We don’t see any major moves in sterling against the dollar until September.

The free collapse of the GBP/USD currency pair continues, and its losses reached the 1.1742 lowest support level for the currency pair in nearly 30 months. It is settling around the 1.1765 level at the time of writing the analysis. Despite the crash, it still has a chance of more downward pressure, especially if the busy US economic calendar or comments from Federal Reserve (Fed) officials allow US bond yields and the dollar to add to the gains.

The British pound was not helped by better-than-expected UK economic data and a sharp increase in market expectations for interest rates at the Bank of England (BoE) last week, often appearing to be the most vulnerable among the major currencies to a rebound in US bond yields and the US dollar. This was after a chorus of votes from the Federal Reserve’s rate-setting committee reminded the market in public comments that there was still a risk that the bank would opt for a straight 0.75% increase in US interest rates next month, stimulating US bond yields and the dollar.

With UK economic numbers ignoring and sterling losses mounting despite increases in UK bond yields that might normally have been supportive of the currency, this week’s S&P Global Purchasing Managers’ Index surveys may now be less important than risks emerging from the busy US economic calendar. Rising US bond yields and a stronger dollar dented risk appetite in the market on Friday and seemed to exacerbate losses for GBP/USD, which came close to revising multi-year lows under 1.18 support ahead of the weekend.

Joseph Caporso, an analyst at the Commonwealth Bank of Australia, said: “FOMC Chairman Powell is due to speak on Friday (midnight Sydney time). His speech was the first since the Federal Open Market Committee’s policy meeting in late July. We expect Powell to deliver an upbeat message on inflation in line with recent comments from FOMC officials. There is room for market pricing to raise the money rate, and to support the US dollar.”

Focus on Jackson Hole Symposium

The highlight of this week is Fed Chairman Jerome Powell’s speech at Jackson Hole’s annual symposium next Friday due to its potential to influence market expectations of US interest rates in September and beyond. However, before then, a number of US economic figures are due, and each will help determine market appetite for the dollar in the coming days.

This includes the second estimate of US GDP for the fourth quarter and the July reading of the Fed’s preferred measure of US inflation, the core PCE price index, which markets will be scrutinizing closely for anything to support signs of the mild inflation pressure recently noted in official actions. With financial markets recently expected to cut the September rate hike to 0.50% for the Federal Reserve, GBP/USD will be at risk this week from anything that pushes market rates back in favor of a larger 0.75% increase.

Anything could lead the market to abandon recent bets that the Federal Reserve may rush to cut US interest rates next year. At the same time, Flash PMI releases will provide a glimpse into how the UK economy is holding up. While sterling short positions have been cleared this week, we don’t see any major moves in sterling against the dollar until September.

Sterling dollar forecast:

• The recent losses of the GBP/USD currency pair pushed the technical indicators towards oversold levels.
• Forex traders will be in a cautious position to buy the currency pair as the strength of the US dollar continues.
• Currently, the closest support levels for the currency pair are 1.1720, 1.1650 and 1.1580, respectively, and from the last two levels, you can consider buying the currency pair with no risk.

On the other hand, breaking the resistance 1.2100 will be important to form an opposite channel for the current sharp bearish situation. The sterling will be affected by the announcement of the PMI readings for the manufacturing and services sectors in Britain.

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Given enough time, I do think we will have a wicked pullback, but if we break above the 13,500 level, that opens up the gates for even more rallies.

• The NASDAQ 100 Index rallied a bit again on Friday as we continue to see the market “climb the wall of worry.” 
• After all, the market will continue to see a lot of noisy behavior, and therefore volatility. It is a difficult market to hold onto, but for those that have, they have been rewarded.

The 13,500 level above is likely to be a significant barrier, just as we had seen during the trading session on Thursday. Ultimately, if the market were to struggle in this area, then it’s likely that the market would struggle a bit of the time to try to get above there. On the other hand, if we break down below the massive red candlestick from the trading session on Thursday, then I think we have a pullback to the 13,000 level just waiting to happen.

Federal Reserve at the Center

Unfortunately, this will have nothing to do with the companies or the economy. Everything is going to be about the Federal Reserve and the idea of what they will be doing as far as interest rates. The Federal Reserve still swears up and down that they are going to do whatever they can to fight inflation, which is the same thing as saying they are going to keep monetary policy tight. However, Wall Street has run with the narrative that they are going to have to be less restrictive with monetary policy due to the fact that inflation has slowed a bit. However, it’s unfortunately still much above the Federal Reserve target rate, which is 2%. In fact, inflation is still roaring at 8.5% year-over-year, so it does make a certain amount of sense that we would see tight monetary policy going forward.

At this point, you can take a look at the 10-year yield in the United States to see how things play out for the stock market overall. If we see a sudden sharpening in rates, that would be negative for stocks. At the moment, the falling rates have propelled the market to the upside, but the reality is that the rates are falling because a lot of bond buyers are preparing for a recession. That obviously is not good for the market as well. Given enough time, I do think we will have a wicked pullback, but if we break above the 13,500 level, that opens up the gates for even more rallies. The average bear market rally is roughly 21%, which is just where we happen to be at.

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Gold futures settled lower, to continue falling to the fourth session in a row. However, with the dollar weakening, the downside for gold was marginal. Since the start of this week’s trading, the price of gold has been moving in narrow ranges with a downward tendency between the level of $1847 an ounce and the level of $1824 an ounce, and it is settling around the $1835 level at the time of writing the analysis.

Investors digested Federal Reserve Chair Jerome Powell’s testimony before the Senate Banking Committee. In prepared remarks, Powell indicated that the Fed plans to continue moving quickly to combat inflation but said the US economy is strong enough to handle tighter monetary policy. However, Powell later admitted that achieving a “soft landing” would be “very difficult” in part due to factors beyond the Fed’s control and noted that a recession is “a sure possibility”.

Powell added that the pace of interest rate hikes in the future will depend on incoming data and the evolving outlook for the economy and suggested that the Fed would need to see “convincing evidence” that inflation is slowing before it begins to scale back its monetary tightening plans. The Fed chief added that the central bank would strive “to avoid adding uncertainty in what is already a very difficult and uncertain time.”

Technical analysis of the gold price XAU/USD:

According to the recent performance of the gold price, technical indicators are moving in relatively neutral ranges. Narrow trading in limited ranges warns that there is a strong movement in one of the two directions to come, but there is anticipation for what will lead to that. I still prefer to buy XAU/USD gold from every bearish level, despite the strong demand of global central banks to tighten their monetary policy, which is negative for the gold market. It finds momentum from other factors, most notably global geopolitical tensions led by the Russian / Ukrainian war, as well as fears of an economic recession world in the coming period. Gold is a traditional safe haven in those times.

The closest buying levels for gold at the moment are 1820, 1805 and 1785 dollars, respectively. On the other hand, the bulls may find enough momentum to launch further higher if the XAU/USD gold price breaches the resistance level of $1855 an ounce again.

Pay attention to the uptrend line underneath, which is currently at roughly $105

The West Texas Intermediate Crude Oil market has found Monday to be rather quiet, which makes sense considering it was Juneteenth in the United States, and this of course had a major influence on the futures markets. That being said, we had a massive selloff on Friday, and one would have to believe that there is still a little bit of a hangover from that breakdown. Because of this, I think it is probably only a matter of time before we see a little bit more downward pressure, I think it’s short-term at best.

Pay attention to the uptrend line underneath, which is currently at roughly $105. The market breaking below that level would be a significant signal that perhaps the uptrend line is giving way, and we could go down to the 200 Day EMA, currently sitting at the $95 level. That being said, I do think that there are buyers between here and the uptrend line, so we need to see a little bit of stabilization on a full day in order to build the confidence to go higher again. Yes, this has been a vicious selloff, but ultimately it is yet just another selloff in a market that is volatile, to begin with.

The 50 Day EMA was pierced on Friday, so recapturing that would be a good sign, and that could bring more buyers into the market as well. Crude oil rallying from here more likely than not will go looking to test the $120 level, perhaps even higher than that. Longer-term, I do think that we have further to go, especially as the demand for crude oil will continue to pick up due to a lack of drilling during the pandemic. However, there are concerns about the economy slowing down, so that of course is something that will have to be paid attention to as well. In other words, think this means that we are going to have a very volatile market, but that can be said about almost every market that I follow, so I see no reason why oil would be any different.

Keep your position size reasonable, because we could see sudden moves. You can always add as the position goes in your favor, which is the way you should be trading markets anyway.

I’m looking for short-term rallies that I can take advantage of, to pick up value in the US dollar when we get an opportunity.

The GBP/USD pair initially tried to rally during the training session on Thursday but get back gain as we continue to see a lot of negativity. Furthermore, the CPI numbers coming out of the United States on Friday will certainly have a major influence on what happens with the greenback, and it looks is that the bond markets are trying to price the idea of a hotter than expected inflationary number. If that’s going to be the case, then it makes quite a bit of sense that the US dollar will continue to strengthen.

While we have not broken it down completely, it is worth noting that rallies continue to get sold into. If we break down below the lows of the Tuesday session, it almost certainly will send this market down to the 1.24 level, possibly even down to the 1.22 level. I do think that it is probably a scenario where we have more of a “sell the rallies” type of situation unless, of course, something changes completely.

If the CPI numbers come out lower than anticipated, that could cause a bit of a turnaround, but we also have a lot of resistance near the 1.26 level that extends to the 1.2650 level, where the 50 Day EMA sits and is going lower.

I believe at this point we have a situation where the British pound will have to prove itself, so unless it’s an absolutely astonishing number during the day on Friday, I just don’t see how this market changes the trend. Even if we were to break above the 50 Day EMA, the ceiling in the market is probably at the 1.30 level as there is such an obvious selloff at that point and by extension, quite a bit of supply. Breaking above that would be what it would take to change the overall trend of this market, something that I’m not anticipating seeing anytime soon. Because of this, I’m looking for short-term rallies that I can take advantage of, to pick up value in the US dollar when we get an opportunity. However, if we get a massive rally on Friday, then we need to look for signs of exhaustion unless of course we get that break out in daily close above the 50 Day EMA. Ultimately, this is a market that had shown quite a bit of exhaustion.

ETH/USD has experienced a strong selloff, and the broad cryptocurrency market is challenging important support levels across the spectrum.

ETH/USD is trading near the 1750.00 level as of this writing. Yesterday’s early trading took ETH/USD above the 1900.00 mark, but it was not able to sustain higher momentum and began to show signs of erosion rather dramatically towards the end of the day. Early trading this morning has seen Ethereum and other major cryptocurrencies including Bitcoin tumble. The bearish trend in digital assets has seemingly decided to challenge crucial support levels today.

The inability of ETH/USD and its counterparts to build on yesterday’s early momentum was a negative signal.  Technically there are also indications that selling volume increased significantly when short term resistance levels were not seriously tested, which suggests some speculators who had been holding on decided to get out of the market.

ETH/USD is now flirting with long term lows and if it breaks below the 1720.00 support barrier, this could set off a negative chain of additional selling.  ETH/USD is now within vicinity which it is traversing prices not seen since February of 2021. The long term bearish trend has been able to muster some buying when the 1700.00 price level has appeared ready to be broken in May and in early June, but gut instinct among speculators may believe ETH/USD could be ready to explore lower depths of value.

Traders who are convinced they can buy at current lows and look for short term moves upward which allow them to cash out winning positions can certainly wager, but they need to be using solid risk management.  Price velocity this morning has been strong and it has been negative. Lower values in Ethereum and Bitcoin have been tested the past couple of months and held, is today the moment crucial support levels break?

If market conditions in cryptocurrencies remains negative and buyers disappear due to a lack of confidence, ETH/USD and other digital assets could falter to cheaper prices near term. The 1720.00 level could be vital for Ethereum today. If this price sees a sustained challenge and prices dip below, selling could increase again.

Day traders who want to try and sell ETH/USD based on the notion there is further room to move downwards cannot be faulted.  Sellers should keep realistic targets in mind and be willing to cash in profits before they vanish into thin air. Ethereum looks ready to deliver a volatile day of trading ahead.

Ethereum Short-Term Outlook

Current Resistance: 1794.00

Current Support: 1721.00

High Target: 1865.00

Low Target: 1597.00

LUNA/USD dove to long-term low values in early trading this morning, as a combination of nervousness and fundamental selling hit Terra.

LUNA/USD fell below the 24.00000000 USD level in early trading this morning.  As of this writing, the price of Terra is traversing near 28 USD, but this price is certain to be different as readers study this article. The price of LUNA/USD has reacted to broad market nervousness among digital assets and the fact that the ‘stable coin’ TerraUSD, backing LUNA/USD, faltered below the 1.00 level yesterday. LUNA/USD is part of the Terra ecosystem and the Terra/USD cryptocurrency as of this morning is seeing volatile price action still and is near 85 cents as of this writing.

LUNA/USD began yesterday’s trading within a bearish trend certainly, and its slide which began slightly below the 69.00000000 mark until this morning’s low has likely wiped out plenty of trading accounts. Traders looking to participate in LUNA/USD are urged to use entry price orders to make sure their fills meet their expectations. And anyone pursuing LUNA/USD also needs to use an extremely well-selected array of risk management.

The nervous sentiment in the broad crypto market is likely to continue as many of the major digital assets challenge lower support levels, and LUNA/USD will work under this shadow too.  Coupled with the notion that price pressure is evident in Terra’s ecosystem via its stable coin will have an effect on LUNA/USD also. Values of LUNA/USD can be expected to see a great deal of volatility the remainder of the day.

If LUNA/USD falters to the 27.00000000 mark again, it will not be surprising to see the cryptocurrency retest morning lows again.  The abrupt nature of the selling pressure in the broad market, and the onslaught of behavioral sentiment which is likely feeling the sting of massive losses in some trading accounts will not help ease the tension. The question for LUNA/USD is when stability may come back into its trading landscape, and that may not happen for a while. LUNA/USD will certainly continue to shake in value as long as the Terra ecosystem which is geared towards its stable coin which is under fire, suffers further price pressure.

Traders who want to sell LUNA/USD need to be cautious. It may be the logical decision, but speculators need to be prepared for massive spikes and unsuspecting news flow which may continue to be experienced. If LUNA/USD breaks below the 24.000000000 level, there is reason to suspect prices not seen since the middle of August of 2021 could be displayed.

Terra Short-Term Outlook

Current Resistance: 32.58000000

Current Support: 27.63000000

High Target: 44.8700000

Low Target: 21.59000000

ETH/USD suffered another weekend of strong selling, and its price has shown signs of rapid lower moves as values have broken through key levels.

ETH/USD is trading near the 2450.00 price as of this writing and technically important support levels are being challenged. Ethereum, like most of the other major cryptocurrencies, suffered a weekend of strong selling, and intriguingly ETH/USD has provided quick prices velocity as it made its way lower breaking through key junctures. However spikes have not been violent, but the selling has been consistent.

ETH/USD has shown little ability to sustain a higher move the past week of trading and the inability of the cryptocurrency to maintain value is likely causing greater nervousness as crucial lower prices come into view. If ETH/USD falls below the 2400.00 mark near term, and is not able to climb above this level in a convincing manner, speculators may believe a test of Ethereum’s January 2022 low could be demonstrated. Behavioral sentiment is extremely fragile among traders, and if ETH/USD continues to trade within sight of late February values it could propel speculators to aim for this lower depths.

While the belief that ETH/USD has been oversold may be heard among many long term cryptocurrency backers, day traders are likely not interested in what the price of Ethereum could be six months from now.  The bearish tone within the cryptocurrency market is echoing other global trading conditions as riskier assets have been sold. The question for value seekers is when the tide will turn and prices will move up.

However timing strong reversals remains difficult and day traders may want to simply continue following the trend.  Price movement this weekend did prove fast and there will be more volatility in the days ahead, particularly if technically important support levels continue to be tested and break lower. ETH/USD should be monitored closely. If the 2425.00 level is brushed aside and momentum continues to incrementally nudge towards lower values, traders cannot be blamed for wanting to pursue selling positions.

Speculators need to use their risk management tactics wisely. ETH/USD and other major cryptocurrencies are testing junctures which will likely ignite abrupt price action as they are tested. Traders should choose their leverage cautiously. If ETH/USD falls below the 2400.00 mark, traders may want to continue chasing further declines. The bearish trend in Ethereum appears ready to create potentially cheaper values for the cryptocurrency.

Ethereum Short-Term Outlook

Current Resistance: 2497.00

Current Support: 2427.00

High Target: 2591.00

Low Target: 2316.00

Fading rallies will continue to be the way forward.

Polkadot continues to trend lower as the market is threatening to break down through the $14 level. The $14 level is an area that has been tested a few times over the last couple of days, but quite frankly this is a market that will almost certainly break down through that level. The market looks very likely to continue going lower, perhaps down to the $10 level.

Polkadot is suffering at the hands of the general negativity that is found throughout the crypto markets, as Bitcoin has gotten hammered, Ethereum has gotten hammered, and just about every other chart I looked at this morning all fell. The risk appetite is failing across the board, and it is obvious that crypto is going to continue to suffer at the hands of this. As Polkadot is an altcoin, it will likely have an outsized loss in comparison to the bigger markets.

At the $18.75 level, the 50 Day EMA is sloping lower. Above there, we have the 200 Day EMA which is sitting at the $23 region. I believe the area between both of these moving averages will continue to offer selling pressure. The market does not look like it is going to reverse anytime soon, but if we start to see money flow back into Bitcoin, that might be the first sign that we are going to rally. Polkadot continues to be sold, and at this point, it comes down to whether or not the coin is ever going to attract enough in the way of use. If Bitcoin breaks down below the $30,000 level, I suspect that another market such as Polkadot is going to continue to be toxic, so I would have no interest in buying this market.

However, if Polkadot drops down to the $10 level, we may see the market try to build a little bit of a base. Looking at the overall markets, I suspect that we are getting dangerously close to “crypto winter”, which will be toxic for this market. However, crypto winter ends and we will likely see some of these coins rally quite significantly afterward. If you have a longer-term time horizon, you might have the ability to pick up a bit of value, but I think you have plenty of time to do so. Fading rallies will continue to be the way forward.

DOT/USD has taken another turn lower and is clearly within sight of important support levels, which speculators may consider critical inflection points.

DOT/USD is trading below the 17.0000 mark as of this writing and if the cryptocurrency cannot rise and sustain its value over this level, this inability may set off alarm bells among speculators. On the 21^st of April DOT/USD had climbed to nearly 19.7000 after testing lows slightly above the 17.0000 mark for a handful of days before. Yesterday’s trading took DOT/USD below the 16.5000 ratio momentarily, which challenged values not seen since the 8^th of March.

The broad cryptocurrency market remains nervous and Polkadot is certainly mirroring the rather weak results as support levels considered critical are being monitored in many digital assets. DOT/USD was able to reverse higher after hitting its lower values on Wednesday, but the buying has not been exuberant and traders who believe more downside action could develop are likely watching. If DOT/USD starts to make support near the 16.9000 and 16.8500 prices appear ready to falter, it is conceivable that 16.7500 to 16.5000 would become legitimate targets.

While bullish traders may believe upside reversals can be attained, they may want to stay rather cautious and not look for over ambitious results higher. The short term has shown plenty of resistance above, and the 17.2500 mark almost feels far away in early trading. However, if this relatively close resistance mark is penetrated, traders may feel obligated to wager on further upside to the 17.4500 to 17.5500 ratios. It does appear any move above 17.7500 in the short term would be rather surprising.

DOT/USD is currently fighting for equilibrium below 17.000 and if the cryptocurrency continues to traverse near these critical lows and again moves towards yesterday’s depths, this would be a negative signal.  If the lower values are flirted with in the short term, it could mean a significant test of values not seen since the first week in March are about to be exhibited.

Cautious traders may believe downside pressure is going to continue and want to wait for some upside movement before igniting their short positions. However, if DOT/USD lingers near its current price of 16.9500 and lower, than it may be worthwhile to look for downside momentum sooner rather than later. The trend downwards in DOT/USD has been rather consistent. Traders should use conservative amounts of leverage and stop losses, but wagering on lower prices in DOT/USD may be the logical decision near term.

Polkadot Short-Term Outlook

Current Resistance: 17.2100

Current Support: 16.5200

High Target: 17.8700

Low Target: 15.8100