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Month: January 2022

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ZAR Commodity Correlation

ZAR Commodity Correlation
25 January 2022

Dollar Rand (White) overlayed with CRB Index (Green)

Good Afternoon all.

After making my bold prediction yesterday the Dollar Rand will trade towards the R11.50 level over the next 17 – 24 months, I have been inundated with messages asking me why and hence I have decided to send this out to explain my view.

Firstly, the weekly report that I send out is purely technical, although I am very cognisant of the macro factors.

After making a significant pullback from the Covid high, the Dollar Rand looks very much to be making what I refer to as an “irregular flat” formation.

This formation will be complete at R11.57 in a perfect technical scenario, while the actual range is R13.00 – R11.57.

I have been perplexed as to why the ZAR could become this strong, especially in a world where the Fed has turned Hawkish, but alas, I believe my charts first and foremost.

Last week I stumbled on some research showing the ZAR’s 87.39% correlation to the CRB Index over ten years.

I decided to overlay the ZAR & the CRB Index (see chart), and one can see that the correlation is strong.

If one believes in the commodity bull market, one cannot ignore the fact that the ZAR should strengthen significantly over the next 24 months.          

Please note that the above view does not mean the ZAR cannot weaken as there are Black Swans that could quickly raise their heads this year with geopolitical tensions that could see the ZAR go through a risk-off environment before strengthening.

However, I can now confidently say that all significant spikes relating to ZAR weakness would constitute a short of the Dollar Rand chart.

In closing, the state of the economy, the potholes in your suburb, and the general negativity you may feel have nothing to do with the direction of the ZAR, and at this stage, the ZAR is set to go where it hurts the most players!

Happy hunting, and may 2022 be the year of patience in your trading.        

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CJS Oilseeds Monday Tech Magik

Oilseeds Report

24 January 2022

Weekly CBOT Soybean Continuous Close

Good afternoon and blessings for 2022 where I would like us all to adopt the theme “Patience” for the year.

It has been five weeks since we last communicated, but congratulations to all the longs that made a small killing!

This chart is still bullish and has upside yet before looking to correct.

Look to the $15.00 level to provide some very decent resistance! 

240 Min CBOT January 22 Soybean Candle Chart

The 240 min chart is still looking good, but I feel that the next leg up will be the last before making a decent correction.

For those that are long I would definitely look to take some profit on a rally over the $14.50 level. 

Board Crush Continuous Daily Close

Wow, all I can say that this price action is wicked and could easily be a widow maker.

Right now, I would look to buy a dip to the previous low at $1.22.

 

The chart is nearing seriously oversold levels.  

 

Oil Share Continuous Daily Close

We have not been stopped on the below view, but will put in a stop under 40% as this chart is now highly overbought!

“After kicking off extremely oversold levels and making a new MT low, the chart remains at oversold levels and another leg lower to 42% will get me long. – lets see how this plays out.”

Weekly SAF Soy Continuous Close

For those that were long in size congratulations!

I would take 50% of the cash and ride the balance as this chart still has decent upside in the coming weeks.  

This chart looks great, and I expect a move to over R8000 in the coming weeks! – this played out very well.

Weekly SAF Suns Continuous Close

This chart is not a true refection of the Suns market and hence I don’t have any commentary. 

Weekly CBOT Soy Oil Continuous Close

Ok the below is all the commentary from last year and we have still not been stopped, lucky more than anything else, but as the great Gary Player says “the more I practise the luckier I get” and this chart is headed north over the next few weeks.  

I seem to have this wrong and although we are long, this chart is now grossly oversold on a weekly basis and we need to dig deep and buy more scale down with a stop under $0.52 as the rally is coming, even if its only a kick!

I feel the correction is done (it had another leg lower), and all the pullbacks from here are buying opportunities with upside targets between $0.85 -$0.89! – the correction was obviously not done.

I almost feel that we don’t have enough cash to get as long as we should, buy at best and scale down, this is budget making stuff with sprinkling of retirement!!!!  – hope we don’t go broke before retiring. 

Weekly CBOT SBM Continuous Close

After a great trade, we will once again be looking at getting long, but are happy to stay square for now until further notice.

“I love the chart, and after confirming a low, all the pullbacks are a chance to BTFD’s!

$400 + here we come! – what a trade, what a call! ”

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CJS Grains Monday Tech Magik

Grains Report

24 January 2022

Weekly Corn Continuous Close

Good afternoon and blessings for 2022.

I have a feeling we are in for a bumpy ride this year but I would like us all to make our trading theme this year, the year of patience!

Not much has change over the last five weeks and I would STILL look to fade a rally from $6.10 – $6.25 for profit taking and further fade into a move to $6.50 getting short.  

I am not convinced that the chart will turn into massive bull market from here and that my big picture view is that the next $1.00 move will be lower rather than higher (could be famous last words).

Should my above view be correct this chart could be in for a move back towards the low $5.00’s, before becoming a serious buying opportunity once again. 

240 Min March 22 Corn Candle Chart Close

I REMAIN very uncertain of the ST view on this chart.

The long we had played out wonderfully, but now I feel that the chart could still look to test the high and potentially make a false break, but overall I would be looking to sell a rally of this nature.

If my above view is correct we could be in for a vicious ST bear market. 

 

Weekly WM Continuous Close

For those that were long through the rally and made good cash, congratulations!

As for how this chart shapes up, I am very afraid as these double tops are as unfriendly as they could be and although the chart could still have another leg higher I would be looking to get short.  

Right now IMO any rally back over R3770 would constitute a selling opportunity. 

 

Weekly YM Continuous Close

For those that were long through the rally and made good cash, congratulations!

This chart has reached its target zone perfectly and although it could still trade higher, I would be looking to sell a move over R3930!

I feel this chart is either done on the upside or has one leg higher, either way I am now looking at opportunities to get short.  

Weekly KC Wheat Continuous Close

I like this chart and I would be looking at buying a move sub $8.00 – $7.44 as I can see the price heading towards $9.50 before making a significant correction!

The oscillator is also pretty low and $0.30 lower should become nicely oversold. 

 

Weekly Chicago SRW Wheat Continuous

I like this chart and I would be looking at buying at best down to $7.43 as I can see the price heading towards $9.44 before making a significant correction!

The oscillator is also pretty low and $0.40 lower should become nicely oversold. 

 

Daily Close KC Wheat v Chicago SRW Continuous Close

The chart is kicking well off oversold levels, but the overall formation seems murky to me and its with this in mind that I would look to sit on the side-line until further notice.   

Gun to the head I would look to sell a rally over $0.30!

Weekly SAF Wheat Continuous Close

 The chart seems to be making a decent correction that should look to rally over R600 higher within the next 10 weeks (has not broken higher yet).

A rally of this nature would be considered a selling opportunity, but before that enjoy the ride higher!

Daily Matif Wheat Continuous Close

All I can say is that there is a very high probability that the correction is over and that this chart will look to target the highs and quite likely make new highs!

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CJS FX and FI Monday Tech Magik

FX & FI Technicals

24 January 2022

Dollar/Rand Weekly Close

It has been a good five weeks since I updated these charts, and wow, how the landscape has changed and how some time away is terrific for gaining a unique perspective.  

After the fear of Omicron and some technical breaks, this chart has eventually shown me its true colours.

Most of you will not like or believe my LT view, but alas, I am not here to appease but only to call it the way I see it, and what I see is R11.50 over the next 17 months.

I am convinced that the ZAR is in a multi-year corrective phase vs. the USD and that from today on, all upward spikes on this chart are well worth a short!

Now before everyone (who believes me) goes selling their house to fund a Dollar short position, be cognitive of the fact that this chart could easily have a leg higher and trade toward the R16.77 level in the coming weeks.

This could easily be attributed to Russia invading the Ukraine or China invading Taiwan or both, which should provide a risk – off environment, causing a quick and painful weakening of the ZAR.

An event of this nature should be seen for exactly what it is, an opporutunity to sell the USD and buy the ZAR.

I will be doing some ad-hoc research on this later in the week to fully explain why I strongly feel that the above view will playout.

Until then, the range is likely to be R14.88 – R15.50 and I would seriously consider owning the bottom of the range!  

 

Dollar/Rand Daily Candle

The chart has traded and tested the MT trend, this combined with being oversold has resulted in a good kick, and although I cannot buy the USD here, I would look to get long sub R15.06 – R14.88 this week should we see a spike down to these levels.  

A trade of this nature should be good for a rally of at least R0.80 if not more.

In the bigger picture the greater daily chart fits well into my weekly view.

I want everyone’s theme for 2022 to be PATIENCE, because for what I can see across all markets is that picking our spot will be more important than ever, especially as this could be the year we encounter a wedge of Black Swans.   

 

 

Dollar/Rand 240 min Candle

Our last trade did not work out as the chart failed miserably at R16.07.

Lucky for us stops losses are there to make sure we live to fight another day and its with this in mind that I propose the following:

Buy USD from R15.06 – R14.88, with stop loss under R14.80.

Trade targets will be R16.06 = 15/1 RR.

This view is based on the fact that I feel the chart is making an ending diagonal.   

 

Euro/USD Weekly Close

The $1.1250 remains MASSIVE support and if she goes, we might print sub $1.07.  

In the ST should we see this chart move back over $1.450 – $1.16 I would sell it. 

 

 

US Dollar Index Weekly Candle

We are still well within the road map and we are long at 95.32 and very patiently waiting for a move back over 100.00 in the coming months.

To say that this is a 5 day game would be an understatement as it’s far move like a 5 test series, so patience is key!

 

 

SA Government Bond 30 Year Yield Daily Close

The chart is very range bound and all I can add from here is that the top of the range (11.40%ish) will be an amazing buy as the greater formation is starting to appear more and more like a consolidation for a seriously leg lower.  

The chart is also kicking very nicely off over sold levels. 

 

US Government Bond 30 Year Yield Weekly Close

This chart is heading to 3.00% in my opinion.

I would buy any move back the MT trend line!