Rallies will more likely than not offer selling opportunities.

The West Texas Intermediate Crude Oil market has been very negative for a while, and it makes a certain amount of sense that we would see an attempt to turn things background. After all, the market won’t go in one direction forever, and it should be noted that quite a few crosswinds are blowing at the same time.

One of the big negatives out there is the fact that the world economy seems to be slowing down, therefore it should drive down the demand for crude oil. Even with the Russian supply being diverted, the reality is that the market is still trying to price in the fact that demand may fall off a cliff. If this is going to be the case, it’s obvious that the price needs to come back in. The question is whether or not the market has priced everything in so far. That remains to be seen, but we are clearly below the 200 Day EMA, and now below the $90 level.

Crude Oil Forecast

If we break down below the lows of the last couple of days, it’s very likely that this market could drop to the $80 level. Any rally now will struggle to continue going higher, at least not without the fundamentals changing. A bit of a rally from here does make a certain amount of sense though, because if no other reason than the fact that the market has been selling off for quite some time. Remember, markets never go in one direction forever, so it does make a certain amount of sense that we would see an attempt to recover. It looks as if oil is going to continue to struggle not only based on the potential lack of demand, but also the fact that the Iranians are apparently making concessions in order to sell in the global markets as well. If Iran starts to pump crude oil into the global supply chain, that obviously brings more supply and, thereby drives prices down.

• If we were to break above the $100 level, that could kick off the next bullish run in this market.
• It would take quite a bit of momentum shifting in order to make that a reality.
• Rallies will more likely than not offer selling opportunities.

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At this point, it’s almost impossible to short this market and we are so close to a major breakout it’s unreal.

• The S&P 500 Index rallied on Monday again after initially falling.
• It now looks as if we are going to do everything we can to break above the 4300 level, and that opens up the possibility of a bit of a “melt-up”.
• There’s nothing truly keep in the market back other than the 200-day EMA, an indicator that is only somewhat reliable.

S&P 500 Likely to Break Out to Upside

Keep in mind that these markets run on liquidity and not what’s going on in the economy unless of course, it’s good news. Because of this, I think that this market probably does break out to the upside and continues going much higher, mainly due to the fact that there doesn’t seem to be anything that can dissuade buyers from coming in and taking advantage of the “cheap pricing.” Keep in mind that this is about liquidity, and it’s obvious that the market believes the Federal Reserve will do whatever it tells it to, and right now is telling the Federal Reserve to be loose with its monetary policy.

The bond market also doesn’t buy the Federal Reserve being able to tighten either, and that has had its own emphasis on potential flooding of liquidity. As long as there is liquidity, stocks go higher because that’s what Wall Street’s been trained to do. The Federal Reserve has been complicit in pumping up a massive asset bubble and has raised an entire generation of traders that know nothing else but pay attention to what the bond market and liquidity is doing. Fundamentals do not matter anymore, and unfortunately, there are a lot of retail traders out there wasting their time looking at P/E ratios, expense reports, etc.

The game has changed quite drastically because most of the volume is done with high-frequency trading machines looking at mathematical patterns, not anything to do with the stock that they are trading. Quite frankly, it’s just an algorithm that gets followed. I know this sounds pessimistic, but once you understand the game you’re playing, you can begin to score some points. At this point, it’s almost impossible to short this market and we are so close to a major breakout it’s unreal. Yes, there are a lot of bearish cases to be made out there, but it’s obvious that Wall Street doesn’t care. As long as it’s going to be the case, you can either argue with Wall Street, or make money.

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If you have a longer-term belief in crypto, you know what you should be doing right now.

Ethereum has rallied a bit during the trading session on Thursday to reach the $1250 level. The area is a major resistance barrier that we have seen over the last several weeks and have been trading back and forth from. The $1250 level above offers a bit of a “ceiling”, and at this point, it’s likely that the $1000 level underneath will continue to offer support. If we were to break down below the $1000 level, the market then could go down to the $900 level.

If we were to break down below the $900 level, it’s very likely that Ethereum will break down drastically, and then perhaps even to the $500 region. This is an area where I would anticipate seeing a lot of buyers, but perhaps it may take a while for accumulation to turn things around. That being said, the market is likely to see “crypto winter” continue, meaning that we have a scenario where the attitude of the market is simply sideways, and larger players are starting to build up massive amounts of Ethereum for a bigger play. After all, the market has done this multiple times in the past, so certainly there are people out there willing to jump in and take advantage of cheap Ethereum so that they can build up a huge position.

If the market were to break down, then I think that area right around $500 could be a longer-term area as well. Ultimately, I think this is a market that will eventually turn around, but you need a turnaround in central banks in order to show signs of slowing down when it comes to monetary policy tightening. That is more likely than not going to be quite a while down the road, so I don’t have any interest in trying to get too cute at this point, but I do recognize that we have a scenario where we will eventually turn things around.

As for myself, I’m starting to accumulate small bits and pieces of Ethereum for the next run higher, but with the slow rollout of Ethereum 2.0, monetary policy, and a lot of “risk-off” attitude, it’s not a huge surprise to see that we are struggling to go higher. Because of this, if you have a longer-term belief in crypto, you know what you should be doing right now.

I’m looking for signs of exhaustion that I can start shorting.

Bitcoin rallied a bit on Tuesday to pierce the $32,000 level. There was a very impulsive candlestick on Monday, but it should be noted that Tuesday was very quiet. This is interesting considering that institutional traders were not involved in the Monday candlestick, so that may have been Bitcoin taking advantage of a lack of liquidity. Either way, we are still in a very bearish market, so a rally will more likely than not struggle to maintain any type of momentum.

The 50-day EMA sits at the $34,000 level and is sloping lower. This suggests to me that we could see dynamic resistance come into the picture rather quickly, offering further bearish pressure. Granted, this has been a good couple of days, and most certainly the $30,000 level will probably offer a bit of psychology when it comes to support. However, I just don’t see this market changing rapidly, because there is no real use for Bitcoin at the moment. Yes, you will hear people on forums talking about “I just bought several things with Bitcoin yesterday”, but that’s nonsense.

Furthermore, given the fact that Bitcoin has not proven itself in any one particular way, it’s difficult to imagine why somebody would go out of their way to risk their trading capital on Bitcoin when even stocks can’t seem to produce some type of sustainable return at this point. Remember, Bitcoin is still a relatively new technology, although distributed ledgers have been around since the Middle Ages.

If we were to break down below the $28,000 level, then that could open up fresh selling, but right now it looks like this is a run-of-the-mill bear market bounce, at least until we break above $40,000. That would be a gain of roughly 25% from here, so we have a long way to go before the buyers firmly take control. The only thing I can think of right now that would shift the tide would be if we suddenly see the Federal Reserve change its entire attitude when it comes to monetary policy. That does not look to be very likely, so I believe we will continue to see a lot of risk aversion, which is like kryptonite for the Bitcoin market. Because of this, I’m looking for signs of exhaustion that I can start shorting.

It comes down to timeframe at this point.

Bitcoin rallied a bit on Monday, as it looks like we are trying to build enough support for a base. That being said, the market is still very much in a consolidation area, so it’ll be interesting to see if we can continue going higher. It’s probably worth noting that the market has been beaten down rather hard and for good reason. Crypto has a fraud problem that’s being exposed, and even though it’s not necessarily based around Bitcoin, it has people running from everything.

When you look at the last couple of weeks, you can see clearly that we are consolidating. However, the last time we were consolidating like this we were near the $40,000 level before the bottom fell out. That resulted in a 25% drop, so you can’t simply jump into Bitcoin and buy with both hands. At this point, I think we are about to make a pretty big move, but I don’t know the direction quite yet.

If history is any indication, it’s likely that we will go lower rather than higher. If we break down below the $28,000 level, I suspect that we are going to drop down to the $25,000 level, possibly even as low as $20,000. With all of the negativity around the crypto markets right now, it would not surprise me at all, and would probably drag the rest of the crypto markets down with it. Because of this, I would not only start shorting Bitcoin, but I would probably jump all over the smaller altcoins as well. In this environment, the best rate in crypto is to short smaller markets, as they stand no real chance.

Think of Bitcoin as the bellwether for the entire crypto market, and it’s not until we break above the 200-day EMA that you can technically say that we are in an uptrend. That is currently at $41,000. Bitcoin and the rest of crypto look miserable right now, so if you have the opportunity to take advantage of falling prices, that’s what would be the most profitable route. However, if you’re more of an investor, you could start to build up small bits and pieces of a larger position, understanding that it may be a few years before those positions pay off. It comes down to timeframe at this point.

GBP/USD made a solid rebound from the depths of its mid-month lows, but it may struggle for more momentum over the coming days. Major US economic reports capture the lion’s share of market attention in a period that will be quiet for them from UK economic calendar. The rebound gains for the GBP/USD pair stopped around the 1.2666 resistance level and settled around the 1.2650 level at the time of writing the analysis.

Last week, the British pound benefited from a broad decline in the US dollar, which kept the GBP/USD losses flat and short-lived even after the S&P Global Purchasing Managers Index surveys for May warned of tough times ahead for Britain’s most important services sector. Sterling’s recovery against the dollar was underpinned by the Treasury’s unveiling of a fiscal support package aimed at protecting retired families, the unemployed and other social welfare claimants from very high energy costs.

Since much of this targets welfare claimants for “tested means,” it is possible, if not likely that eligibility issues will also result in the exclusion or simply the exclusion of many low-income workers from such support, which could lead to continued risks to the economy and the pound later this year.

These will be headwinds over the medium term, while other factors are likely to dominate the GBP/USD rate this week.

It is not clear whether US factors such as declining market expectations for US interest rates and other recent international drivers, such as the increasingly broad easing of coronavirus containment measures in China, will remain supportive of the British pound and other currencies over the coming days.

Lee Hardman, currency strategist at MUFG, warns that the dollar could be weak for another corrective setback. The US dollar fell last week amid indications that large parts of the Chinese economy may be emerging from a hibernation caused by the Corona virus, and after some US economic data, including figures related to the service sector, housing market and business investment figures indicated the weakness of the economy.

The US data has encouraged speculation about a possible slowdown in the pace at which the Fed is likely to raise interest rates later this year, speculation that was substantiated to some extent by the minutes of the bank’s May meeting. The minutes suggested that some Fed policymakers might be open to the idea of ​​a pause in the “tightening cycle” if they receive “clear and convincing evidence” that US inflation is falling back to the Bank’s 2% target.

US inflation data is still a bit far from providing the “clear and convincing evidence” that is a prerequisite for any Fed decision to slow or pause the monetary tightening cycle, although that hasn’t stopped the market from pulling back a bit. about US interest rate expectations. The core PCE price index for April provided an additional indication last Friday that inflation pressures may ease, and this is the context in which the market is likely to assess this week’s US economic figures.

According to the technical analysis of the pair: There is no change in my technical view of the currency pair. On the daily chart below, the price of the GBP/USD currency pair started forming an ascending channel opposite to the broader bearish channel. As mentioned before, the breach of the 1.3000 psychological resistance will be important for a stronger and continuous control for bulls on trend. The current trend will continue to face a threat if the currency pair returns to the vicinity of the support levels 1.2490 and 1.2350, respectively.

I still prefer to sell the currency pair from every bullish level as the factors of the strength of the US dollar are continuing and may remain for a long time.

Pay attention to emerging markets, Latin America, and of course soft commodities to get an idea of how the Brazilian real may trade.

The US dollar rallied to break above the 5.00 BRL level on Wednesday but gave back a little bit of the gains. It was the Federal Reserve statement day, so is not a huge surprise to see that the market was somewhat all over the place. That being said, it is worth noting that the area above 5.00 extends resistance to the 5.20 level. Quite frankly, this is an area that I think is going to be crucial for the directionality of the market going forward.

Looking at this chart, you can see that the 50 Day EMA sits just below and should offer a bit of support. This would be an indicator that a lot of people are following, just as the 200 Day EMA above could offer a bit of resistance. With that being said, it is another reason to think that there is going to be a lot of noise just above. However, I also think that there is a significant amount of support. The market does not know what to do at the moment due to inflationary problems, and of course, concerns about global growth. If we are going to have problems with global growth, then it stands to reason that the US dollar might be one of the first places that people run to. This will be especially true when it comes to a currency like the Brazilian real, which is an emerging market currency.

If we were to break down below the hammer from Friday, that would be a negative sign, perhaps allowing the pair to fall to the 4.80 area, where we had previously seen a bit of resistance. In that scenario, I think you would see US dollar weakness across the board, not just against this currency. Keep in mind that Brazil represents emerging markets, Latin America, and of course soft commodities. With all that being said, pay attention to all of those markets to get an idea of how the Brazilian real may trade. I think that we have a lot of noise ahead of us, but quite frankly with all of the concerns around the world, it does make a certain amount of sense that we would see the US dollar continue to at least attract attention.

In the short term, it certainly looks as if we are going to get a little bit of a recovery, the question of course is whether or not it can sustain itself.

The US dollar has been all over the place during the trading session on Thursday, as we initially fell, but then turned around to show signs of strength. We have broken out of a short-term consolidation area during the trading session, and therefore it looks as if we are trying to recover. The 14.50 Rand level is an area that has been important more than once, so is not a huge surprise to see a bit of a bounce here.

The question now is whether or not this candlestick? After all, South Africa has seen a massive decline in coronavirus numbers, so it does suggest that perhaps the economy will wake back up. The interest rate differential comes into the picture as well, and it is worth noting that the US dollar has seen interest rates in the 10-year note rise rather rapidly, so perhaps that is starting to have a bit of an influence on this market as well. Nonetheless, the obvious thing is that the 14.50 Rand level now looks as if it is significant support.

The 50 Day EMA above is breaking through the 15 Rand level, and therefore I think that if we can go to the upside and test the 50 Day EMA, it will be an interesting resistance barrier. Breaking above that could then have buyers coming back in for a bigger move. This is a market that has been very negative for a while, and therefore it would take quite a bit of momentum to make that happen.

Keep in mind that the South African Rand is essentially a commodity currency, so you need to pay attention to the commodity markets. Commodity markets are starting to turn around a bit, selling off in several different areas. If that keeps up, it could work against the value of the Rand going forward, especially if it is more of a “risk-off” type of situation, as the US dollar is considered to be safe in the currency markets. In the short term, it certainly looks as if we are going to get a little bit of a recovery, the question of course is whether or not it can sustain itself.

On the downside, if we were to break down below the lows of last week, it opens up the possibility of a move down to the 14 Rand level. However, the Thursday candlestick does suggest that it may not happen in the short term.

We have no interest in shorting this market until we can break down below the 200 Day EMA, so at this point it is a “buy on the dips” scenario.

The S&P 500 has rallied just a bit during the trading session on Friday to show signs of life again, but we still have to worry about a significant amount of resistance above based on short-term charts. The market has been very strong for a while, so the recent pullback in the hammer that formed on Friday makes a certain amount of sense.

The hammer that formed during the Friday session being broken to the downside could send this market much lower, perhaps down to the 50 Day EMA. The 50 Day EMA sits at the 4453 level, so I would anticipate that area to be dynamic support, and therefore I would anticipate a lot of interest in that general vicinity. Underneath there, we have the 200 Day EMA sitting at the 4400 level, which is the bottom of the move to the upside. As long as we can stay above that area, then it is likely that we could continue to see a lot of interest.

If we were to break down below the 4400 level, then the market could go down to the 4200 level. The 4200 level has been a massive support and therefore if we were to break down below that level it would be a collapse of the overall uptrend. The market has been strong enough that it looks like we are going to try to get to the upside. It has moved beyond anything economic-related, and now it looks as if the only question will be whether or not the Federal Reserve will continue to look liquefy the markets or if they will finally try to fight inflation. If they do try to fight inflation, that will be bad for the stock market because of the rising rates. They do not have a long history of helping the people, but they do have a long history of helping Wall Street.

As things stand right now, breaking to a fresh, new high almost guarantees that we go looking towards the 4800 level based upon the momentum. We are forming a little bit of a bullish flag, so that also suggests that we could go higher as well. I have no interest in shorting this market until we can break down below the 200 Day EMA, so at this point it is a “buy on the dips” scenario.

The dollar will struggle to extend its multi-month rally as the market appears to have achieved a “peak hawk” in its expectations for future Fed rate hikes, some analysts say, but others question the notion that the greenback always drops after the first rally of the cycle. In the case of the GBP/USD currency pair, it tried during last week’s trading to break the downside trend with gains to the resistance level of 1.3210 and closed the week’s trading stable around the 1.3175 level. This month the Federal Reserve and the Bank of England raised interest rates, and both the dollar and the British pound are proving a slowdown in the G10 currency space.

However, the Pound held ground against the Dollar, indicating that expectations of future interest rate hikes by the Federal Reserve are what matters to the GBP/USD pair at this point. The Federal Reserve is on course to raise US interest rates on six more occasions in 2022 – more than the Bank of England will do – in what amounts to a frantic attempt to normalize policy in the face of rising inflation.

However, this policy trajectory has been sufficiently telegraphed, meaning that the forex FX markets were “priced in” long before the Fed actually hiked with a 25 basis point hike last Wednesday. This was manifested in the build-up of expectations to push the Dollar higher, which remains one of the best performing currencies in the past year. But, “the market is pretty much at a ‘peak hawk’ for the Fed. Can the Fed raise 7 times this year? Most likely, but the market has already priced it in, says Biban Ray, forex analyst at CIBC Capital.

One of the stages of the US dollar’s multi-month appreciation against the British pound and other major currencies was the anticipation of higher interest rates from the Federal Reserve, which in turn would increase bond yields and increase inflows into US monetary assets. For this trend to continue, markets would like to see more price hikes in the future.

Forecasts released by the Federal Reserve point to seven rate hikes this year and roughly four next year with an average expected rate that will end at 2.8%. Overall, the GBP/USD exchange rate recovered above the $1.31 level following the Fed’s policy decision in March that saw US interest rates raise and signal that six more hikes are likely to fall in 2022.

Research by RBC Capital over the past 20 years has found that there have been periods when the US dollar has not been sensitive to spreads, but there has never been a period when the dollar has not. Another key element in the slightly higher dollar exchange rate is the ongoing market anxiety associated with Ukraine. The safe haven US dollar is a natural benefactor as investors show their nerves and as long as the war continues, the weakness of the global reserve currency will be met with support.

Therefore, the rise in the GBP/USD exchange rate is likely to be limited under these circumstances. Indeed, it is worth remembering that sterling is one of the undisputed losers of the G10 in the war in Ukraine. Commenting on this, Chris Turner, analyst at ING Bank says, “There is a camp arguing that the US dollar usually sells in the first six months of the Fed’s tightening cycle – presumably based on a ‘buy the rumor, sell the truth’ mentality of a good tightening cycle.” What is different this time, in our opinion, is the strong tightening that will be undertaken by the Federal Reserve and the events in Ukraine that have damaged European growth prospects and will affect currencies in the region.”

“In summary, we believe the US dollar will continue to bid on dips against European currencies and the Japanese yen, while commodity-exporting currencies could continue to outperform,” the analyst added. Meanwhile, the war fueled soaring commodity prices, and promised to extend the period of severe global inflationary pressures that threaten to slow global economic growth. The dollar is a countercyclical currency which means that it rises when the global economy suffers, so the basic background remains one from which the dollar can benefit.

According to the technical analysis of the pair: According to the chart of the daily time frame, the price of the GBP/USD currency pair is still trying to break the general bearish trend, and it may succeed in that in the event of a rebound and breaking the top of the resistance 1.3350. Until that happens, the general trend will remain bearish, and the war will continue. Russia and its consequences for the future of the global economic recovery will support the bears to move towards psychological support 1.3000 again.