We are getting relatively close to “The Merge” but is becoming increasingly obvious to me that perhaps we are “buying the rumor and selling the news” when it comes to this market. 

The ETH/USD has fallen hard during the trading session on Friday, as Jerome Powell gave his Jackson Hole speech. He reiterated that the Federal Reserve was in fact going to remain very hawkish, and therefore tight monetary policy should continue to work against the value of risk appetite-related assets such as Ethereum.

Furthermore, we are getting relatively close to “The Merge” but is becoming increasingly obvious to me that perhaps we are “buying the rumor and selling the news” when it comes to this market. The market now looks as if it is going to break down below the $1550 level. If we break it down below there, then it’s likely that we see the $1500 level would be potential support. If the market were to break down below there, then it’s likely that we could go lower, perhaps down to the $1200 level.

A Lot of Volatility Ahead

• At the $1200 level, there is a previous area of consolidation the traders will be paying close attention to, that extends down to the $900 level.  This is an area that has been important previously, so breaking through all of that it’s likely that Ethereum gets crushed.
• Breaking down below the $900 level would bring the next move lower.
• This would almost certainly coincide with a stronger US dollar, something that looks very likely to be the case going forward.

On the other hand, if the market were to turn around and break above the $1750 level, it’s likely that the market goes looking to the $2000 level. The $2000 level is a large, round, psychologically significant figure, and an area where we have the 200-Day EMA approaching. Ethereum is going to suffer at the hands of risk appetite being suppressed, and I think it’s also probably worth noting that this chart looks a lot like the NASDAQ 100, which suggests that the market is more likely than not going to fall right along with stocks, just as Bitcoin has. All things being equal, this is a market that I think continues to see a lot of volatility, but ultimately for people who are long-term believers in Ethereum, any significant selloff would be a nice opportunity to pick up bits and pieces of Ethereum to accumulate a larger position. It looks like the sellers are starting to jump into this market.

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 I think we are going to see a lot of noisy behavior over the next 24 hours, before continuing for all drift higher that we have been in for a while.

The USD/CAD initially fell during the trading session on Thursday but found a little bit of support underneath the show signs of life. It’s worth noting that the 50-Day EMA is sitting just below, and a lot of traders will pay close attention to that indicator. After all, longer-term traders consider that a short-term support level.

The fact that we ended up forming a bit of a hammer during the trading session on Thursday is interesting because we had formed an inverted hammer during the Wednesday session. In other words, the market is hanging around the 1.2950 level, an area that previously has been resistant, and therefore the market is trying to figure out what we are doing next. Jerome Powell is speaking at 10 AM on Friday at the Jackson Hole Symposium, and therefore a lot of people will be looking at the speech for signs of what the Federal Reserve may do next. Unfortunately, Jerome Powell has a long history of blowing up the statements and being misunderstood, because he’s not very good at his job.

Friday Session Likely to be Noisy

• The market breaking down below the 50-Day EMA opens up the possibility of the dollar dropping down to the 200-Day EMA, underneath the 1.28 level. On the other hand, if we can take out the 1.30 level on a daily close, it opens an attempt to reach the 1.32 handle.
• When you look at the longer-term chart, you can see that we have been drifting higher in a bit of a channel, and I would assume we you to do the same over the longer term.
• The session on Friday is likely to be very noisy.

The oil market has a certain amount of influence on the Canadian dollar as well, so if it starts to rise that may bring this pair down. However, all things lead to the Federal Reserve before it’s all said and done, so if we get some type of overly hockey statement, that could send this pair higher, just as more fumbling by Jerome Powell could send the market lower. I think we are going to see a lot of noisy behavior over the next 24 hours, before continuing for all drift higher that we have been in for a while.

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• The S&P 500 has rallied slightly during the trading session on Wednesday as we are waiting to see what Jerome Powell has to say on Friday.
• This sets up Thursday as being a very lackluster day, and probably one that more likely than not is going to be better off avoided.
• If you are a short-term trader, then we probably have a nice range bound to set up for the day.

The 200 Day EMA sits just below the 4200 level, and therefore I think it will offer a bit of the ceiling in the short term. Traders will more likely than not be a bit hesitant to get overly aggressive during the Thursday session, so I think at this point you’re probably going to be trading something along the lines of 15-minute charts. It’s likely that the market will continue to see Friday as the day that could set up the next move.

For myself, I will be placing a trade until Monday, because the day of the announcement and speech typically has a lot of noise. It’s not uncommon for Wall Street to run the market up in one direction, only to turn around the next trading day. This will be especially true if they have the entire weekend to “rethink their interpretation.”

Markets Waiting for Interest Rates

The 50-Day EMA underneath could offer support, and if we were to break down below the 50-Day EMA, then I think the market could unwind because the 4000 level will be challenged at that point. Anything below the 4000 level opens up a flight of selling. As far as getting bullish is concerned, I need to see a daily close above the most recent high, which is just above the 4300 level.

Take your time to pay attention to the interest rates coming out of the United States, because interest rates will directly counter what the stock market is going to do. Higher interest rates will drive the stock market lower, and vice versa. It appears to me that Wall Street is trying to convince itself that the Federal Reserve is willing to support it again, so the next couple of days should be rather important. Nonetheless, it’s astonishing to me how many people believe that the Fed will ultimately ride to their rescue.

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The ETH/USD has gone back and forth during the trading session on Tuesday as we continue to trace the 50 Day EMA. The 50 Day EMA is an indicator that a lot of people pay attention to, so it’s not overly surprising to see that the market is just simply hanging around this area. Furthermore, the $1600 level is an area that has been important more than once, so it’s not overly surprising that we are hanging around.

Looking at this chart, it appears that we are finding short-term buyers on small dips, but it does not necessarily mean that we are ready to take off to the upside. The market is going to continue to see a lot of concerns, because quite frankly the risk appetite globally is anemic, to say the least. Furthermore, you also have to keep in mind that Ethereum is pretty far out on that risk spectrum. In other words, the market needs to see a lot of confidence in order to truly take off.

Waiting for Stocks to Take Off

• If we were to break above the 50 Day EMA, then it’s likely that we could open up a move to the $2000 level. The $2000 level of course is a large, round, psychologically significant figure, and sitting just below the 200 Day EMA.
• The market is going to look at that as a major ceiling in the market, so we need to break above there before we could take off to the upside.
• At that point, we could see a significant “buy-and-hold” type of move at that point.

On the other hand, if we break down below the $1500 level, it’s likely that the market could go down to the $1200 level. In that area, you would expect to see a lot of support considering that it was the top of a consolidation area that so many people had been paying attention to as marked on the chart. Breaking below there then opened up a much deeper correction.

Although cryptocurrency is supposed to be its own asset, it has a lot of correlations. Stock markets have huge correlations to cryptocurrency, and therefore you need to see stocks truly take off to see Ethereum take off. It has not decoupled from the traditional market check, despite the fact that “The Merge” is coming.

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The Europeans are going to struggle to keep the lights on, and that has a lot to do with economic output. 

• The EUR/USD currency pair rallied a bit on Wednesday as CPI numbers in the United States came out lower than anticipated.
• This suggests that the rate of inflation could give the Federal Reserve a bit of a break, keeping them from having to be so aggressive with its monetary policy.
• That being said, it’s very unlikely that we will see that happen, due to the fact that the inflation numbers have still come in at about 3 to 3-and-a-half times the Fed’s desired target.

The size of the candlestick was somewhat impressive, but the later we get into the day, the more we pulled back. This suggests to me that there is no real follow-through ready to happen, and I think it is a potential problem just waiting to happen. The 50-Day EMA has offered a little bit of dynamic resistance, so that’s worth paying attention to as well. The 1.04 level above their offers resistance as well, so I do think that it is probably only a matter of time before the overall downtrend continues.

Lack of Energy

When you look at the European Union, it has a whole host of issues, not the least of which is going to be the fact that the energy situation is going to be a very big problem. After all, the Europeans are going to struggle to keep the lights on, and that has a lot to do with economic output. As long as the economy is going to struggle to live up to its full potential, the ECB will have to remain relatively loose with its monetary policy, despite some of the rhetoric that had recently been stated.

The 1.04 level being broken to the upside opens up the possibility of a much bigger move, perhaps to the 1.06 level. It’s not until we break above the 1.06 level that I would consider this trend completely changed. On the downside, I think that the parity level is worth paying close attention to, because it has a lot of psychology attached to it and of course will attract a lot of headline attention. If we were to break down below there on a daily close, then it would open up a trap door selling pressure. That would take a bit of work, but ultimately, I think it’s probably only a matter of time.

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I suspect that by the time we are done with the Wednesday session, we may have a bit more clarity.

• The USD/JPY currency pair continues to hang around the 50-Day EMA as we are going back and forth around the ¥135 level.
• If we can break above the high of the Monday candlestick, then it’s possible that the entire uptrend can continue to go higher.
• We have to wait on the CPI numbers coming out on Wednesday to get a read on what the Federal Reserve may do.

The market breaking above the top of the candlestick for the Monday session suggests that traders are starting to think that the Federal Reserve is going to continue to be extraordinarily tight with monetary policy as they have been trying to tell everyone. However, if the market were to break down below the bottom of the candlestick, then it’s likely that we will go lower to find support underneath. At that point, the ¥132 area should be a significant area of support that a lot of people would be paying close attention to.

Interest Rate Differential Major Factor

Ultimately, this is a market that is going to continue to be very noisy and based upon the interest rate differential between Japan and the United States, as the Bank of Japan has been buying bonds in order to keep the 10-year rate in Japan down to the 0.25% level. When they have to buy more bonds, that’s the same thing as printing more yen. When other interest rates around the world continue to rise, the Bank of Japan will have to put in some work and therefore print more currency.

On the other side, you have the Federal Reserve which is doing everything can to fight inflation and tighten monetary policy. This has set up the perfect storm for this pair, and that’s how we are trading right now. The market should continue to see plenty of momentum to the upside over the longer term though, unless CPI starts to melt down because then it suggests that the Federal Reserve may not have to tighten monetary policy as much as previously thought. In that scenario, the market would fall apart. This is a market that looks like we are trying to figure out where the next move goes, and where the momentum comes from. I suspect that by the time we are done with the Wednesday session, we may have a bit more clarity.

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This remains a market you need to be very cautious about position sizing.

• Gold markets fell hard Friday as the jobs number came out much stronger than anticipated.
• Because of this, the market looks likely to continue dropping a bit, as the interest rates in America started to climb.
• Remember, interest rates rising typically is bad for gold, because it becomes much easier to hold paper than it is to store physical gold.

Looking at this chart, it’s obvious that the $1800 level is a major resistance barrier, so I think we need to pay close attention to it. If we do break above here, then I think you should start to take a significant look at whether or not gold can continue to go higher. The $1815 level would wipe out the resistance and support candle that we had broken through the $1800 level with, opening up the possibility of the market going much higher. At that point, I think that we could see this market try to reach the 200-day EMA which is sitting just below the $1840 level.

On the downside, if we break down below the lows of the Friday session, it is very likely that we will attempt to get to the $1750 level, perhaps even the $1720 level. Ultimately, this is a market that I think continues to see a lot of volatility, but that’s nothing new for gold. Pay attention to the US dollar, and the US Dollar Index, as it tends to have a very negative correlation.

Higher Rates, Lower Gold

The market will continue to be very noisy, but I think the one thing that probably saved gold for the day was the fact that we were heading into the weekend. Ultimately, it’ll be very interesting to see how this plays out because we have been in a very negative trend for a while, but obviously, things could change rather rapidly. Pay close attention to the 10-year note in the United States, because has a major effect on where we go next. Higher rates, lower gold. That’s not always the case, but it seems to be the case at the moment. If we were to break higher, although we could go higher for a longer-term move, it will probably be very noisy and choppy to say the least. Ultimately, this remains a market you need to be very cautious about position sizing.

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I’m looking for an opportunity to fade this short-term bounce.

• The GBP/USD currency pair rallied a bit Monday to break above the 50-day EMA.
• The market looks very likely to continue seeing a little bit of upward pressure.
• We are getting rather close to the end of the range that we had been in, and it’s possible that we could see a little bit of resistance just above.
• The 1.24 level has been important more than once.

Fade the Rallies

The interest rates in America have been sliding, so that of course has a certain amount of negativity in the US dollar as well. Because of this, the British pound has gotten a little bit of a boost. That being said, there are still a lot of concerns out there and of course the English have their own issues as well. With this being the case, I think it’s more or less going to be a “fade the rally” type of situation. If we were to break down below the 1.21 level, then it’s likely that we drop down to the 1.20 level. The 1.20 level is an area that has been important more than once, so if we were to break down below there, it’s likely that the market then drops down to the 1.18 level.

The 1.18 level being broken to the downside would open up the possibility to see this market break down rather drastically. At that point, I would expect the British pound to go looking to the will .16 level, followed by the psychologically important 1.15 level. Anything below there would be a massive move just waiting to happen. I think we are more likely than not going to see a little bit of sideways back-and-forth action, but I don’t necessarily think that is going to be easy to break this market in general.

Keep an eye on the 10 year yield, because that has a lot to do with where we go next. As long as the 10-year yield doesn’t completely collapse, there will be a bit of fight left in the greenback. This will be especially true if we start to see people run towards the bond market for safety, which can change the overall attitude. Ultimately, I’m looking for an opportunity to fade this short-term bounce.

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I will more likely than not be looking at a breakdown to start buying.

The Bitcoin market rallied ever so slightly Wednesday as we continue to see a lot of noisy behavior. That being said, the market is likely to be very noisy, to say the least, therefore I think volatility is something that you will need to get used to. The 50-day EMA sits above and is drifting lower. The market is likely to see dynamic resistance due to that, and it is possible that we could see sellers come back into the market at the first signs of exhaustion. Furthermore, we need to pay close attention to the recent high and the $24,000 level.

If we were to break above that high, then it’s possible that we could go looking to the $28,000 level. The $28,000 level is the beginning of the next major resistance barrier that extends to the $32,000 level. If we break above that level, then it’s possible that we could go much higher. Having said that, it’s very likely that we are going to see exhaustion before it’s all said and done. Signs of exhaustion will be looked at as a potential opportunity because quite frankly Bitcoin still has a long way to go before it changes its overall attitude.

With the central bank in the United States being so tight, as well as many others, it makes it very likely that crypto markets around the world will continue to suffer. While Bitcoin is the leader, the reality is that it will just be “less bad” than many others. If we break down below the $18,000 level, this is a market that could fall apart rather quickly, perhaps reaching down to the $15,000 level, perhaps even down to the $12,000 level.

The $12,000 level underneath has been an important level multiple times over the last several years, so I think that you could have a lot of people looking to get involved and build up a larger position. I do think that’s where the monies are to be made next time, building up a longer-term position for the next pump higher. Even though it’s been relatively bullish over the last 24 hours, it’s difficult to think that we have changed attitude completely, so I will more likely than not be looking at a breakdown to start buying.

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Looking at this chart, we have much further to go to the upside than down, but if we were to break down below the $100 level, then it would be a very negative turn of events.

The West Texas Intermediate Crude Oil market rallied after initially falling on Monday to show signs of life again. The WTI Crude Oil market is approaching the $110 level and by extension the 50-day EMA. If we can break above all of this, and there is nothing on this chart that suggests that we cannot, then it’s likely that the market will go home much higher. At that point, it’s very likely that the $120 level gets targeted. That’s an area where we have seen resistance previously, so it does make sense that it makes for a nice target. Furthermore, it’s likely that we could even eventually break above there.

When you look at this chart, you can see that the market has been in an uptrending channel for a while, and there is nothing that suggests this attitude is going to change. That being said, if the market were to break down below the $100 level, that would be very negative, perhaps opening up even more selling pressure. The $100 level not only has the previous action around it, but it also has a significant amount of psychological input.

The market breaking above the 50-day will be a sign that we are ready to continue going higher, as it has a certain amount of interest that algorithmic traders will pay attention to it as well. Demand for crude oil will continue to strengthen, especially as the attempts to get the UAE to pump more crude oil seem to be somewhat fruitless by both France and the United States. In other words, the supply is going to continue to dwindle. Furthermore, the Strategic Petroleum Reserve of crude oil in the United States is at the lowest level since 1986, and that does no good whatsoever to help the idea of the market trying to pull back. Ultimately, I think that oil has further to go, and especially now that we are in the midst of the “summer driving season” in the United States, demand will certainly pick up again. Looking at this chart, we have much further to go to the upside than down, but if we were to break down below the $100 level, then it would be a very negative turn of events.