The market is more likely than not going to continue to drift lower, perhaps trying to test the lows near the $1680 level, but I would be surprised to see it go any lower than that anytime soon.

• Gold markets got hammered during the trading session on Friday after Jerome Powell gave a very hawkish speech at Jackson Hole. At this point, the US dollar looks like it’s reasserting its dominance, and that of course he’s going to have a major influence on where we go next.
• This is a market that I think given enough time may retest the $1720 level, possibly even lower than that.
• The market has been very noisy and had tried to rally but now it appears that people are finally getting it through their heads that the Federal Reserve is going to have to stay rather tight going forward.

This should bring interest rates higher, and it should continue to drive the US dollar higher. The US dollar being stronger obviously works against the value of commodities priced in that same US dollar, but it is worth noting that the market did not necessarily meltdown during the day, it just lost 1.2%, well within the tolerance of normalcy.

Market Likely to Drift Lower

The market is more likely than not going to continue to drift lower, perhaps trying to test the lows near the $1680 level, but I would be surprised to see it go any lower than that anytime soon. If it does, that opens up a massive amount of selling pressure that could send gold down to the $1500 level.

If the market rallies from here, the $1760 level will be the first carrier, followed by the 50 Day EMA and then the $1800 level. The $1800 level is an area that previously had been supported, and of course, we have seen a lot of resistance just recently. Because of this, the market will continue to be one that you have to watch through the prism of a downward trend, and it’s not until we clear the 200 Day EMA above that I would assume things have changed at all. The market breaking above that level then opens up the possibility of a move to the $1850 level. Breaking above that level then opens up the possibility of $1900 and more of a “buy-and-hold” type of situation. I do think the gold eventually takes off, but we are nowhere near that right now with the central bank still out there fighting inflation. Higher rates equals lower gold.

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It’s difficult to sit on the short position over the weekend as news can come out and you may have a huge loss on your hands.

The German index tried to recover early on Thursday but then fell apart as we have sliced through the crucial €13,250 level. If we can break down below that level, then it’s likely that we are going to continue going even lower. In fact, we closed at the very bottom of the candlestick for the day, and now it looks like we are going to go down to the €12,500 handle, where we had bounced from previously.

The German index is the leader of the European Union, so if we continue to see the DAX fall, that’s going to bring the rest of the European Union down with it. Because of this, even if you are not trading the DAX, you need to pay close attention to it because I have such a major influence on multiple other markets. That being said, the market will continue to see a lot of volatility, and I think as we head into the weekend, it may be a scenario where traders tried to take profit heading into the weekend. After all, it’s difficult to sit on the short position over the weekend as news can come out and you may have a huge loss on your hands.

That being said, it’s not likely that we are going to rally, and even if we do, I think that’s only going to offer a selling opportunity closer to the €13,500 level, assuming that we can even get there. I like the idea of shorting this market every time we get signs of exhaustion, and therefore I think it is probably going to be a scenario where we do continue to reach that previous low. Breaking down below that area opens up the possibility of a move down to the €12,000 level, but that does not mean that it will be quick and easy.

There is a lot of fear out there and indices, in general, are suffering as a result. Because of this, it’s likely that we will see major volatility and selling opportunities along the way. I would not put huge positions on it, because stock markets are under extreme amounts of pressure. Furthermore, the market has to focus on the idea of a major “risk off” attitude around the world so I do believe that we will see even more pressure next week.

Ultimately, I think this is a market that will be noisy, but every time we rally, I’m looking for signs of exhaustion that I can start shorting.

The S&P 500 fell rather hard on Friday as inflation numbers came out much stronger than anticipated, destroying the narrative that Wall Street was trying to put together. After all, the traders on Wall Street were hoping that inflation had peaked, but based on the number on Friday, we are far from that being the case.

Furthermore, when you look at the candlestick for the trading session on Friday, it shows just how negative things are. It looks as if we are going to threaten the 3900 level, which is a large, round, psychologically significant figure and an area where we had seen support. If we were to break down below there, then it opens up the possibility of a move to the 3800 level. The 3800 level has been the scene of a major bounce, so if we were to break through there, it’s likely that the market would then go looking to the 3600 level.

If we do rally a bit at this point, there is plenty of resistance above, not only at the 50-day EMA which recently had offered a significant amount of selling pressure. The 4000 level between here and there could be an area where we can have selling, right along with 4100. At this point, as long as the S&P 500 has to deal with the Federal Reserve tightening interest rates drastically, as well as running off the balance sheet, Wall Street will suddenly have to find itself working at making a profit instead of just throwing money at everything. This is what you are seeing currently, an unwinding of a massive bubble.

Ultimately, I think this is a market that will be noisy, but every time we rally, I’m looking for signs of exhaustion that I can start shorting. That’s what the last couple of weeks has been, and now it looks like we are ready to continue threatening to the downside. The 50-day EMA has spread quite far from the 200-day EMA, showing just how negative the trend is, and how much momentum it has. The last couple of candlesticks has been very negative and long, so that does suggest that there is going to be a significant amount of follow-through waiting to happen. Typically, if you close at the bottom of candlestick, it means that the market is comfortable being short, or at the very least uncomfortable buying.

I think more than anything else, Ripple will continue to be a back-and-forth trading environment.

Ripple got hit hard on Monday as we continue to see a lot of volatility and risk assets across the board. Keep in mind that crypto is of course far out on the risk spectrum, so we need to see more “risk-on behavior” overall in order for Ripple to turn things around. Ripple has been finding a bit of support near the $0.65 level, so it is possible we could have a little bit of a bounce from here. With that being said, it is probably worth noting that the market has had a couple of impulsive red candlesticks recently.

If we were to break down below the lows of the trading session on Monday, that could open up fresh selling, sending Ripple down to the $0.60 level. The $0.60 level has been significant support previously, so it does make sense that we would see that continue to offer a bit of interest from the buyers. Breaking down below the $0.60 level then opens up the possibility of a move to the $0.50 level.

The 50-day EMA above is at the $0.77 level and drifting lower. The $0.75 level underneath is an area could offer a little bit of resistance as well. If we can break above the 50-day EMA, then it is possible that Ripple could go looking towards the $0.90 level, but it would need to see crypto strength, in general, to get that type of movement happening. Furthermore, we have the never-ending SEC lawsuit that hangs over the head of Ripple, so you need to keep that in the back of your mind as well. The latest headlines have been a little bit more in favor of Ripple, but it has not been resolved completely yet.

I think more than anything else, Ripple will continue to be a back-and-forth trading environment. In other words, if you are a shorter-term trader this might be a nice opportunity. However, if you are more of an investor, then a dip like this could end up being a nice buying opportunity. After all, if the SEC lawsuit gets thrown out eventually, or even gets ruled in favor of Ripple, that could send this market screaming higher. Until then, I think you need to keep your expectations in check.

It is not until we break down below the $1900 level that I would consider shorting this market.

Gold markets have fallen rather hard during the trading session on Tuesday to break down below the $1970 level. That was an area that had been significant resistance previously, and therefore it is a bit surprising that we sliced through it as easily as we did. The market still has plenty of support underneath that could come into the picture, and it is worth noting that we had previously broken out of a consolidation area.

The market also has the 50 Day EMA sitting at the $1925 level, and of course, going higher. Because of this, the market still has plenty of buyers between here and there to lift this market. If the market were to find some type of supportive candlestick between here and there, then it is likely that we could reenter the market to the upside. I do believe that the market continues to go higher over the longer term, as there are so many reasons to think that people will be looking for some type of safety.

If we do rally from here, the $2000 level is an area that has offered quite a bit of resistance previously and is a large, round, psychologically significant figure. The market will then try to decide whether or not we can continue to go much higher, perhaps reaching the $2050 level. At this point, the market continues to see a line of value hunting, and that of course is a big part of what is going on in the long term. It is not until we break down below the $1900 level that I would consider shorting this market, and even then, I would be a bit cautious about shorting until we saw a weekly close below that level.

At that point, then it is very likely that the gold market goes looking toward the 200 Day EMA, which is currently at the $1850 region. The market at this point could break down even further, but I still believe that this is a market that has more upward momentum than downward and of course more things to drive people into the risk asset part of this market than anything else. The candlestick is rather long, but we are not closing all the way at the bottom of it, so I think that shows that there is still a fight left in this market.

I will be watching this market quite closely at this point and could be setting up for a huge swing trade.

The Australian dollar fell a bit on Wednesday as we see a continuation of the shock to the markets after the FOMC statement suggested that the Federal Reserve is going to be much more hawkish than initially expected. Because of this, the US dollar strengthened, and it looks as if the Australian dollar is taking it on the chin. The market is trying to break through the 0.75 handle, and if it breaks through the 0.7450 level, it will have completely wiped out all of the potential reactions to the RBA statement.

The Australian dollar has been ripping higher for quite some time, so it will be interesting to see whether or not reactions continue to follow commodity markets higher, but it is worth noting that commodity markets have been hit as well. Ultimately, this is a market that I think will continue to see a lot of trouble ahead, and now we have the 0.75 level offering even more in the way of potential trouble, as we now will have to figure out whether or not we are going to hold the uptrend intact, or if we are going to turn things around.

There are a lot of concerns when it comes to the overall global economy, and that is one thing that you should keep in the back of your mind when you are looking at the Aussie dollar. If global growth suddenly stops, that would be extraordinarily negative for most assets with perhaps the exception of the US dollar. With that, I think that it is probably only a matter of time before we have to make some type of a longer-term decision, so the next couple of days are going to be crucial. At this juncture, if we were to break down below the 0.7450 level, that could open up a massive wave of selling. I will be watching this market quite closely at this point and could be setting up for a huge swing trade. Ultimately, if we turn around and clear the 0.7550 level to the upside, then it is possible that we could continue the overall uptrend. I suspect that the Thursday and the Friday sessions both are going to be very important. The next couple of days could determine the longer-term trend for this market.