Risk Assets: Gold, gas & the yen

November 21, 2017 11:51 AM

The Cycle Projection Oscillator (CPO) is a technical tool that employs proprietary statistical techniques and complex algorithms to filter multiple cycles from historical data, combines them to obtain cyclical information from price data and then gives a graphical representation of their productive behavior. Other proprietary frequency domain techniques then are employed to obtain the cycles embedded in the price.

Gold began a correction from its summer rally this past September after touching overbought territory in the CPO. That correction is expected to last through October before turning higher in November, according to CPO data. The CPO expects gold to continue to rally through the rest of the year once it makes a bottom sometime around Halloween, before again turning lower in early 2018.

Natural gas has bumped along in a relatively narrow range for most of 2017 despite the recent threats to supply caused by our extremely active hurricane season this fall. But that appears to be ending soon. The CPO is forecasting a major upturn in natural gas prices that should last through January 2017. The CPO expects this rally to take out the late 2016 highs and challenge the $4 level. The CPO expects natural gas to once again turn lower in February 2018.

The Japanese yen continued to strengthen against the dollar in the late summer early fall until moving into oversold territory based on CPO data in September. The recent uptick (bearish yen) is expected to end soon according to the CPO. The CPO is forecasting a major long-term move in the yen that could take it below 110 and challenge levels not seen since 2016.  

About the Author

John Rawlins is a former member of the CBOT with more than 30 years of experience in trading and research. He co-developed the Cycle Projection Oscillator, which has been featured in Futures and numerous research reports, with an aerospace engineer to identify the dominant cycles in a data stream and project them into the future. Reach John at johnrawlins@msn.com. @cpopro1. You can reach John at johnrawlins@msn.com.