10 YR Yield, Gold, AUD/JPY and FTSE 100 Forecasts – US Dollar and Risk Appetite

US 10-Year Yield Technical Analysis

The US 10-year yield is the first thing I’ll be watching during the session, as it looks like we are in fact trying to break down, driving yields back towards the 4% level. That is not necessarily something that I can trade for myself, but it is something worth paying attention to because it gives me a little bit of insight into some other markets, such as the next one, the gold market.

Gold Technical Analysis

If yields continue to drop, that can be a tailwind for gold, and you can see that we did, in fact, break to a fresh new high. At this point, I’m looking for short-term pullbacks that show a little bit of a bounce. I want to be on the right-hand side of the V and buy with momentum, so let it pull back, let it bounce, and as it bounces, I’ll be entering.

I do think eventually we will reach the highs again, but we have a lot of work to do to move beyond all of that previous trauma from that massive sell-off several Fridays ago. I do think, though, this market is showing itself to be rather resilient, and in fact, I do think eventually we’re going to flip back to gold first, silver second kind of scenario.

AUD/JPY Technical Analysis

One chart I’m watching is the Australian dollar against the Japanese yen. This has to do with the carry trade and the 110 barrier. If we could break above there, that would be very bullish, but I do like buying dips here regardless. I’m pretty much okay doing it wherever as long as we have the ability to stay above the 108-yen level. This will have a lot to do with risk appetite, but it also has a lot to do with interest rate differentials, which should only be widened over time. On a break above 110, I think 111 gets targeted, but the actual measured move is 112 yen.

FTSE 100 Technical Analysis

Then finally, I’m watching the FTSE 100. The FTSE 100 has been one of the better performers for a while now and I’ve done quite well at it. Now it looks like we are grinding sideways and we are in a buy-on-the-dip kind of consolidation area.

That’s good. That means that we will work off some of the froth and hopefully continue the overall path higher. This is an index that has been fairly reliable for months now and I don’t see anything on this chart that tells me things are going to change.

Much like the Australian dollar against the Japanese yen or the gold market, I like buying dips here as well. I have no interest in shorting and as long as we can stay above 10,450, you have to assume that the FTSE 100 remains a strong uptrend with a potential target at this point of somewhere near 11,000.