FX next week and Gold

Brian Twomey Brian's Investment

XAU/USD as Gold correlates to EUR/USD and its impossible not to correlate positively because Europe and EUR are classified as Gold nations derived from 2000 years ago. While XAU/USD is the same financial instrument as EUR/USD, the opposite USD/EUR is found as USD/XAU.

XAU/USD rose 26 points yesterday, 92 pips for EUR/USD and USD/XAU dropped 25 points. XAU traded 28% of EUR/USD or 1/3. Actual 1/ 3 of 92 equals 30% so XAU barely met the 1/3 criteria. When the interest rate system to trade markets was introduced in 1972, Gold lost its trade movement power to evolve as trade by 1/3 of the currency.

Every financial instrument on the planet is located inside the currency price. The currency price must move in order for all financial instruments to trade.

Gold as XAU/USD or XAU/EUR for example trades daily as 10.19 minimum points then 18.33, 27.33 and max at 36.67 to factor 1/3 intervals Vs EUR/USD. EUR/USD trades daily as EUR/USD and USD/EUR in the same manner as XAU/USD and XAU/EUR. No difference. The names were changed to protect the innocent.

See my blog at 2015 for deeper analysis to Gold/Silver Ratios, Gold, Silver, Correlations, EUR/USD and many currencies. Then we ran averages dating 25 years and 1000's of data points.

Since 2015, nothing changed. Silver in 2015 wasn't worth a discussion as it traded 1 and 3 points per week. This week, Silver traded 0.91 points. Silver isn't worth the trouble today. Gold in 2015 traded 1200's and today 2000's or a rise by 100 points per year.

Gold is the driver to Gold/ Silver ratios because Silver doesn't move. A rise in Gold/Silver ratios doesn't reveal Silver is oversold. A rise in simple terms says Gold backed currencies are overbought and Silver currencies oversold. Simple terms because the Gold Silver Ratio level must factor against Gold backed currencies. For modern day trading since 2016, easier methods exist to profit.

The week

USD/JPY traded this week to the brink. USD/JPY's vital point for Monday was 133.90 and USD/JPY traded to 133.86 then dropped. Tuesday traded to 133.80 then dropped. USD/JPY traded 134.04 Vs vital 134.01 then dropped.

Next week USD/JPY targets 131.97 easily then within the range from 131.97 to 130.95.

USD/JPY is a special currency because it serves currency markets as a predicter to many many exchange rates. Many banks now forecast USD/JPY at 121.00 and 122.00 targets. We beat the banks by 4 months by reporting targets in December. Nothing new to beating banks turned retail traders. Show me a chart and I won't offer the time of day.

GBP/JPY first targets 162.67. GBP/JPY trades 166.00's or 400 pips to target. EUR/JPY targets 141.96 and trades 146.00's or 500 pips to target. The theme of 400 and 500 pip targets runs through many currencies.

The GBP/JPY target at 162.00's is the same as saying the target is located around the 50 day average and EUR/JPY's target below the 253 day average and begins at the 5 day.

Averages must be correct to see this as chart averages are miles off target. Using chart averages is the same as a Plumber fixing a pipe with a screwdriver when a wrench is required.

DXY next week at low 103.00's becomes overbought. Low 101.00's is next target.

EUR/USD traded 1.1024 highs and 29 pips to target.

USD/PLN traded to lows at 4.2154, recall from April 5 the targets at 4.2147 and final at 4.1400's. From 4.3400's, the trade runs +1300 pips and much more to go.

GBP/USD traded highs at 1.2524 and and 54 pips to the break at 1.2578 for the 1.2700 target.

XAU/USD should top next week at 2050.45.

Author

Brian Twomey

Brian's Investment

Brian Twomey is an independent trader and a prolific writer on trading, having authored over sixty articles in Technical Analysis of Stocks & Commodities and Investopedia.

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