Ethereum will continue to struggle on multiple fronts. 

Ethereum has fallen yet again during the trading session on Thursday as it looks like we are going to threaten the $1000 level. The pattern that we are carving out on the chart is an “H pattern”, which is typically very bearish. The $900 level recently offered significant support, and if we were to pierce that level, it’s very likely that Ethereum will go much lower. This is what I’m hoping for because I would love to be able to accumulate Ethereum at low levels again.

Ethereum will continue to struggle on multiple fronts. The first problem of course is the fact that the Federal Reserve is tightening its monetary policy, so therefore risky assets such as cryptocurrency get decimated. In this scenario, Ethereum is no better than any other one, and it’s not until we see Bitcoin get a little bit of a boost that Ethereum can have a real shot. By extension, it needs to see the US dollar fall, because Bitcoin is getting killed by that very same greenback.

Furthermore, the Ethereum 2.0 rollout has been slow to say the least, and as long as that continues to drag on, there is a certain amount of ambivalence when it comes to this ecosystem. We have seen multiple lenders get crushed, and hacked on Layer-2 types of environments, which of course sit on top of Ethereum. At this point, crypto is entering a “crypto winter”, which is a time where people will accumulate crypto hoping for a major shot higher. I do think that there is some type of future for crypto, but I don’t think it’s going to be quite what most people anticipate. After all, we will have digital currencies coming out of central banks soon enough, and while the purest and libertarians argue about safety, Aunt Millie will be using those central bank assets.

If we were to turn around here, I think that the 50 Day EMA comes into the picture as major resistance, which sits just above the $1600 level. After that, you have a resistant barrier in the neighborhood of $1800 that could cause problems as well. Ultimately, I think this is a “fade the rallies” type of situation if you are planning on trading from both sides. Crypto is about as toxic as it gets right now, so that’s probably the prism you need to be looking at this market through.

I do believe that as long as monetary policy is set to be tightened, you have to look at rallies like this as potential selling opportunities.

The S&P 500 initially shot higher in the futures market on Monday but has given back the initial gains to form a shooting star. The daily candlestick does suggest that perhaps there are some selling pressure to come, but at this point, it would simply be a continuation of the overall downtrend. There has been nothing substantially different about the macroeconomic background to change the attitude of traders, and this rally is probably not long for this world.

If we break down below the bottom of the candlestick for Monday, I anticipate that a quick move to the 3800 level could be in store. Keep in mind that as we get closer to the end of the week there may be the “end of the month rebalancing” that you see at times, which can be somewhat noisy. Because of this, even if we break above the highs of the day on Monday, I still think that the upside is somewhat limited. The 4000 level would be the first area I would anticipate seeing trouble act, right along with the 50-day EMA which is sitting there as well.

It is not until we break above the 4200 level that I would consider this trend changed. Even then, I would probably have to see what is going on in the fundamental picture to get overly bullish. Until the Federal Reserve reverses its course, the S&P 500 will still have a lot of negativity surrounding it. With that in mind, I do believe that as long as monetary policy is set to be tightened, you have to look at rallies like this as potential selling opportunities.

That being said, you do have to be cautious shorting markets, because there is the inevitable “short squeeze” like we had seen on Friday. Although it looks like at the end of the day Wall Street is trying to claw back some of the losses earlier in the session, the reality is momentum is starting to slip away from the market right now, and I think it’s probably only a matter of time before we drop again. I do not like this market, and I have no interest in buying it. If we can break down below the 3800 level, we will almost certainly try to break down through the bottom again.

I will only add to positions once they prove themselves.

The Australian dollar rallied a bit on Wednesday to form a double-bottom pattern. Ultimately, the market has been hanging around the 0.6850 level. Looking at the start, we could rally significantly, but at this point, I think it’s only a matter of time before we see sellers come back in because this relief rally is probably just that, a relief rally.

Looking at this chart, I think we have a lot of volatility ahead of us, and it’s also possible that we see a bit of a range form. Nonetheless, I think that’s probably the “best-case scenario” for Australia at the moment, as the Australian economy is suffering at the hands of China slowing down again, or perhaps I should say locking itself down, and potential concern when it comes to the demand for certain commodities.

The interest rate in America continues to climb, but now that we’ve had a little bit of a relief rally after the Federal Reserve raised to 75 basis points, any knock on effect of positivity is probably short-lived, and we will start to focus on the diversions of interest rates again. Inflation continues to run hot in the United States, and that is going to be a major problem. Granted, Australia does have a lot of a correlation between its currency and gold, but that is probably going to go by the wayside given enough time.

Look at this chart, if we were to break down below the recent low, that would be a very ugly turn of events. At that point, we go looking to the 0.68 level, and then perhaps open up a move down to the 0.66 level. On the upside, the 0.7250 level being broken could open up the possibility of the 0.75 level being targeted. The only thing I think you can count on in the Forex market right now is the fact that there is going to be a lot of volatility, so you need to keep your position size reasonable and recognizes that we are in a very unsettled environment as so much concern is found around the world when it comes to growth, inflation, and the recessions that are almost certainly coming down the road. I will only add to positions once they prove themselves.

Ultimately, I do favor the upside but I also recognize that we are just not quite ready to go higher.

Gold markets initially rallied on Tuesday but gave back gains rather rapidly in the middle of the session as yields in America continue to climb rapidly. Because of this, the gold markets continue to be very difficult to trade from anything more than a short-term perspective, as we have been in a range for a while. The gold markets are volatile most of the time, but recently we have settled into a relatively well-defined range between $1910 and $1950.

There is a mix of factors out there that are pushing the market around, not the least of which would be the interest rates on the 10-year note. They continue to spike higher, and that is negative for gold. At the same time though, we have the inflationary concerns around the world that are driving those higher, and that gives a little bit of support for gold where it would normally not find it.

Looking at the technical analysis, the range has been reliable over the last couple of weeks, but sooner or later we will make a bigger move. A long daily candlestick is probably needed to add enough confidence to make traders get involved, and it should be noted that we are seeing support from the 50-day EMA as well, which is something that will attract a lot of attention. The $1900 level sits underneath there, so I think we will see a huge barrier of support in that general vicinity.

That being said, you could make an argument for a bit of a descending triangle right now, but until we break down below that $1900 level on a daily close, I am not completely convinced. The market breaking down below there would open up the possibility of a move down to the 200-day EMA, which sits just below the $1850 level, but I do not think that is the most likely of moves, at least not without some type of massive strengthening of the US dollar.

On the upside, if we were to take out the $1950 level, then it is likely that we will go looking towards the $1970 level, and then even the $2000 level, an area that has a lot of psychology attached to it to say the least. Ultimately, I do favor the upside but I also recognize that we are just not quite ready to go higher.