EUR/USD plummets to new 19-year low.

My previous EUR/USD signal last Wednesday produced a losing short trade from $1.0195, although the same level was later rejected to provide the high of the day, so I was correct about that resistance level.

Today’s EUR/USD Signals

Risk 0.75%.

Trades may only be entered between 8am and 5pm London time today.

Short Trade Idea

• Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $0.9950 or $1.0000.
• Place the stop loss 1 pip above the local swing high.
• Move the stop loss to break even once the trade is 20 pips in profit.
• Take off 50% of the position as profit when the price reaches 50 pips in profit and leave the remainder of the position to run.

Long Trade Ideas

• Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $0.9900, $0.9850, or $0.9800.
• Place the stop loss 1 pip below the local swing low.
• Move the stop loss to break even once the trade is 20 pips in profit.
• Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

EUR/USD Analysis

In my last analysis of the EUR/USD currency pair on 17th August, I saw the technical picture as more bearish following the breakdown below the ascending trend line, which was confluent with a clear level of resistance at $1.0195, which was also quite confluent with the round number at $1.0200. I saw a short from there as the best potential trade of the day and I was not wrong, although the initial rejection during the New York session saw the high exceeded again later.

The technical picture now is even more bearish, as the price plummets through blue sky to new 19-year lows which have not been seen since 2022, well below parity.

There are no obvious support levels, except perhaps round and half numbers.

There is strong bearish momentum, and longer-term traders could have a good opportunity to go short if we see a bullish retracement to $0.9950 or even the parity level at $1.0000.

Shorter-term traders can try to ride the momentum by selling rallies on short-term time frames, perhaps being cautious of trading right into any major round numbers.

Trend traders will not want to miss the bearish momentum here.There is a very strong bullish market and long-term trend in the US Dollar, with the Euro one of the weakest major currencies (the British Pound is the other), so we can expect plenty of action here today as this pair is in the market’s focus.

Concerning the USD, there will be a release of Flash Services PMI data at 2:45pm London time. Regarding the EUR, there will be releases of French, German, and British PMI data between 8:15am and 9:30am.

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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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Ultimately, I prefer the US dollar against almost all currencies, this one included.

• The AUD/USD currency pair went back and forth Wednesday
• The pair continues to dance around the crucial 0.68 level.
• It’s likely that we will end up seeing further downside pressure.
• The Australian dollar is highly levered to the commodity markets, and you need to pay attention to what’s going on in those markets to get an idea of what’s going to go on in this market.

Time to Start Shorting?

As you know, commodities have been getting slaughtered as of late, so that is not going to help the Aussie anytime soon. I believe at this point it’s likely that rallies will get sold into, especially near the 0.69 level, which is an area that has been significant support previously and should now have a bit of “market memory” attached to it. In other words, I would anticipate a lot of selling pressure. At the first signs of exhaustion near that level, I will not hesitate to start shorting the Aussie.

If we break down below the bottom of the lows over the last week, it’s likely that we will continue to see the US dollar strengthen quite drastically, driving the AUD/USD pair down to the 0.67 handle. They break down below that level and could open up even more aggressive shorting, sending this market down to the 0.65 level. Ultimately, I don’t have any interest in buying this market anytime soon as the Aussie is limp, despite the fact that there was a surprise interest rate hike from the Reserve Bank of Australia just a couple of days ago.

The 50-day EMA sits just above the 0.70 level, and I think that would be the absolute “ceiling in the trend.” Because of this, the market is likely to respect that as a very difficult barrier to overcome, and I don’t think that it will happen. However, if it did, then you would have to pay close attention to this market because I think at that point, we could go to the 0.72 level. The 0.72 level is an area that currently features the 200-day EMA, so you should pay close attention to it. Ultimately, I prefer the US dollar against almost all currencies, this one included.

Things are so bad in the European Union that they are talking about rationing energy, and that  is going to continue to weigh upon the economy.

• The German DAX index drifted a little bit lower to kick off the trading session on Monday.
• The index broke down below the €12,500 level, before bouncing a bit.
• By the end of the day, we ended up forming a bit of a hammer.

This suggests that we could get a bounce, but it’s also telling that we continue to threaten the same support level time and time again. In other words, it’s very likely that we will continue to see rally sold into, which makes quite a bit of sense considering what is going on around the world.

Economic Impact

Keep in mind that the DAX has a lot of export-laden companies built into it, so the rest of the world certainly has a major influence on what happens in Germany. With the entirety of the world looking likely to go into some type of recession, this has a major influence on these exporters and German markets will probably continue to struggle. Furthermore, you also have to worry about the fact that the German economy looks like it’s about to take a major nosedive.

Things are so bad in the European Union that they are talking about rationing energy, and that  is going to continue to weigh upon the economy. That being said, I think we are going to see a situation where we get a little bit of a bounce, but a lot of people will be looking at that bounce as a shortening opportunity. At the first signs of exhaustion, it’s very likely that this market falls, especially with the 13,000 level above being a large, round, psychologically significant area of resistance, and of course has shown itself to be important in the past. Above there, the 13,250 level is another area that you need to pay close attention to.

The alternative is that if we break down below the bottom of the candlestick from Tuesday, the market is likely to drop down to the 12,250 level, possibly even the 12,000 level after that. We have been falling rather hard recently though, so I think it’s more likely that we see a bounce here in order to build up more downward momentum. If we break above the 50-day EMA, then it’s possible that we could see a move to the upside, but that would take a massive shift.

There’s nothing on this chart that looks remotely bullish.

Cardano has done very little over the last couple of weeks, as it has been hanging out just above the $0.45 level. This is a market that looks as if it is killing time until it decides what its next move is. The fact that we have sat in the same area for a little while does provide a little bit of comfort for those who were bullish on Cardano, but at the end of the day, the fact that we have not rallied it all should probably be the focus.

If we were to break down below the $0.45 level on a daily close, then I think Cardano has further to fall. Regardless, Cardano is going to struggle in this environment, as the crypto world itself is falling apart. There are a lot of projects out there that have absolutely no business being traded because they are never going to do anything. I’m not saying that about Cardano, but there is going to be a great reckoning over the next year or two, because we have reached the point as we did in 1999 with tech stocks.

Eventually, you have to turn some type of profit or actually be used for something other than a pet project. As things stand right now, crypto has a lot of promise but at the end of the day, it’s not overly useful the moment. Because of this, and the massive speculation that we had seen in some of the smallest coins, there is a lot of financial destruction that people will have to sit on top of before they can dip their toes back into the water. There have been a lot of people wiped out by the crypto meltdown, so it’s going to take some time to build that trust back up. However, if you are a longer-term believer in the Cardano ecosystem, and I certainly think there is something to be said about it, you should welcome these breakdowns because they will offer longer-term investing opportunities. As far as trading goes, the only thing you can do with crypto right now is short every rally that comes along. The 50-day EMA sits at the $0.60 level and is dropping toward the current price action. There’s nothing on this chart that looks remotely bullish.

It looks like things are going to get much worse before they get better.

The British pound tried to recover a bit on Tuesday but then collapsed at the 1.22 level to turn around and fall straight through the floor. In fact, by the end of the day, we were threatening the 1.20 handle, an area that looks like it is going to break apart. This is a downtrend that has legs at this point, especially as the US dollar continues to strengthen overall, and the interest rates in America continue to climb as well.

As the world heads toward a potentially devastating recession, I do think that it is probably only a matter of time before we see the US dollar act like a wrecking ball against almost all currencies, this one included. Rallies at this point should be selling opportunities, as we are in such a strong downtrend. At this point, I don’t necessarily have a longer-term target, but I would anticipate that the 1.18 level could be the target over the next several weeks. Quite frankly, this is a horrific-looking chart, and it looks like we are going to go much lower given enough time. The fact that we are closing at the very bottom of the range does suggest that we have more follow-through coming, and with that in mind, I think that the market is going to continue to see reasons to get short.

At this point, the 50-day EMA sits at the 1.26 level and is currently lower. That should be a significant amount of dynamic resistance as well, so I think we are looking at a scenario where we need to break above there on a daily close at the very least, and really at this point, I don’t see that happening. Any balance should be an opportunity to pick up “cheap US dollars” going forward. Because of this, the market will continue to see plenty of downward momentum.

The Federal Reserve is going to have to get extraordinarily tight with its monetary policy, and I think that’s going to continue to be the case. As long as that’s the case, the US dollar is the king of all currencies. In fact, it looks like things are going to get much worse before they get better.

The price has room to rise to $33,445.

Previous BTC/USD Signal

My previous signal on 9^th May was not triggered, as there was no bullish price action at any of the key support levels I had identified when they were reached that day. Unfortunately, the price came close to $33,828 but never quite reached that level.

Today’s BTC/USD Signals

Risk 0.50% per trade.

Trades may only be entered prior to 5pm Tokyo time Wednesday.

Long Trade Ideas

• Go long after a bullish price action reversal on the H1 timeframe following the next touch of $28,607, $27,981, or $27,487.
• Put the stop loss $100 below the local swing low.
• Move the stop loss to break even once the trade is $100 in profit by price.
• Remove 50% of the position as profit when the trade is $100 in profit by price and leave the remainder of the position to ride.

Short Trade Ideas

• Go short after a bearish price action reversal on the H1 timeframe following the next touch of $33,445 or $33,828.
• Put the stop loss $100 above the local swing high.
• Move the stop loss to break even once the trade is $100 in profit by price.
• Remove 50% of the position as profit when the trade is $100 in profit by price and leave the remainder of the position to ride.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

BTC/USD Analysis

I wrote in my last piece on 9^th May that Bitcoin had fallen with strong bearish momentum after breaking down from a consolidating triangle chart pattern and entered what had historically been a very pivotal zone, from the support level at $28,607 to approximately $35k. I thought that if the price could get established below the support level at $28,607 it could quickly fall to $10k or even lower.

The price did get established below $28,607, but my call was not great as the price rebounded quite firmly and is now making a bullish consolidation above what is again the nearest key support level at $28,607.

I see Bitcoin’s recovery from the price area below $28,607 as technically significant, showing that buyers are still prepared to step in strongly when Bitcoin reaches long-term lows.

If the support level at $28,607 does not break down, I see the next likely price movement for Bitcoin as upwards to the next resistance level at $33,445.

I will be happy to take a long trade here if we get a retracement to $28,607 and a bullish bounce off that level.

Concerning the USD, there will be a release of Retail Sales data at 1:30pm London time.

There is a pivotal zone above $28,607.

Previous BTC/USD Signal

My previous signal on 26^th April was not triggered, as there was no bearish price action at any of the key support levels I had identified when they were reached that day.

Today’s BTC/USD Signals

Risk 0.50% per trade.

Trades must be taken before 5pm Tokyo time Tuesday.

Long Trade Ideas

• Long entry after a bullish price action reversal on the H1 timeframe following the next touch of $32,817, $31,630, $31,015, $30,000, or $28,607.
• Place the stop loss $100 below the local swing low.
• Adjust the stop loss to break even once the trade is $100 in profit by price.
• Take off 50% of the position as profit when the trade is $100 in profit by price and leave the remainder of the position to run.

Short Trade Ideas

• Short entry after a bearish price action reversal on the H1 timeframe following the next touch of $33,828, $34,908, or $35,583.
• Place the stop loss $100 above the local swing high.
• Adjust the stop loss to break even once the trade is $100 in profit by price.
• Take off 50% of the position as profit when the trade is $100 in profit by price and leave the remainder of the position to run.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

BTC/USD Analysis

I wrote in my last piece on 26^th April that the best potential trade was a short trade from a bearish reversal at either of the nearby resistance levels, with $40,907 looking attractive, and $41,706 looking likely to be strong as it was confluent with the descending bearish trend line.

This was a good call as although the price never quite reached the nearest resistance level, I was right to see this as a pivotal area as the price fell without getting above it, after getting very close to it.

Bitcoin and cryptocurrencies in general have continued their declines for several weeks, and the bearish momentum had increased after the breakdown below the consolidating triangle pattern, which can be seen drawn with trend lines within the price chart below.

The price of Bitcoin has now entered what has historically been a very pivotal zone, from the support level at $28,607 to approximately $35k. The price has penetrated this zone and is showing no sign yet of a bullish reversal.

I see two scenarios approaching, either of which might be traded very profitably:

1. If the price can get established below the support level at $28,607 it could quickly fall to $10k or even lower, as the price moved very quickly between these price levels in its initial ascent.

2. If the price makes a bullish rebound, and Bitcoin continues to be bought every time it dips a little bit below the big round number at $30k, we could see a major bullish reversal, and an excellent risk reward ratio presented by a speculative long trade from this area of entry.

I think the best approach right now is to be prepared to go short from a reversal at any of the nearby resistance levels, but to trade small if the price remains above $28,607. Alternatively, a long trade might be a good opportunity if taken from a bounce off $30k or $28,607.

As a final note, the decline of cryptos should be taken as a lesson by newer traders that no matter how hot an asset looks and how far it rises, prices can go down as well as up. Bitcoin below $10k by the end of May is quite possible, though I am not forecasting that it is going to happen.

There is nothing of high importance scheduled for today concerning the USD.

Expect noise, nothing more, nothing less.

Bitcoin has fallen a bit during the trading session on Monday to break below the $39,000 level initially. However, we did bounce ever so slightly at the end of the day. If we break down below the bottom of the candlestick for the Monday session, that is likely we go looking to reach the $37,500 handle. That is an area that has offered support multiple times, so it of course is important to pay close attention to.

If we were to break down below that level, then I think it is possible that we could go down to the $35,000 level, which breaking below there then opens up significant selling pressure and perhaps even the possibility of kicking off “crypto winter.” The market has been very noisy for quite some time, and therefore it is likely that we will continue to see a lot of choppy behavior.

Turning around opens up the possibility of an attempt on the 50 Day EMA, which is sitting at the $42,500 level. The market then has to deal with the $44,200 level, where the 200 Day EMA sits. Breaking through all of that could open up the possibility of a move higher, perhaps even trying to get back to the $50,000 level. The $50,000 level of course is a large, round, psychologically significant figure, and I think would offer a bit of a “ceiling in the market.”

The only thing I think you can count on in the Bitcoin market is a lot of choppy volatility. After all, the market has been noisy for quite some time, and therefore I think we will continue to see more or less a sideways market, which shows a lot of indecision. The question now is whether or not the consolidation leads to continuation, or if it is a turnaround to show signs of strength.

Keep in mind that the Bitcoin market is highly sensitive to risk appetite due to the fact that Bitcoin is such a volatile asset. Until we get stability in some of the more traditional markets, it is difficult to imagine that the Bitcoin market will be able to find stability as well. The candlestick does suggest that we could go lower, but I also recognize that there is a lot of support just below that will come into the picture. Expect noise, nothing more, nothing less.