Ethereum has recently been a little bit negative but previously had seen a massive move higher based upon the idea of “The Merge” coming soon, and the idea that Ethereum will become much cheaper as far as transactions are concerned, and a whole host of other features.

• The ETH/USD market rallied a bit during the trading session on Monday, getting over 7%.
• However, you need to keep in mind that a 7% gain from here is much smaller than it would have been a couple of weeks ago. It most certainly is quite a bit smaller than it was a year ago.
• The market is likely to continue seeing a lot of noisy behavior, so at this point, I’m not necessarily sold on the idea of Ethereum suddenly taking off.

If we break down below the bottom of the candlestick for Monday, you can see that there’s been a little bit of support in that area, and it’s likely that we could drop down from there to reach the $1000 level. The $1000 level is an area where we have seen a lot of action in the past, and obviously, the $1000 level will have a lot of psychology attached to it. Breaking down below the $1000 level would be extraordinarily negative, and that could open yet another leg lower. Ethereum has recently been a little bit negative but previously had seen a massive move higher based upon the idea of “The Merge” coming soon, and the idea that Ethereum will become much cheaper as far as transactions are concerned, and a whole host of other features.

Bounce not Likely to Last

The reality is that the market has more likely than not already priced this in. Furthermore, you must keep in mind that risk appetite is going to be a major driver of what happens in this market, as well as everything else related to cryptocurrency. I don’t necessarily think that the market is out of the woods yet, and I would fully anticipate that we drop again. However, the question at this point is whether the Ethereum market rallies toward the 50 Day EMA, and then beyond, or if it just starts falling.

A lot of this is going to come down to central-bank behavior, and how hawkish they are. Pay attention to bond markets, because if interest rates continue to rise, that would of course work against risk appetite, and thereby work against Ethereum. Ethereum does seem to be one of the better performers in this financial asset class over the last several weeks.

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Short-term breakouts might lead to longer-term selloffs.

• The West Texas Intermediate Crude Oil market has fallen rather hard during the trading session on Monday but then turned around to show signs of life.
• The market ended up forming a bit of a hammer, and the hammer sits just above the $90 level.
• The downtrend line just above is part of a “falling wedge”, and therefore breaking above there could kick off a move to the upside.

If we were to break out to the upside, it’s likely that we will test the 200 Day EMA, which is the blue line on the chart, which is also being tested by the 50 Day EMA as we are slowly lower. At this point, I think that might be your first target, but I also recognize that scenario that could cause quite a bit of trouble. Signs of exhaustion in that area could be jumped on, but if we break above it, then one would have to assume that the market is going to go looking to the $100 level.

Demand causes concern

If we break down below the bottom of the hammer from the candlestick on Monday, then it should open up quite a bit of fresh selling, perhaps sending this market down to the $80 level after we break through the $85 level. Keep in mind that a lot of people are worried about the potential slow down globally, which of course would have a lot of negativity attached to the oil market as demand should drop. More likely than not, that will probably be an ongoing theme in this market, as signs of exhaustion will almost certainly be jumped on. If we do get those signs of exhaustion, it’s likely that the market then will jump on it and start shorting again.

If we were to break above the $100 level, then it’s likely that the market could change its overall attitude, perhaps opening up a move to the $110 level. I don’t expect to see that, but it is something worth paying close attention to, and therefore it’s something to keep in the back of your mind. All things being equal, this is a market that I think will continue to see more noise than anything else, but clearly, there is a serious concern out there when it comes to the overall demand. Short-term breakouts might lead to longer-term selloffs.

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If we can break above the $100 level, I believe the market may turn around completely.

• The West Texas Intermediate Crude Oil market has bounced a bid from a major support level during the trading session on Thursday.
• We are now above the $91 level, which is a nice bounce, but it does not necessarily mean that the world has changed.
• If you have been following my analysis here at DailyForex, you know the move that I had hoped to see is some type of bounce that we can start selling.

Crude Oil Forming a Death Cross

We are at the top of the range for the candlestick, and it suggests that perhaps we probably have a little further to go to the upside. I like the idea of looking right around the $94 level for significant resistance, perhaps extending all the way to the $95 level. The $95 level obviously has a certain amount of psychology attached to it, and of course, we also have the 200 Day EMA hanging around in the same area, right along with the 50 Day EMA dropping down toward that area as well. In fact, we may be getting ready to form a “death cross.”

It should be noted that the “death cross” is when the 50 Day EMA crosses below the 200 Day EMA, signifying to longer-term traders that we are now in a very bearish downtrend.

I think at this point we probably have a situation where we continue to saw tooth on the way down, and this bounce is just the latest iteration of a bit of a bounce, and therefore I think it’s only a matter of time before the sellers come back in. It will be interesting to see how things play out going forward because everything has been so negative and of course, there’s also the possibility of the Iranians being able to pump oil into the market as well as we continue to see discussion around the Iranian nuclear deal.

One of the biggest drivers of prices going lower will be the strengthening US dollar and a lack of demand. The “reopening trade” seems to be over, so therefore it makes sense that oil demand will drop regardless. If we can break above the $100 level, I believe at that point the market may turn around completely, but until then I look at things as being suspicious to say the least.

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In this environment, it’s difficult to risk a lot of money on any one particular asset, let alone something with the volatility profile of Bitcoin.

• The BTC/USD currency pair bounced a bit Wednesday to show signs of life, gaining over 2%.
• That being said, we still face a lot of noise just above, and in particular at the $24,000 level.
• The $24,000 level is an area that has been difficult to get beyond for a while, so it’s not a huge surprise to see that this market has not necessarily taken off to the outside during the day.

Bitcoin Choppy and Following Risk Appetite

The 50-day EMA sits at roughly $21,000 and is rising, so that could be dynamic support on any type of pullback. Bitcoin has had a little bit of a resurgence over the last couple of weeks, but it is choppy to say the least. In fact, it almost looks like we are trying to form some type of basing pattern, so while it is bullish in its intention, that does not necessarily mean that we get some type of big rally. It’s possible that we could be in a major accumulation phase, but it does remain to be seen whether or not that’s going to be the case. After all, Bitcoin is pretty far out on the risk appetite spectrum, and risk appetite is somewhat all over the place currently. In this environment, it’s difficult to risk a lot of money on any one particular asset, let alone something with the volatility profile of Bitcoin.

If we do break down from here, the $20,000 level will be crucial support. Breaking through that could be quite a bit of a blow to the Bitcoin traders out there, perhaps making them scramble and kicking off the next wave lower. It’s not necessarily going to be an easy move or trade to get beyond, but I do think that given enough time this is a market that will have to make a bigger move. If we break it down, then $12,000 could be your target. If we rally from here, the $28,000 level will be the beginning of significant resistance it extends to the $32,000 level.

Breaking above the $32,000 level then allows for a longer-term move, perhaps to the $40,000 level. I don’t see that happening anytime soon, but if it does, all you can do is follow the market because at the end of the day, price is everything.

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The most likely scenario is going to be that volatility picks up and eventually we see more selling.

The Ethereum market bounced a bit Wednesday as the market is bouncing from the hammer that had been formed during the Tuesday session. The market looks likely to continue to go back and forth in this general vicinity, but the longer-term trend has not changed. Because of this, I still think you will have plenty of time to build a bigger position, which is my plan from a longer-term standpoint.

A lot could come down to risk appetite, which presently is in the dumps. The market has been very noisy over the last couple of weeks, and although we have seen a bit of a short-term breakout, the reality is that the market has not completely changed the trend at this point. Because of this, the market is likely to see a lot of back and forth, perhaps confusion more than anything else. That being said, I think the $1200 level is underneath, and therefore it’s likely that there will be a bit of interest in that area. If we break down below there, it’s likely that we go down to the $1000 level. If we break it down below the $1000 level, then it’s likely that the $900 level gets targeted.

If we see the market breakdown below the $900 level, things can get rather interesting. At that point, I would anticipate that we could go looking all the way down to the $500 level. It is in that general vicinity that I think you will see longer-term traders come in and build a bigger position. This is my plan, but obviously, there’s no way to predict the future, rather you prepare for it. It is because of this, that if we break above the $1800 level, I will have an eye on the $2000 level which would be the next target. Quite frankly, I don’t see that happening, but it is worth noting that the $2000 level is crucial. If we were to break above there, then the market is likely to continue to go much higher, perhaps entering a “buy-and-hold” scenario.

All of that being said, the most likely scenario is going to be that volatility picks up and eventually we see more selling. However, certainty is the one thing that we most certainly do not have in the crypto markets.

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It certainly looks as if we are going to go higher than lower.

• The Canadian dollar initially fell on Wednesday to reach down toward the ¥104 level.
• The ¥104 level is an area that has been previous support, soit’s not a huge surprise to see this market turnaround and show signs of life.
• In fact, by the end of the day, the pair ended up forming a bit of a hammer, which is telling considering that the crude oil market recovered quite nicely as well.

The 50-day EMA is at the ¥103 area and rising, and because of this, it’s very likely that we continue to see more of a “buy on the dips” type of attitude. This is especially true considering that the Bank of Japan is doing everything it can to work against rising yields, thereby essentially buying as many bonds as it takes. That is the same thing as printing currency hand over fist, so we should continue to see the Japanese yen suffer as a result.

Pay Attention to Crude Oil

However, you should keep in mind that the Canadian dollar is highly levered to the crude oil markets, so pay attention to how they are behaving to get a feel for how the Canadian dollar will do. In other words, if the crude oil market recovers, then it’s likely that we would see the pair do quite well. However, if oil takes a bit of a dip, it could either turn this market around and make a breakdown, or it may work against the upward momentum.

This looks like a market that is trying to do everything it can to show signs of life, and I think we continue to consolidate back and forth. The 50-day EMA might be reason enough for people to get long, but really at this point, I think what we are seeing is the market trying to chip away at the ¥106 level. The attitude of the market remains very noisy, so you should be very cautious about your position size. Regardless, it certainly looks as if we are going to go higher than lower. However, if we were to break down below the ¥100 level, that could change a lot of things as it would almost certainly have a certain amount of psychology working as well.

I believe in selling rallies at this point, but we may get a short-term bounce.

The German DAX stock market initially fell on Friday, but the €12,800 level seems to be hanging on as far as support is concerned, and it’s likely that the market may try to bounce from here. I see a lot of resistance above, so therefore I think it’s going to be difficult to get overly bullish but if you are short of this market, it’s probably time to start thinking about taking profits.

The €13,200 level is an area that I think will difficult overcome, although I suppose it is possible if the ECB starts to show more signs of accommodation after that, then the market will have the tangle with the €13,500 level, followed by the €13,600 level. It’s not until we break through all of that area that I would consider this a potential buying opportunity, and then I would anticipate that the DAX could make it to the €14,500 level.

We have seen a lot of selling pressure near €14,500 previously, so I would anticipate that there should be a significant amount of supply in that area. Breaking above that would obviously be longer-term bullish, but that’s a difficult thing to think of in this environment as traders around the world are worried about a global recession. Keep in mind that the German index is full of companies that are major exporters, and therefore other economies around the world have an outsized influence on this index. As long as that’s going to be the case, you will have to pay attention to the United States, Asia, and of course peripheral Europe.

The one thing that the DAX has going in its favor is that the euro is very cheap at the moment, and that does help the idea of exports moving around the world. German goods are cheap for a lot of economies right now, but if the customer is struggling to pay bills, I don’t know how much that helps in the long term. I believe in selling rallies at this point, but we may get a short-term bounce. Then short-term bounce should be thought of as an opportunity if you are patient enough, but if we were to turn around and break down through the hammer from the Friday session, we may simply fall apart and reach down toward the €12,500 level underneath.

The Euro has bounced from a major support level to show signs of life yet again. By doing so, the market looks as if it is ready to try to recover, but there are a lot of noisy areas above that could cause problems.

When I look at this chart, it’s obvious that the 1.04 level is supported, but I would also point out that the 1.06 level is likely to be significant resistance. Furthermore, the 50 Day EMA is just above there and is falling, so that should offer a bit of dynamic resistance as well. In that scenario, I fully anticipate that the market will continue to find a lot of noise between the two levels, as we try to sort out whether or not the Euro can save itself. I am of the camp that I do not believe it will.

The Federal Reserve is going to continue to tighten monetary conditions, which of course strengthens the US dollar overall. Furthermore, we have to keep in mind that the overall trend is to the downside, in trends in the Forex market don’t change very often. You continue to fade rallies in this market, you continue to get paid. The 1.04 level is stubborn, but you could have said the same thing about the 1.12 level, and perhaps even the 1.08 level.

The ECB is going to tighten its monetary policy, but it is so far behind the curve in relation to the US central bank that the trajectory still remains lower. Furthermore, if we are going to get a bit of a global slowdown, the US dollar suddenly becomes much more desirable, because it becomes a “safety asset.”

If we do break above the 1.06 level, then I think the 1.08 level is going to be very difficult to break above. Quite frankly, I think this is the type of market where you look for a rally that you can fade. That’s probably what I will be doing as I close the book this weekend, but I would like to see some type of exhaustion that I could start selling into. If we do break down below the 1.04 level, then the 1.02 level is targeted, followed by the parity level. That being said, the Euro is almost always choppy.

The Australian dollar looked as if it was going to break down during the trading session on Thursday but turned around and bounced rather hard from the 0.6850 region. This is an area that has been crucial more than once, so it’s not a huge surprise to see a bit of support in this area. Whether or not this is a sustainable move is the real question, and I suspect that it is not.

The 0.70 level above should offer a significant amount of psychological and structural resistance, so somewhere between here and there, I will be looking for signs of exhaustion so that I can start selling again. Interest rates in America continue to climb, although it must be stated that the Thursday session was probably a bit out of bounds anyway, as it was “end of the month rebalancing” for US stock traders and large institutions.

That being said, the first signs of exhaustion between here and the effort mentioned 0.70 level, I am more than willing to start shorting. If we were to break above the 0.70 level, then I might step back and let the market bounce even higher before starting to short again. It is near the 0.7250 level that I would consider the trend may be changed, but only if we get a sustainable daily close above there. I think that the Australian dollar will continue to suffer at the hands of the commodity markets getting squeezed, as global growth is almost certainly going to dissipate. If that’s going to be the case, it’s very difficult to imagine a scenario where some of these commodity currencies will really start to take off.

Keep in mind that the Federal Reserve is hell-bent on taming inflation, meaning that they are not paying attention to most markets. In fact, some have even stated that they are “waiting for something to break.” I don’t think it will be the Australian dollar, but obviously, there will be a risk appetite component to whatever happens next. That will show up on this chart, as the Australian dollar is considered to be a “risky asset”, mainly because of its exposure to China and hard commodities in general. The US dollar is a “safe haven currency”, skewed than in the back of your mind as well. As long as there is fear and uncertainty, this market has a hard road ahead.

It’s going to be choppy, so you need to be cautious with your position size.

The West Texas Intermediate Crude Oil market rallied a bit on Friday as we had been testing a major uptrend line. By counting the way we have, it confirms that we are still very much in an uptrend, or at least trying to save that uptrend. It is worth noting that the uptrend line sits just above the $100 level, so I do believe that the $100 level will continue to be important. In fact, it is essentially how I am going to define the overall trend, as a move below that level would have a lot of psychological influence on where we go next.

While things have been noisy over the last two weeks, it’s interesting to see that the trendline has held. If we turn around and recapture the 50-day EMA, just above the $110 level, I think it will bring in quite a bit more money, and people will be much more comfortable going long. Keep in mind that there are a lot of crosscurrents right now when it comes to crude oil, not the least of which would be fears about recession. In a recessionary environment, there will be less demand for crude oil, so that of course is negative for price. However, at the same time, we have to factor in the reality that during the pandemic very little in the way of drilling or exploration was done, so the market still has to deal with the supply catching up to the true demand.

China continues to go back and forth as to whether or not they are going to open up fully, and that has a huge influence on what happens with oil prices as China is the world’s largest consumer, followed by the US which is most certainly seeing a slowdown. With this being the case, it’s likely that we will continue to see a lot of choppy volatility, but as long as we can stay above the $100 level, I look at this through a prism of finding value. If we break above the $110 level and the 50-day EMA, I believe that it opens up the possibility of going back to the high again. Regardless, it’s going to be choppy, so you need to be cautious with your position size.