Panic attack Oil Copper Gold Silver USDINR

Published: Tue, 02/04/20

04 February 2020

The last few weeks were a wild ride as a mix of global and local issues generated some volatility in markets. but some of it looks overdone. No this was not the budget that anyone including me was expecting but a step back and a cool mind show that a lot is and has been done outside the budget and that maybe the theme that the government is pushing. Now that apart the technical's went from a peak in the 20 day A/D ratio to an extreme oversold in metals and commodities because of the corona-virus outbreak. This however maybe a knee jerk reaction that caused the dollar to soar against many currencies and so should be watched in that light. That said there is reason why EM currencies and DM currencies have started to diverge. The secret may lie in the repo market crisis that the FED continues to address with liquidity injections. So I cannot stop looking at what the dollar is doing every day. If the government has used the limited window it had for Fiscal imprudence has it now left enough room for RBI to cut rates? We will know in two days. My thoughts are that there is room if not now then in the months ahead. At least based on what the RBI said in Dec. But then no body is sticking to their narrative nowadays. The street does not expect a rate cut but then why else would the Budget stick to the fiscal deficit control measures. So I see a mix of possibilities where the broad market is still driving up stocks but we also face the potential for the USDINR to go up. And the knee jerk reaction world wide might end up being just that. The posts below reflect on some of this but there is a lot more in my recent Long Short Updates to Subscribers online for those interested.

Crude

I have already indicated that crude oil bottomed thrice before near the $ 51 mark and it may do so again as the RSI indicator oversold condition. However, if you break this level then they can come up with 2 Fibonacci levels the 1st at $ 49 and the 2nd at 47.66 where wave 5 and 1 would be equal to each other. Note that wave 3 and 1 also equal in size. More important than that, the fall from the 8th the Jan top at $ 65 is a 5 wave fall meaning that the larger trend may have turned down. Once this 5 wave fall completes we should get a meaningful retracement of this fall, but what might follow may be a further decline from there.

crude 030220

Gold Mcx

Gold and sakes prices sometimes move up because of USDINR and can then go against the trend in global prices. So far gold spot prices have not fallen despite divergences in the momentum and USDINR has started to go up. So if M6 prices do rise and a combination of these factors then the 5th wave could extend and would be in minor wave iii where iii=i= 43,475 and the support would be near the 20 DMA at 40,175

gd030220

Silver Mcx

Silver Mcx prices have consolidated for a while and the daily momentum crossed over to the buy side - And we could be starting wave 3 up where III=I is shown in the chart to go to 51,150 and the support may be near the 40 Dema at 46,180

silver 030220

USDINR

USDINR is moving up slowly maybe in wave 3. I am marking the recent moves as minor wave i and ii and so wave iii up started today from the 20dma support at 71.25 and we have to break above the upper Bollinger band at 71.87 and then the trendline of the highs at 72.10

usdnr 030220

Copper

With the daily RSI at 20, copper remains above its long-term 61.8% retracement Mark near $ 2.46, meaning that it may be too early to call it a day on base metals and in fact this could be a shakeout of the hands if we get a bottom here. One possible Elliott wave interpretation is shown on this chart.

copper 040220

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Rohit Srivastava
www.indiacharts.com
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