The S&P 500 plunged significantly during the trading session on Monday, as we have seen a lot of negativity. The market continues to see a lot of noisy behavior, as we are heading into the Jackson Hole Symposium week. By selling off the way we have, it’s obvious that traders are suddenly starting to worry about central bankers and whether or not they are going to continue to argue for tightening monetary policy.

It is likely that we will continue to see reasons to do so, as inflation has been extraordinarily strong. With that in mind, the market is likely to continue being a bit skittish, and it is probably worth noting that we are sitting right on a “ledge” that had formed previously in the form of the 4135 if we break through this area, that could be the beginning of a rather significant selloff.

If we rally from here, the 200-Day EMA is an area that I think a lot of people would pay close attention to, because it is a rather bullish thing to overcome. At that point, the market is likely to look into the 4300 level. I don’t necessarily think that’s going to happen easily, and I would fully anticipate that the Jackson Hole Symposium is a long litany of central bankers going on about how they need to tighten monetary policy. In other words, we may have seen the top of the rally. However, we do not know what happens until it happens.

Forecast for S&P 500

If the market were to break above the highs right around the 4300 level, that would be a very bullish sign, perhaps sending the S&P 500 to the 4500 level. I don’t necessarily know the reason for that happening. It is rather amazing how Wall Street can find one reason or another to get bullish, most of the time involving the idea that the Federal Reserve is going to continue to be dovish. I’m not sure what else the Federal Reserve can do to convince Wall Street that it is serious, but something tells me this week we will see everything but dovish behavior coming out of central bankers, with perhaps the exception of Japan. With this, I think rallies will get faded at the first signs of exhaustion as well. I have no interest in buying into it make it fresh, new high.

Ready to trade our S&P 500 daily forecast? Here are the best CFD brokers to choose from.

• Spot gold markets have fallen roughly ½% for the trading session on Friday, as we are threatening the $1750 level.
• The market is likely to continue to see a lot of noisy behavior.
• Need to be paying close attention to the bond yields in America and other major economies as gold is highly sensitive.

Furthermore, it’ll be interesting to see how next week plays out due to the fact that the central bankers are all meeting at the Jackson Hole Symposium. There will be a lot of talk about fighting inflation, which should continue to put pressure on the upside on bond yields. It’s much easier to own bonds and earns a yield than it is to hold gold and store it which of course has costs involved. In other words, this is a market that has a lot to look at next week.

If we do break down below the $1750 level, it’s likely that the market will go to the downside and look toward the lows at the $1680 level. The $1680 level underneath should be supported, as we have bounced so hard from there. If we were to break down below there, then the market is likely to go down to the $1600 level. This would almost certainly accompany a strengthening US dollar, so pay close attention to the US Dollar Index. Higher interest rates will cause a chain reaction in this market.

If the market were to turn around and rally from here, I think there is a significant amount of resistance above, especially near the $1800 level. That’s an area that has a lot of market memory built into it, as it had been massive support previously. I think that this is going to be a “pay the rally” type of situation, at least until we can break above the 200-Day EMA. We have a long way to go before we go there, and therefore it’s likely that you would see more of a “fade the rally” type of attitude going forward. Remember that the US dollar is like a wrecking ball against most assets, and of course, gold won’t be any different. Expect volatility, and keep your position size reasonable, as the noise in this market can be very challenging to say the least.

Ready to trade today’s Gold forecast? Here are the best Gold brokers to choose from.

I think we are more likely than not going to see a lot of chop, with more of a proclivity to drop.

The euro initially fell on Wednesday only to turn around and rally again. The 1.05 level looks to be offering significant support, at least in the short term. Underneath, there was a “double bottom” that formed, and it’s possible that people are trying to front-run the Federal Reserve and the fact that it will have to change its opinion on monetary policy sooner rather than later. Furthermore, there has been a bit of chirping out of the ECB that they may have to tighten interest rates.

If that is in fact going to be the case, then the euro will more likely than not recover a bit. Having said that, this is a market that continues to be very noisy, as is typically the case. This is one of the worst pairs to trade, because most of the time it goes back and forth with no real directionality. This is why you need to look at it from the prism of a longer-term trader, which still looks at this as a major downtrend.

I believe that the 50-day EMA above will continue to cause headaches, and if we approach that area, I would anticipate that there is probably a certain amount of resistance to be found in that area. If we break above there, then the 1.08 level becomes an even bigger problem. Ultimately, it would take quite a fundamental shift in attitude to make that happen, but the volatility of this market and everything else is so out of control right now you cannot bank against anything. Because of this, I think we are more likely than not going to see a lot of chop, with more of a proclivity to drop. If we can break down below the 1.04 level again, that could open up a move down to the 1.02 level, and then possibly parity. I do think that parity is a very real possibility sometime later this summer, as many of my contemporaries feel the same way. Rallies are not trusted right now, and I think that will continue to be the case as there are so many concerns when it comes to the global growth situation. As long as there are concerns about global growth and economy slowing around the world, there’s always going to be demand for US dollars.

In general, I have no interest in trying to get long.

The Parisian CAC Index gapped higher Monday but then pulled back to find buyers underneath. By doing so, it suggests that the market is going to try to rally again, but there are plenty of reasons to believe that there is resistance above. After all, the CAC is sensitive to risk appetite, so you need to be cautious about what you do if you are trying to buy into this market. After all, the CAC is heavily influenced by luxury goods, something that does not go well in times of recession or global slowdown.

The candlestick for the trading session is somewhat bullish but still needs to pay attention to the massive resistance that I see based on the potential down-trending channel. There is a little bit of a downtrend based upon the 50-day EMA as well, so you should pay attention to that. It is at the €6434 level and dropping quite drastically. We had recently formed a “death cross” when the 50-day EMA drops below the 200-day EMA, and then a reluctance to try to break above the 50-day EMA. The entire area between the 50-day EMA and the 200-day EMA should be a massive resistance barrier that the market is going to struggle to break above.

If we were to turn around and break down below the €6200 level, it is likely that the market will drop to the €6100 level rather quickly. This is a market that I think will continue to see a lot of sellers, as people will be running away from risk appetite, and if Germany drops, so will Paris. During the trading session, Christine Lagarde suggested that perhaps the ECB would start to raise rates at a ¼ percentage clip, which could work against risk demand as well. Either way, we are in a decisively negative market, and I just do not see that changing anytime soon. I would be a seller of rallies but would also sell breakdowns below support. Further exacerbating trouble will be the energy problems in the European Union, as well as a war on the doorstep of the continent. In general, I have no interest in trying to get long.

You need to be very patient with any trade that you take in this market, as it will not necessarily move as quickly as many of the other emerging market currency pairs out there.

The US dollar fell a bit on Tuesday to break down below the 20 pesos level. That being said, there are multiple Federal Reserve members speaking during the day on Tuesday, so a lot of noise would have been anticipated. When you look at the chart, you can see that the 19.75 pesos level has been significant support previously, so it does make sense that we would see it offer support again. In fact, we formed a bit of a “double bottom” and have bounced from there.

On the upside, the 20.25 level should offer a bit of resistance as the 50-day EMA sits there, and it is also an area where we have seen both support and resistance multiple times. However, we have sliced through there a couple of different times, so if we break above there it would not be the be-all and end-all of the trend. If we break above there, the 20.50 pesos level and the 200-day EMA comes into the picture just below there. Ultimately, I do think that we will continue to bang around in this market, but it is also probably going to be highly influenced by the crude oil market, which of course has shown quite a bit of strength as of late.

If we were to break down below the 19.75 level, then it would more likely than not have to do with yields in America dropping, or oil taking off to the upside, take your pick. This is not to say that it would be easy to happen, just that it could. If we break above the 20.50 pesos level, that would be an extraordinarily bullish sign for the greenback, and you would probably see the dollar strengthening against most other currencies. At this point, it appears that the higher interest rates in Mexico continue to attract inflows, right along with the oil market driving up demand for the currency. Keep your position size reasonable, but also recognize that this pair does tend to move very slowly, so you need to be very patient with any trade that you take in this market, as it will not necessarily move as quickly as many of the other emerging market currency pairs out there.