Any rally between here and there is going to be thought of as a potential shorting opportunity in order to pick up “cheap US dollars.”

• The EUR/USD currency pair fell hard Wednesday to break down below the 1.02 level.
• The 1.02 level is an area that has a certain metapsychology attached to it, so it is worth paying close attention to.
• If we were to break down below that level significantly, then it’s likely that we go looking to the parity level next, which is my longer-term target to begin with.
• This is a market that I think will continue to draw from here, as the market continues the overall downtrend.

The US dollar will continue to strengthen against the Euro due to the fact that the Federal Reserve is tightening monetary policy, and the economy in the United States continues to outperform the European Union. Ultimately, this is a market that I think will find plenty of selling opportunities above, especially near the 1.04 level if we get some type of relief rally. However, the last couple of candlesticks have shown us just how negative the market is, so you should pay close attention to it. I have no interest whatsoever in trying to buy the euro right now, as they are worried about energy in the EU, not necessarily something that bodes well for the outlook of the economy.

The Parity Level

At this point in time, I think parity is going to be hit sooner rather than later, so you should pay close attention to the overall attitude of the market. As long as we have more of a “risk-off” type of situation out there, parity is the most likely outcome. In fact, if we look at longer-term charts, you can make an argument for the market blowing through parity and going all the way down to the 0.85 level. I don’t know if that happens, but it’s a theoretical possibility.

As far as buying is concerned, the market would have to break above the 1.06 level to even begin to show signs of strength that you could pay attention to. Any rally between here and there is going to be thought of as a potential shorting opportunity in order to pick up “cheap US dollars.” In that scenario, you simply will fade rallies at the first signs of exhaustion and profit time and time again. The trend is ensconced and getting stronger.

This is a market that continues to offer plenty of selling opportunities as we have seen for quite some time.

The S&P 500 fell hard on Tuesday, slicing through the 3900 level. At this point, it looks as if the S&P 500 is going to threaten the 3800 level, and perhaps even lower than that. The market is likely going to continue to be one that gets sold off every time it tries to rally, as the market is so bearish. This is a market that has a massive barrier in the form of 4000 above, and it’s not until we break above there that you can take any rally remotely seriously.

The 50-day EMA sits just above the 4000 level, and if we can break above there, then it’s possible that we could pick up a little bit more momentum. However, the market breaking above the 4200 level is what is needed in order to have this market really take off to the upside. I don’t see that happening, at least not without the Federal Reserve doing something to help risk appetite, as the market seems to continue to worry about the idea of monetary tightening.

The length of the candlestick is rather long, and the fact that the market is closing towards the bottom of it does suggest we probably have further to go, but keep in mind that shorting the market is always a bit of a tricky move to make, as indices in the United States are not built to fall for any significant amount of time. Short-term rallies continue to be selling opportunities, assuming that we even get one. The 3700 level underneath could be supportive, and after that, the 3650 level could be important.

If we were to turn around and take out the top of the channel, then it’s possible that we could see a little bit of momentum, but one of the potential stories that people are talking about is “end of the month rebalancing” to send the market higher, but that may have already happened last Friday. Nonetheless, this is a market that continues to offer plenty of selling opportunities as we have seen for quite some time, and until the Federal Reserve changes its tune, it’s very likely that we will have to see Jerome Powell himself start to suggest that interest rate hikes are not going to happen. The bond markets certainly don’t believe that’s going to be the case.

At this point, the market is likely to continue its downward trajectory.

Monero got eviscerated on Monday to show signs of extreme weakness, as the 50-day EMA has offered a bit too much in the way of resistance. Further backing up the 50-day EMA is also the 200-day EMA, both going sideways and showing signs of hesitation. At this point, the market forming the big red candlestick that we have suggests that we are going to continue to go lower.

It should be noted that Bitcoin got hammered, and this has a major knock-on effect when it comes to smaller coins like Monero. The crypto markets in general are in a lot of trouble, and with the strengthening US dollar, we will likely continue to see this happen. The pair of course is quoted in US dollars, so as the US dollar gets stronger, it will take less of them to buy one unit of Monero. Monero and other smaller coins like this have no real shot at appreciating until Bitcoin and Ethereum can turn it around. As things stand right now, they look like they are ready to fall further, which will translate into lower altcoin pricing.

It also is worth noting that the $220 level has offered quite a bit of resistance, as there has been a lot of noise in that general vicinity. If we can break above there, then we may go much higher, but that would take a Herculean effort and exterior influence from Bitcoin. It probably is going to take a couple of good days for the larger coins to make this thing turn around because people will have to feel comfortable stepping further out into the risk spectrum. Monero is pretty far out there, so we would need to see a lot of money come into the crypto markets to think that Monero will pick up.

If we break down below the $180 level, it is likely that we will go looking to reach the $150 level. At this point, the market is likely to continue its downward trajectory, and I think if there is any type of rally, it will more than likely show signs of exhaustion that you can start shorting again. If you are a longer-term believer in Monero, you probably have an opportunity to pick it up at much lower prices.

The market is likely to see a lot of noise more than anything else.

Polkadot fell hard on Monday as crypto got crushed. Polkadot is an altcoin, so that has a certain negative connotation to it. The market is significantly below the 50-day EMA, which is an indicator that a lot of people will pay close attention to. The size of the candlestick suggests that we are going to go lower, as it is rather large in comparison to the last several weeks, and it looks as if we are going to go looking towards the support level at the $16.50 level.

If we do break down below that level, then it is likely that we will go looking toward the $15 level. The $15 level is an area that would have a certain amount of psychological attention paid to it, and I think that there is probably a little bit of a bounce. If we break it down below there, the market will more than likely fall apart and collapse.

Alternatively, if we were to turn around and break above the 50-day EMA, the market will go looking to the $22.50 level. The 200-day EMA sits at the $24.35 level and offers a lot of psychological and structural resistance as well. Breaking above that indicator is a very bullish sign, but at this point, it does not look very likely to happen. Furthermore, you need to keep in mind that the rest of the crypto market needs to rally, especially Bitcoin and Ethereum. Those things drive the rest of the market, so you need to see strength in those “blue-chip coins.”

Another possibility is that we bounce around in the area between the two lines that I have on the chart, which would probably be a relatively bullish turn of events because it at least can get the markets to stabilize a bit. We have seen the weekend be very negative for the crypto markets, and we have been in a negative trend for quite some time. The market is one that even if we do turn around and go higher, you will need to be somewhat cautious, and you should have plenty of time to turn things around and build up a position. That being said, the market is likely to see a lot of noise more than anything else.