This remains a “paid the rally” type of market, but perhaps more or less from a shorter timeframe than I normally trade from.

The GBP/USD currency pair continues to see a lot of noise right around the 1.20 level, an area that has been important multiple times. By hanging around this area, it shows that the market is not quite ready to break down, and therefore it’s likely that we will do more sideways action than anything else. This does make a certain amount of sense as the world is trying to figure out what central banks are going to do.

The Jackson Hole Symposium next week will almost certainly influence the markets as well, as several central bankers around the world will meet and give speeches. The British are now worrying about inflation that is running at over 10% year-over-year, although the Americans are still at 8.5%. This is a market that I think will continue to be very noisy and trying to figure out who’s going to be the more hawkish of the two.

The Federal Reserve continues to try to convince people that they are going to be hawkish, but it’s possible that they may already be looking at slowing down a bit if the June Federal Open Market Committee Meeting Minutes are to be believed. That’s obviously in the past, but that was released during the day, and it suggested that perhaps there are some second thoughts at this point.

Markets Continue to be Noisy

• If we break it down below the 1.20 level, then it’s likely that this market will go hunting the 1.18 level underneath, an area that has a lot of previous support.
• This is from a short-term perspective.
• Breaking down below that level then opens the possibility of even more US dollar strength.

At this point, it looks as if the world is going into a global recession, so I think that it is probably only a matter of time before the US dollar picks up strength on any bounce. In fact, I have no interest whatsoever in trying to buy this market until we get above the 1.26 level, something that I don’t see happening anytime soon. It remains a “paid the rally” type of market, but perhaps more or less from a shorter timeframe than I normally trade from. Markets continue to be noisy, so you may need to watch interest rates in both of these countries get a bit of a heads up.

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I’m using the 200-Day EMA as a bit of a signal as to which way we’re going.

The S&P 500 Index has pulled back during the trading session on Wednesday as we continue to see a lot of noise right around the 4300 level. The E-mini contract also has the 200 Day EMA sitting just above there, so it does make a certain amount of sense that we have seen a lot of noisy behavior in this general vicinity. Furthermore, you can make an argument that perhaps the market is a little overbought at this point.

The fundamental situation has not been good. Wall Street continues to start buying stocks every chance it gets since traders are hoping that the Federal Reserve will step off the brakes, giving the opportunity for cheap money to be able to gamble with again. This is the monster that the Federal Reserve has created, and therefore it’s the monster that they must deal with.

If we were to turn around a break above the 200 Day EMA, it would open quite a bit of buying pressure, perhaps sending this market all the way up to the 4500 level. The E-mini contract has been very bullish right along with the underlying index, but at this point, it’s likely that we will continue to see a lot of pressure.

Forecast for S&P 500

• If we do break down below the bottom of the candlestick for the trading session on Wednesday, then it’s possible that we could pull back to the 4100 level.
• We are going to see a lot of back-and-forth and noisy trading.
• This is a market that I think will continue to move on the latest perception of the Federal Reserve.

Next week we have the problems with the central bank speakers at the Jackson Hole Symposium. They will be doing everything they can to be serious about fighting inflation, so I think we continue to see a lot of chop and back and forth. However, I’m using the 200-Day EMA as a bit of a signal as to which way we’re going. In general, it’s obvious that there is a lot of buying pressure, but at this point in time I don’t think confidence is something that is a for sure deal.

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This is a market that I think will be choppy and difficult to put a lot of money in.

• The AUD/USD currency pair pulled back a bit from the crucial 0.70 level, as we have seen happen multiple times.
• As we wait for the CPI number to come out on Wednesday, it’s likely that we are going to see some type of bigger move.
• If the CPI number comes out hotter than anticipated, which would be the 0.5% level month over month, that could send this market reeling to the downside.

On the other hand, if we turn around a break above the 0.7050 level, then it’s probably going to be a result of the CPI number coming out cooler than anticipated. In that scenario, it’s possible that market participants may do everything they can to convince themselves that the Federal Reserve is going to loosen monetary policy. While that may take some of the aggressiveness out of the situation, the reality is that we are still very much in a downtrend, and for multiple reasons.

Commodity Markets Selling Off

When you look at commodity markets, they have been selling off in general, and that of course puts a bit of negativity into the Aussie dollar. I think given enough time, we will probably try to test the lows again, but I don’t think necessarily that it is a market that we should be buying. However, there are a couple of levels above that could cost some issues anyway. Not the least of which would be the 200-day EMA which is sitting just below the 0.72 level.

If we turn around and start falling apart, the 0.69 level is an area where I would see a lot of support, and if we break down below that level then we will almost certainly try to get down to the low at 0.67. Keep in mind that there is a lot of economic and inflationary noise out there that is going to cause this market to be choppy at best. The 50 Day EMA is right in the middle of the consolidation area that we are in right now, so that will attract a certain amount of algorithmic trading as well. This is a market that I think will be choppy and difficult to put a lot of money in. However, we should get a bit more clarity by the end of the Wednesday session, so analysis tomorrow will probably be much more convincing.

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If you are a longer-term trader, then you can buy little bits and pieces, but a short-term trader has to be looking to the downside, and the downside only.

The Bitcoin market has fallen during the trading session on Thursday as it looks like we are ready to test the $20,000 level again. This is an area that is a large, round, psychologically significant figure, and therefore if we were to break down below the $20,000 level, I think it opens up a rush of new selling. The previous session formed a hammer, so if we were to break down below it, that would also signify rather negative pressure.

On the other hand, if we were to rally from here it’s likely that we will see significant selling pressure above. The market breaking above the $24,000 level might kick off a bit of a relief rally, but that is all that it will end up being. Ultimately, this is a market that I think will have plenty of sellers above as the people that jumped in during the previous consolidation area will be willing to get out as close to “break-even” as they possibly can. Crypto is almost dead at this point. Don’t get me wrong, there is a significant amount of interest in the crypto markets going forward, but there are a lot of them that are going to zero.

Over the next several months, if not several years, I anticipate the crypto is going to underperform. This makes sense as we have seen so many ridiculous “meme coins” attract a lot of attention over the last two years. We’ve also seen a lot of fraud, and therefore the entire industry is looking suspicious to most traders at this point. However, this is a lot like the technology selloff in 1999, there will be a handful of winners that go on for decades. After all, there was a point where Google and Amazon both got absolutely crushed along with the rest of the .com stocks. This is essentially where we are at right now, so you need to pay attention to the big coins. At this point, the only thing that is likely is that Bitcoin and Ethereum should continue to have a use case scenario, so starting with these two markets would be the first way to recover. If you are a longer-term trader, then you can buy little bits and pieces, but a short-term trader has to be looking to the downside, and the downside only.

In the short term, I think €13,500 would probably be a major accomplishment by the short-sellers.

The DAX fell rather hard on Thursday as we continue to see a lot of negativity. Stock markets around the world are trying to figure out whether or not inflation, and central bank policy, will continue to work against stocks. It’s kind of interesting to see how this is running concurrently around the world. The German index obviously is not going to be immune to global issues, especially as so many of the major constituents of the DAX are massive exporters.

Underneath, I do see a significant amount of support, especially near the 50-day EMA. If we can break it down below the 50-day EMA, it’s very likely that the DAX will go much lower. However, there is a lot of noise between here and there, and I don’t think it’s going to be easy. On the upside, the €14,700 level also features the 200-day EMA, so I think that’s going to be a formidable barrier to break above. In fact, if we can break above there, then it is likely that we will go much higher. That being said, we would need to see some type of good economic news, or perhaps the ECB threatening to throw even more liquidity into the system.

I think it’s much more likely that we break to the downside, but in the short term it looks like we are more likely than not willing to hang around and chop back and forth. Because of this, if you are a short-term trader you will more than likely continue to look at these two moving averages as barriers. Once we do break out of this area, it would make sense that we could go down to one of the blue circles that I have on the chart. I think that is the most likely scenario but I would also point out that there has been a significant amount of momentum, so I think what we will probably see is an attempt to get down to one of those. Whether or not we break to a fresh, new low is a completely different question, but in the short term, I think €13,500 would probably be a major accomplishment by the short-sellers.

It certainly looks as if we have been rather bullish as of late, but one could make an argument for a bit of a rising wedge as well.

The DAX initially rally on Monday to slam into the €14,750 region. This is where the 200-day EMA resides, so a lot of technical traders probably started to get short in that area. At this point, the market is forming a bit of a shooting star for the training session, and looks as if we may be running out of momentum. If we break down below the bottom of the candlestick, then could perform the necessary move to get others to short the market.

That being said, I don’t think it’s going to be easy to short the DAX, as there is so much noise just below. More likely than not, we will see a lot of noise in this general vicinity, as traders try to figure out what they’re going to do next. That being said, if we were to break above that 200-day EMA on a daily close, it almost certainly sets up a huge fight at the €15,000 level. A lot of this is going to come down to how people view the European economy, as Germany is by far the biggest part of it.

The DAX also is made up of a lot of exporting companies, so you will have to pay attention to the global economy, and how it performing to see whether or not there is going to be demand for goods from these companies. If the global economy starts to shrink again, that will certainly be filed in the DAX, although it may not be as prominent as it will be in some of the other indices on the continent. After all, the DAX is considered to be the “blue-chip index” for the region, so this is the first place money runs to. It’s also the last place money runs from.

If we fall from here, the 14,250 level has structural support, as well as the 50-day EMA sitting right there as well. Because of this, I think it’ll be a very interesting place to see how the market behaves, and it could give you a bit of a “heads up” as to where we are going longer term. It certainly looks as if we have been rather bullish as of late, but one could make an argument for a bit of a rising wedge as well.

Gold markets have fallen rather hard during the trading session on Friday to reach down to the $1800 level. The $1800 level is an area where we have seen a lot of noise in the past, and where we had taken off from. Because of this, is very likely that the market will be looking for this area as an opportunity to stabilize, so it will be interesting to see how this plays out. If we can break above the top of the candlestick, then it is possible that we could go looking to the 200 Day EMA at the $1860 level.

The market continues to see a lot of noisy behavior, mainly due to the US dollar strengthening. The US dollar strengthening and then of course interest rates rising in the United States will continue to be a major sell-off in the bond market. As long as the interest rates in America continue to rise, it is possible that the gold market continues to suffer. However, in the last couple of days, we have seen the bond market rally a bit, and that could be the beginning of something. It would tie in quite nicely at the $1800 level, so it is likely that we will see some type of reaction.

If we do break down below the lows of the day, that could open up a bit of a trapdoor and send this market much lower. In that scenario, we would probably have massive movements in the bond market, and of course the US dollar. That being said, even if we are trying to form a little bit of a bottom in this area, it is going to take some time. With that in mind, I think you are looking at short-term trading at best, and you will have to keep in the back of your mind that there is a lot of potential noise out there when it comes to geopolitics, inflation, and numerous other issues in the currency markets. Because of this, you need to be very cautious about your position sizing and recognize that if the trade is working against you, you need to get out of the way quite quickly. Gold can be very volatile, and one has to wonder whether or not we rallied a bit late on Friday due to profit-taking?

Rallies will more than likely be sold into, as we continue to see quite a bit of bearishness.

Gold markets gapped lower to kick off futures trading Tuesday morning, only to turn around and fill that gap. After that, the market then fell to break below the crucial $1850 level. At this point, it looks as if the gold market is going to continue going lower, perhaps falling drastically given enough time. The $1800 level looks to be the target next, and with the crucial CPI figures coming out on Wednesday, that could be the catalyst.

The Consumer Price Index coming out of the United States is a major indicator of inflation, which is expected to be hot. If it comes out extraordinarily high, then it is likely that the markets will anticipate that the Federal Reserve will become extraordinarily aggressive with its tightening policy, which is what has been driving bond yields higher, and gold lower right along with them. At this point, is becoming a bit of a “feedback loop”, so the CPI number will be the next major influence as to what happens next.

From a longer-term standpoint, you can make an argument that breaking below the 200-day EMA is a signal that we are starting to see even further weakness, so technical traders will be looking to short this market as well. Even if we do rally from here, I anticipate that the market will probably have to pay close attention to the reaction immediately after the breakout to the upside because there is so much in the way of noise between the 200-day EMA and the 50-day EMA which is sitting at the $1912 level and falling.

The market has been falling lower for quite some time, and it does seem like we are on the precipice of something big based on the momentum, which is why think Wednesday could be so crucial for gold. If we were to break down below the $1800 level, then the market will more than likely start to unwind quite drastically at that point. On the other hand, if we were to break above that 50-day EMA, it is likely that we could see gold try to make an attempt to the $1970 level, but that seems to be the most difficult move to make, so I do think that rallies will more than likely be sold into, as we continue to see quite a bit of bearishness.

When you look at this chart, you can see that we are in a massive downtrend.

The euro bounced a bit on Friday as we had initially fallen to reach the 1.05 level. The 1.05 level is a large, round, psychologically significant figure, and an area where we have seen a lot of noise just below. Because of this, the market is likely to continue seeing buyers underneath, but given enough time I do think that it is probably only a matter of time before a bounce will get sold into.

When you look at this chart, you can see that we are in a massive downtrend. The 50-day EMA currently is at the 1.0861 level and falling, and more likely than not will reach the 1.08 level rather quickly. The 1.08 level is an area that had previously been significant support, so now “market memory” would dictate that it should be resisted. Any rally at this point will more than likely have to contend with that to make any serious move to the upside. Furthermore, we also have the 1.0933 level above there that has been significant resistance.

Looking at this chart, I think if we break above the 1.06 level, then we are looking for signs of exhaustion so that we can start selling. On the other hand, if we break down below the 1.05 level, we will probably go looking to reach the 1.03 level. There is a lot of noise between those two levels, and I think it will be difficult to break down all of this. When you look at the longer-term chart, that is an area that has been important more than once.

If we do break down below the 1.05 level, it is likely that it will be very slow-moving, because we are far too well supported to think that we are simply going to slice through there. Keep in mind that the European Central Bank is going to continue to be loose with its monetary policy, while the Federal Reserve is likely going to be tight going forward. In fact, Jerome Powell has said just this past week that there are going to be at least two 50-basis point rate hikes coming rather quickly. This continues to have people looking for the US dollar to rise, and the euro by default will certainly be a victim of its strength.

Shorting is impossible at this point, but if we do see another breakdown in the yen-related pairs, this might be one worth exploring.

The Canadian dollar bounced on Wednesday at the ¥99 level, an area that should capture a lot of attention because it has historically been very important. Furthermore, we had initially seen a major push lower when we pierced that level for the first time, so now that we have pulled back to retest this area, a bit of buying pressure would make quite a bit of sense.

At this point, it could come down to the oil market perhaps driving the Canadian dollar higher, or it may just simply be all about the Japanese yen. After all, the Bank of Japan continues to do everything it can to drive down yields, and this means that they are essentially “printing yen.” That works against the value of the currency, and this has been reflected in the markets over the last several weeks. That being said, we had gotten overdone, and this massive pullback has made a certain amount of sense. That pullback allows for people to pick up the trade at lower levels, which is certainly something that looks like we are going to do.

Unless the Bank of Japan suddenly changes its attitude, it is difficult to imagine a scenario where we would see the Japanese yen recover for a longer-term move. Even if we break down below the ¥99 level, I see a lot of support all the way down to at least ¥97, so therefore it is probably only a matter of time before the market bounces. The market is obviously in a bullish move and as a result, I have no interest in trying to short this market until we break down below the 50-day EMA at the very least.

If crude oil starts to rally, then that will more likely than not supercharge this pair, because Canada being a major exporter of oil and Japan importing all of its oil sets up almost perfectly. Because of this, this is a market that I will be paying close attention to, as it looks like oil is trying to support itself again. A move to the highs would make sense, which is near the ¥103 level. Shorting is impossible at this point, but if we do see another breakdown in the yen-related pairs, this might be one worth exploring.