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XAU/USD

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GBP/JPY vs USD/CAD and gold vs 10 Year Yields

Brian Twomey Brian's Investment

Since the Gold short from 1815 to 1727 for +88 points, Gold in the past 11 days from 1727 ranged from 1675 lows and 1754 highs or 52 points below and 27 pips above. Not much happening here as the overall range remains 1642 to 1815. Gold ranged traded for 11 days. Not only was the easiest trade taken but known in advance was Gold's dead range and no longer an interest.

GBP/JPY achieved 152.03 highs yesterday morning and traded 69 pips lower to 151.34. GBP/JPY bounced from yesterday's Fed from 151.34 to again 152.06. As of yesterday morning, GBP/JPY was located here 152.17, 152.26 and 152.36.

Above numbers are not only the last 3 points above in the price series but longs were impossibe as GBP/JPY was at the highs of the day. Impossible to take an overbought trade long to target higher overbought. Its beyond gambling.

Longer term, GBP/JPY rose 2600 pips from 126 lows and this means the overall trade strategy contains short only until GBP/JPY achieves proper levels. If GBP/JPY decides to trade higher than 152.00's then more money will profit from shorts.

USD/CAD dropped from 1.2486 to 1.2410 or 76 pips. Note the dead center position of 1.2486 in relation to yesterday's Fed. 1.2457, 1.2465, 1.2473, 1.2481, 1.2489, 1.2497, 1.2505 and 1.2513.

USD/CAD dropped to 1.2410 as in this price series: 1.2387, 1.2398, 1.2402, 1.2414, 1.2418, 1.2426, 1.2434, 1.2442.

USD/CAD dropped from dead center above to exact middle location to its bottoms. USD/CAD was 27 pips from its highs and a much smarter trade than GBP/JPY. USD/CAD now deeply oversold at the lows of the week and oversold from 1.4500 highs, only strategy is long only until USD/CAD achieves proper levels.

GBP/USD Vs USD/CAD now spreads 1500 pips from 1400 yesterday to inform a big move is ahead.

Overbought and severe problem pair USD/JPY dropped from 109.25 as 110.00's contains much resistance for USD/JPY.

Overall, price are headed right back to where they started yesterday. EUR/USD for example 2 big points are located at 1.1984 and 1.2020. EUR/USD breached 1.1984 but now trades 1.1934 lows and heading lower. Same for AUD, GBP and NZD.

GOLD vs 10 Year Yields

A macro guy Miles Ruttan posted below charts on FXStreet. Quite interesting so below are actual monthly average Correlations.

The 10-year yield & gold correlation:

2016: The 10-year yield’s bottom = gold’s top.

2018: The 10-year yield’s top = gold’s bottom.

2020: the 10-year yield’s bottom = gold’s top.

10 Year Yield Range 1.3305 to 1.8448 or 51 points Vs Gold 1815 vs 1642 or 173 points.

Correlations Gold Vs 10 Year

6M Averages -0.31

1Y = +31%

2Y = -0.80%

3Y = -0.86%

4Y = -0.86%

5Y = -0.77%

6Y = -0.71%

7Y = -0.70

8Y = -0.71

Beside the 1 year with slight problems to short term variation, correlations are solid. The next question must be how is 10 year yields to DXY.

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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