably want to sell high so price could end up back at MPP or even the top of the range. It makes sense to manage risk as we approach these levels.

Here are the predicted pivot point levels for the week ahead as plotted on the charts below:

Dollar Index (FXCM)
WR3: 12184.33
WR2: 12092.33
WM4: 12075
WR1: 12057.66
WM3: 12029
WPP: 12000.33
WM2: 11983
WS1: 11965.66
WM1: 11937
WS2: 11908.33
WS3: 11816.33

US10Y
WR3: 12184.33
WR2: 12092.33
WM4: 12075
WR1: 12057.66
WM3: 12029
WPP: 12000.33
WM2: 11983
WS1: 11965.66
WM1: 11937
WS2: 11908.33
WS3: 11816.33

Gold
WR3: 1336.01
WR2: 1297.20
WM4: 1285.03
WR1: 1272.85
WM3: 1265.62
WPP: 1258.39
WM2: 1246.22
WS1: 1234.04
WM1: 1226.81
WS2: 1219.58
WS3: 1180.77

Note. Pivot points are just projections and may differ at market open. Calculated using high, low and close of the previous week as per FXBootcamp Guide to Strategic and Tactical Forex pg. 668

USDollar Daily

Price closed at MM3 on Friday. Note this is also the role reversal of the double top that formed at the start of November. Bulls and Bears are in the market with Bulls having bought at MM2 last week and Bears now selling at MM3. We have resistance above and support below so it is quite possible price remains in a tight range until breaking out.

USDollar H4

Price dropped on Friday off of next week's predicted WM3, the target of which is at the confluence of MM2 and predicted WM1. Note the role reversal support at predicted WM2. The trend is bullish though a failure for price to break above MM3 is key. Bears that sold there will sell there again if price comes back up here from support lower down.

US10Y Price Daily

Not much going on in Treasuries this month so far though just like the USDollar, Bulls and Bears are in the market with Bulls having bought off MM2 and Bears having sold off MM3 last week. MM1 marks the bottom of the range and MM4 marks the top of the range.

US10Y Price H4

Price formed a double bottom at MM2, made a higher high and then came down off MM3/ WM3 confluence . H4 is oversold and has crossed over into the trade zone so technically speaking, we do expect price to move higher. According to predicted pivot points, price is going to open in the buy zone for the week which give Bulls a target of predicted WM4. A move higher in price means a more lower in yields and this would support Gold strength. Remember, US10Y price up, stocks down - risk off (Yen and Chf strength).

Gold Daily

Not much to say about this - pretty clear. Price is currently at MS2 with MS2 holding as support. We expect price to move higher and therefore Dollar to move lower the US10Y price to move higher.

Gold H4

Even without calculating predicted pivot points, any swing trader knows that price is going to open at WM2 and that this is a counter-trade opportunity. The standard strategy is price returns to next week's WPP and then Bears are likely to continue selling. The difference here is the MS2 reversal pivot point. Note though that predicted WM3 marks the role reversal of the previous range and so we do expect Bears to sell here. Note that there is confluence between predicted WM4 and MM3 and predicted WR2 marks the top of the range.

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