If we get a daily close above that $2100 region above, this market could take off.

The Ethereum markets initially tried to recover during trading on Wednesday but have sold off yet again. As the $2000 level continues to offer significant resistance, it’s obvious that it’s going to be a bit of a battle to get above there. The $1800 level is an area where we had seen a significant amount of support previously, so I think a little bit of “market memory” is about to enter the picture here.

The shape of the candlestick is a shooting star, so it does suggest that maybe we have a little bit more selling pressure ahead of us. I suppose if you are stuck on the principle of Fibonacci, we are at roughly 50% of the move from previous selling as well.

Two Major Factors in Ethereum Market

The first one has been the bond yields in America dropping, as institutional traders believe that the Federal Reserve will not be able to tighten monetary policy as much as once feared. However, we are starting to see interest rates turn around to the upside again, and that has had a little bit of a negative influence on crypto in general, including Ethereum. After all, Ethereum, and crypto by extension, is pretty far out on the risk appetite spectrum, and therefore it’s not overly surprising to see it suffer.

The second important influence has been the idea of “The Merge” happening quicker than originally thought, and it looks like a theory of is actually going to pull all of this off. That obviously is good for the longer-term outlook when it comes to the network, so it does make a certain amount of sense that people bought coins based upon that.

• We are still in a very tenuous economic situation, and it must be noted that Ethereum is no longer an outlier when it comes to the financial markets, especially as the institutions have gotten involved.
• Ethereum now has a negative correlation to interest rates, much like a lot of other “risk on” assets.
• You will have to keep an eye on the 10 year yield as well.

Furthermore, the Federal Reserve looks hell-bent on trying to spook the markets into driving back down, so I think we may have peaked. However, if we get a daily close above that $2100 region above, this market could take off.

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We have a lot to look at when it comes to this chart, so keep your position size tight, but it’s likely that we will see buyers.

• The German DAX Index rallied significantly on Tuesday to break through a short-term resistance barrier.
• The market is closing near the €13,922 level and has cleared the gap that I have marked on the chart.
• Furthermore, we have just wiped out the 61.8% Fibonacci level, so it does look like the DAX may have a bit further to go.

Is Germany Headed for a Recession?

The 200-day EMA sits near the €14,500 level, so that might be a target at this point. That is a large, round, psychologically significant figure as well, which is also worth paying attention to as well. Ultimately, the DAX seems to be ignoring the fact that Germany is going to head into a massive recession, but it is also possible that the traders in Germany are looking at the possibility of the ECB becoming as loose as possible. That is a very real possibility due to the fact that the economy is going to get so wrecked that it’s possible that the ECB will of course have to loosen monetary policy, and traders will celebrate the bad news like they do in New York.

Looking at this chart, you can also make an argument that if we were to turn around at this level and break down below the €13,600 level, the DAX could start to sell off again, perhaps looking to reach down to the 50-day EMA. We are still very much in a downtrend, but the move on Tuesday certainly suggests that we have a huge fight on our hands. The market has shown itself to be extraordinarily resilient, so it’s perhaps a situation where we make it a little bit of a pullback, as we are overbought. However, if we break above the top of the candlestick for the trading session on Tuesday, it’s likely that we will continue to see momentum.

It’s likely that if other stock indices in the world start to fall off, the German index will almost certainly fall right along with it. The volume is starting to decline a bit, so you can make that argument as a negative sign as well. We have a lot to look at when it comes to this chart, so keep your position size tight, but it’s likely that we will see buyers.

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You need to be very cautious with your position sizing unless, of course, you are looking to build a longer-term position.

• The Ethereum market pulled back a bit on Tuesday to show signs of selling pressure.
• The $1800 level is an area that extends to the $2000 level and has been a major resistance barrier previously, as well as a major support level.
• “Market memory” comes into the picture and should continue to affect how the market moves.

Risk Appetite Suggests Positivity

Ethereum has gotten a bit of a boost over the last couple of weeks as the risk appetite has gotten better, and of course, the network is starting to get close to a major upgrade. This suggests that the market is more likely than not going to be seeing more use, but whether or not that actually happens is a different situation altogether.

Underneath, the 50-day EMA should be supported, near the $1325 level. The $1200 level underneath there is the top of the previous consolidation area, so I do think that it’s an area that a lot of people would be paying close attention to because it also would have a lot of “market memory” going forward. The market breaking down below the $1200 level opens up the possibility of a move down to the $900 level. Anything below the $900 level opens up a massive amount of selling pressure that could cause the Ethereum market to collapse down to the $400 level.

If the market were to break to the upside and continue to show bullish behavior, clearing the $200 level opens up the possibility of a big move higher, and more likely than not would kick off a longer-term uptrend. At that point, I’d be looking for Ethereum to go to the $4000 level, but I don’t think that happens very quickly.

The only thing that you can count on in this market from what I can tell is going to be volatility. Because of this, you need to be very cautious with your position sizing unless, of course, you are looking to build a longer-term position. I think that a pullback at this point in time makes quite a bit of sense and could allow traders to slowly build up a bigger position that believes in the longer-term efficacy of Ethereum, and whether or not the demand will continue to pick up for the network. Longer term, it does look very interesting, but that does not necessarily mean that you need to go “all in” at this point.

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A breakdown seems more likely than not, perhaps a move to the 1.06 level, followed by a move to the 1.04 level.

The euro tried to break above the crucial 1.08 level on Tuesday but has been found wanting again. Because of this, it looks as if the 1.08 level will continue to be a major problem for the bulls, and it would be a bit surprising to see this market break above there. At this point, it’s obvious that we do not have enough momentum to make that move.

It might be worth noting that the 50-day EMA is in this current region, suggesting that we are going to continue to see a lot of noisy behavior. That being said, when you look at the longer-term chart it is obvious that we have been in a downtrend, and none of the fundamental reasons have changed, although Christine Lagarde has suggested that 25 basis point rate hikes could be coming. That being said, the European Union is still far behind the Federal Reserve when it comes to monetary tightening, so I think we still have a huge advantage for the US dollar.

Furthermore, you have to keep in mind that as risks continue to pile up out there, people will want to own US dollars. There are serious issues in emerging markets right now with debt that is denominated in greenbacks. It is a bit of a death spiral just waiting to happen. Because of this, a breakdown seems more likely than not, perhaps a move to the 1.06 level, followed by a move to the 1.04 level. In fact, I think sooner or later we may even test parity if economic conditions start to deteriorate again.

Alternatively, if we were to turn around and break above the 1.09 level, then I think you could see an even bigger rally to the 1.12 level, but that is going to take quite a bit of effort to make happen, and we would more likely than not see US dollar weakness across the board in that scenario. Because of this, I think it is easier to fade rallies as they occur, and we certainly saw a lot of that early on Tuesday. While we have not broken down significantly, the ferocity of the selloff at one point was a bit concerning.

We have been in a downtrend for quite some time so it makes sense that we would see a continuation.

The German DAX index broke down significantly on Wednesday as the €14,250 level continues to offer significant resistance. This is an area where we have seen selling pressure previously, so it is not a huge surprise to see that we had pulled back. Furthermore, the 50-day EMA has been resistant as well, so it all ties together quite nicely.

What is also worth noticing is that we close at the bottom of the candlestick, and it suggests that we are going to see even more selling pressure. Typically, when a candlestick closes at the very bottom of the daily range, there is a bit of follow-through. At this point, I am looking for a move down to the €13,500 level over the next several candlesticks, and I believe that short-term rallies will probably be sold into at the first signs of exhaustion. The DAX is the main index for the European Union, so you need to understand that it is a great proxy for the entire region. It is the first place that money goes flying to, and it tends to lead the rest of the indices either higher or lower.

That being said, if the situation gets worse in the European Union, other indices will get sold rather hard. On the other hand, if we start to see a bit of a turnaround, the DAX is the first place that people put money to so it is also the first place that people start to see a rally. At this point, it is likely that we will continue to see the global economic situation have a part to play as well, as Germany is such a major exporter. In fact, most of the major movers of the DAX index are multinational exporters, so they cannot escape what we may find in other parts of the world.

Regardless, we have been in a downtrend for quite some time so it makes sense that we would see a continuation. Indices around the world have been hammered, and for what it is worth, American indices sold into the close, so that typically means that the Europeans will take their cue from that as well. I do not see a turnaround happening, but if we broke above the €14,250 level, we would more likely than not be a very bullish move.

Expect a lot of chop and keep your position size small, as it is paramount in these times.

The FTSE 100 rallied again on Tuesday but looks as if it is going to have quite a challenge ahead of it. The 7500 level begins a significant resistance barrier that extends past the 7600 level, so it is likely that we will see sellers come into this market given enough time. After all, the market has bounced rather drastically from the 7200 level, but it is also worth noting that equities across the planet are all over the place. With volatility levels as high as they are, it is difficult to imagine a scenario where owning stocks will be the easy way going forward. I do believe that it is more likely than not going to be a situation where we will have a washout coming.

With that being said, the 7600 level is an area that you need to pay close attention to because it is so heavily defended. If we were to break through to a fresh, new high, then it is possible that the FTSE 100 really starts to take off. There are a lot of traders out there willing to bet that the central banks will be much looser with their monetary policy than they have been suggesting, but that is a pipe dream as inflation has gotten so out of control that it is difficult to imagine a scenario where central banks can do anything but fight it.

The lack of global growth will weigh upon the markets as well, so that is most certainly something that you need to pay close attention to, as there are major headwinds facing most developed economies around the world. The market will be noisy, to say the least, and I do think that there is still going to be a significant amount of support near the 7200 level underneath. Because of this, it is more likely than not that we will see a selloff. At the first signs of exhaustion, I am perfectly comfortable shorting this market because we have such an obvious barrier above that if we were to break it, it would more likely than not have a lot of money flowing into the market and you could probably make your losses back. Regardless, expect a lot of chop and keep your position size small, as it is paramount in these times.

Expect choppy volatility, but that has been the way this pair has traded for several months now anyway, so it should not be a huge surprise at this point.

The euro fell rather hard on Wednesday to reach the 1.05 area. This is an area where we have seen a lot of action in previously, and it is a large, round, psychologically significant figure. The 1.05 level would cause a lot of headline noise, and we have bounced well over 60 pips from that area. Because of this, I think it is probably only a matter of time before we have to bounce after this massive selloff.

This being said, I do not want to buy the euro. In fact, I think that any significant rally you see at this point should end up being a nice opportunity to short this market yet again. The 1.08 level above should act as a bit of a ceiling in the market, and then we have the 50-day EMA which is rapidly approaching the 1.0933 level, an area where we had seen previous resistance as well.

Whether or not we can break down below the 1.05 level is a completely different question, but it certainly would not be surprising at this point. A rally at this juncture will more than likely continue to attract sellers given enough time due to the fact that the overall momentum of the market has been so negative. The Federal Reserve continues to be very hawkish with its statements, and as a result, the market will have to deal with the idea of higher interest rates in the United States. On the other side of the Atlantic Ocean, we have the European Central Bank which is stuck in a situation where they cannot raise interest rates very rapidly because although there is inflation and there are energy concerns. An economy that does not have energy is not an economy that is going to grow very much.

Currently, I believe this pair is oversold and a bounce is almost certain. The bounce should be a nice opportunity so I am going to step out of the way and perhaps try to pick up “cheap dollars” at higher levels. Expect choppy volatility, but that has been the way this pair has traded for several months now anyway, so it should not be a huge surprise at this point. The fact that we bounced as hard as we did does suggest that we are ready to turn around for the short term.

Start counting on choppy behavior in these markets

The S&P 500 has pulled back during the trading session on Wednesday to reach the 4600 level before bouncing a bit. At this point, the market looks as if it is trying to hang about and decide where to go next, as the market had gotten so overstretched. The market remains very noisy, but the fact that we found support at a previous resistance barrier is a good sign.

If we were to break back below the 4600 level, then we could go looking towards the 4500 level. The 4500 level is an area that a lot of people will pay close attention to and an area that could kick off a bit of a selling opportunity. That being said, the market is likely to see a lot of noisy trading in this area, especially as we have the jobs number coming out on Friday.

The market has been parabolic for some time, and I do not trust these types of moves. However, I also know that the US indices are not made to be shorted, because the markets are measured via a market cap, and therefore just a handful of stocks can send this index higher, regardless of what is going on underneath. In fact, it is quite common to see the index rally as huge swaths of stocks decline. That was the case before we started selling off quite drastically, and therefore you should watch some of the smaller stocks for a bit of a secondary indicator. Nonetheless, this is a market that certainly looks as if it is trying to find its footing, and a couple of days going sideways could work off a lot of the froth in order to make it a bit more viable of an uptrend.

The overall health of the market is questionable, simply because there are a lot of moving pieces out there that could suggest negativity, but quite often the market simply ignores this. I think we may be in one of the situations again because there is a huge disagreement amongst bond market traders and stock traders as to whether or not the Federal Reserve is going to save everybody again.  I think the only thing you can count on is a lot of choppy behavior. If we break down below the 4500 level I will reassess the situation.

As far shorting is concerned, we would need to see a reason to do so.

The S&P 500 continues to run straight up in the air in what will almost certainly be thought of as a “melt-up.” We have cleared the double top that I had pointed out yesterday, and now there is not a whole lot on this chart that suggests we cannot make the highs again. Because of this, the market is likely to continue seeing upward pressure, despite the fact that there is it is a whole list of reasons to think that the markets will be paying attention.

When you see this chart, you can see clearly that the 4585 level was an area that has been important a couple of times, and because we sliced through it like it was not even there, I imagine that it would be supported based on value on any type of pullback. The recovery has been based upon the idea that the Federal Reserve can get nowhere near the amount of interest rate hikes that the bond market believes, and we are in a situation now where somebody is going to get hurt. It comes down to whether or not the bond market has it right, or the stock market does.

It is possible that we will turn around and fall from here, but we need some type of fundamental reason to make that happen. There is not enough fear out there, and now this bear market rally has been brutal. The question now is whether or not we can continue to go higher. Based on technical analysis, there is nothing to suggest it cannot happen. The 4800 level could be a potential target, but we are overextended to say the least, so a little bit of value hunting might be the best way forward. As far shorting is concerned, we would need to see a reason to do so. I would need to see this market break down below the 4500 level before considering that now.

I stated a couple of days ago that the indices in the United States are not built to show fair value, as they are designed to go higher over the longer term. It is because of this that 95% of the time I think “long-only” when it comes to the futures market. I am now back to that mode of thinking because quite frankly there is no way to get short at this point.

If this thing does kick off, it could be the end of the overall negativity and could lead to a bigger move to the upside. 

Bitcoin markets rallied a bit on Friday to test the crucial $45,000 level. We also tested the 200-day EMA, so the market certainly looks as if it is banging on the door of a breakout. If it can break above there, it will more likely than not drag the rest of the crypto markets with it, allowing for the possibility of all crypto to advance.

If Bitcoin breaks above the $45,000 level, it is also very likely that it will go looking towards the $50,000 level, which is a large, round, psychologically significant figure. The $50,000 level is an area that will continue to see a lot of interest, but we have broken through a couple of times and in both directions. Because of this, it is likely that the market will only pay so much attention to it.

Ultimately, this is a market that is trying to decide whether or not it is going to continue with the momentum to the upside. If it does not, it is likely that we will go towards the $42,000 level, where we had seen the 50-day EMA. The market breaking down below there then opens up the possibility of going down to the $40,000 level. At this juncture, I think that would not necessarily be the beginning of the end, it would just be the market returning to its consolidation.

If we see this market break down below the $37,000 level, then it is likely that Bitcoin could go to the $35,000 level. Anything below there would open up a massive selling opportunity, and perhaps a major breakdown as well. Ultimately, this market looks as if it is ready to break out, but it is not until we clear the $50,000 level on a daily close that I would be convinced is time to start putting money to work. After all, crypto is extraordinarily volatile and the markets seem to be nervous, to say the least, but you can also make an argument that we just formed a major bottoming pattern.

If this thing does kick off, it could be the end of the overall negativity and could lead to a bigger move to the upside. If you are a longer-term trader, you may get your signal in the next couple of days to start collecting again.