I suspect that by the time we are done with the Wednesday session, we may have a bit more clarity.

• The USD/JPY currency pair continues to hang around the 50-Day EMA as we are going back and forth around the ¥135 level.
• If we can break above the high of the Monday candlestick, then it’s possible that the entire uptrend can continue to go higher.
• We have to wait on the CPI numbers coming out on Wednesday to get a read on what the Federal Reserve may do.

The market breaking above the top of the candlestick for the Monday session suggests that traders are starting to think that the Federal Reserve is going to continue to be extraordinarily tight with monetary policy as they have been trying to tell everyone. However, if the market were to break down below the bottom of the candlestick, then it’s likely that we will go lower to find support underneath. At that point, the ¥132 area should be a significant area of support that a lot of people would be paying close attention to.

Interest Rate Differential Major Factor

Ultimately, this is a market that is going to continue to be very noisy and based upon the interest rate differential between Japan and the United States, as the Bank of Japan has been buying bonds in order to keep the 10-year rate in Japan down to the 0.25% level. When they have to buy more bonds, that’s the same thing as printing more yen. When other interest rates around the world continue to rise, the Bank of Japan will have to put in some work and therefore print more currency.

On the other side, you have the Federal Reserve which is doing everything can to fight inflation and tighten monetary policy. This has set up the perfect storm for this pair, and that’s how we are trading right now. The market should continue to see plenty of momentum to the upside over the longer term though, unless CPI starts to melt down because then it suggests that the Federal Reserve may not have to tighten monetary policy as much as previously thought. In that scenario, the market would fall apart. This is a market that looks like we are trying to figure out where the next move goes, and where the momentum comes from. I suspect that by the time we are done with the Wednesday session, we may have a bit more clarity.

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I believe this is a market that will continue to struggle in the face of higher interest rates, and of course, the fact that there are a lot of concerns out there when it comes to global growth in general. 

Gold markets have been relatively quiet as we awaited the Federal Reserve meeting on Wednesday. That being said, we have seen a lot of noise in the general vicinity, and now it’s a question as to whether or not we can get some type of clarity for a longer-term outlook before gold can settle everything out. After all, the Federal Reserve continues to be very tight with its monetary policy and did in fact raise interest rates by 75 basis points as anticipated.

When you look at the charts, it’s easy to see that the $1700 level has been important over the last couple of years, so the fact that we have bounced from there should not be a huge surprise. The question now is whether or not we can break it back down below it? If we do, then the gold market will be more likely than not to drop all the way down to the $1500 level over the next several months. That being said, we have some work to do before that happens. In fact, we need to break it down through the $1680 level, as the $1700 support level is basically “$20 thick.”

Rallies at this point will have to deal with the $1750 level, an area that I think is going to be a bit difficult to overcome. At this point, even if we broke above there, I think it’s likely that we would see this market struggle to go much higher, with the $1800 level above being a major barrier that will be very difficult to get past. We have the large, round, psychological significance of the number, we have the major selling area there as well, as well as the previous trendline and the 50 Day EMA. With everything said, I believe this is a market that will continue to struggle in the face of higher interest rates, and of course, the fact that there are a lot of concerns out there when it comes to global growth in general. The US dollar has been like a wrecking ball over the last several months, and I think that will continue to be the main theme here, as this market will continue to pay close attention to the headwinds that the greenback causes this market.

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While I do believe that Bitcoin will be a good investment longer-term, I also believe that you will get an opportunity to start buying at much lower prices.

Bitcoin has rallied ever so slightly during the trading session on Thursday, as we continue to hang about the $30,000 level. There does seem to be a certain amount of hope or wishful thinking going on out there, so be interesting to see how this plays out. Quite frankly, I think it is probably only a matter of time before something bad happens, but a bounce could be the first thing. In fact, I would not be surprised at all to see this market bounce, but I would also anticipate a lot of selling pressure above.

As long as there is an institutional desire to own US dollars, mainly as a function of the Eurodollar system, it is going to be difficult for Bitcoin to attract a lot of major inflows. Yes, some retail traders will live and die by Bitcoin, but they do not move the market. In fact, the people who do move the market are shunning Bitcoin as a lot of them have just been eviscerated and other crypto markets.

If we break down below the bottom of the candlestick from last week which is at roughly $25,854, this market will make a beeline towards the $25,500 level, and then eventually the $25,000 level after that, dragging the rest of the crypto markets down with it. A lot of what you are seeing here is due to US dollar strength, and a general “risk-off” type of attitude around the world. I find it difficult to believe that a lot of money is suddenly going to go looking to get involved in these types of markets, as we need some type of stability in more traditional markets to even approach that type of environment.

While I do believe that Bitcoin will be a good investment longer-term, I also believe that you will get an opportunity to start buying at much lower prices. If we head into the type of buzzsaw recession I think is starting to be imagined, this will send the entire crypto market much lower. It is only when you have cheap central bank money that crypto gets a huge bid. After all, one of the huge tenants of crypto has been all of the central bank’s “printing of money.” (This is a ridiculous concept because money is not created by central banks, it is created by loans.) Leaving that aside, it is worth noting that the Federal Reserve is getting tighter, not looser.

Do not fall for the hype, follow the price. Price is truth. The price is going lower.

Bitcoin went back and forth on Wednesday to challenge the $30,000 level. This is a large, round, psychologically significant figure, and an area that a lot of people will be paying close attention to. Looking at this chart, the $30,000 level has been important multiple times, so it does make sense that we would see this area being challenged and paid close attention to.

If we were to break down below the bottom of the candlestick during the trading session on Wednesday, that could open up a flood of selling. If we get down below the $30,000 level, is likely that we could fall apart and start entering the possibility of “crypto winter.” With some of the trouble that we have seen in the area of the stable coins of crypto, it is not going to be a surprise at all to me if we break down. Short-term bounces will more than likely offer nice selling opportunities, as this is a very bearish market, and that is not changing anytime soon. In fact, because we could not break over the highs of the trading session on Tuesday, it is likely that we will continue to see a lot of nastiness.

If you are a longer-term believer in Bitcoin, you are going to get the opportunity to buy it at much lower levels. It would not surprise me at all to see Bitcoin reach the $20,000 level, as the rest of crypto looks absolutely miserable. Ultimately, it is not until we break above the $40,000 level that you can take any rally seriously as far as a longer-term trade is concerned. We might get a short-term pop to the $35,000 level, but after the action of the last couple of days, that does not look to be very likely.

The risk profile of the markets right now is most certainly risk-averse, so there is no reason to think that crypto is suddenly going to attract some inflow. Yes, I know that Michael Saylor has an average price somewhere near the $30,000 level according to Twitter, but that is not a reason to buy or sell anything. Do not fall for the hype, follow the price. Price is truth. The price is going lower.

There is no way to consider this a bullish market, and most of the money will be made by shorting not only ZCash, but most other smaller markets.

ZCash went back and forth on Tuesday as we continue to see crypto markets look very soft. That being said, we are hanging about the crucial $85 level, and it looks as if we are trying to find enough support to hang on. The $85 level has been important multiple times, so it does make a certain amount of sense that we would have a reaction here. The question now is whether or not the crypto markets will try to recover. After all, ZCash is pretty far down the line when it comes to risk appetite, so it needs help from the outside.

Bitcoin has stabilized just above the $30,000 level, which ties in quite nicely with the $85 level offering support. That being said, the market is likely to continue looking at this area as important, but if Bitcoin breaks through the $30,000 level, that will certainly send the rest of the crypto markets much lower, ZCash included. At that point, it is very likely that ZCash will go looking to the $75 level initially, perhaps down to the $50 level given enough time. This is the most likely scenario, but it does not necessarily have to happen right away.

Rallies at this point will face quite a bit of resistance near the $120 level, not only due to the fact that it is an area that has a certain amount of psychological importance to it, but also an area where we have seen a lot of selling. Because of this, the market is likely to continue seeing quite a bit of trouble there. Rallies at this point will then have to face the 50-day EMA above, which is dipping below the 200-day EMA, suggesting that we are getting the “death cross.” Either way, ZCash does not look very strong, so I think it is probably more likely than not going to find plenty of sellers every time it rallies. I have no interest in buying, at least not anytime soon. Longer term, we may get a reversal in Bitcoin, and then you can start to look towards these smaller markets. Until that happens, there is no way to consider this a bullish market, and most of the money will be made by shorting not only ZCash, but most other smaller markets.

We have a huge fight on our hands in the short term, and I think that is going to be true with most cryptocurrencies.

ZCash initially tried to rally on Wednesday as we rallied ever so slightly but then turned around to show signs of hesitation. We are sitting on the 200-day EMA, suggesting that the market is still going to continue to hear a bit of noise in this area. You can also see that the $145 level has offered support, so I think all of this combines to give ZCash the possibility of rallying. That being said, you can also see that there has been a lot of noise just above, so I think ZCash will be very tight, to say the least.

If we were to break down below the $145 level, then it is likely that the market could go to the $120 level. This is a market that will continue to see a lot of volatility, right along with the rest of the crypto markets. After all, the crypto markets tend to move in tandem, and ZCash is a smaller market. In other words, you need to see Bitcoin and Ethereum take off to the upside for ZCash to have a real shot at going higher.

At this point, it looks as if we are going to go back and forth in this general vicinity but if we can take out the $170 level to the upside, then it would be a very bullish sign. At that juncture, I would anticipate that ZCash could go to the $200 level, where we pulled back from previously. We have a huge fight on our hands in the short term, and I think that is going to be true with most cryptocurrencies. ZCash obviously will attract a lot less attention than Bitcoin or Ethereum, but if they start to rally, then people will start to reach out to further instances of risk appetite, and in places like this. However, if we see Ethereum and Bitcoin start to meltdown, ZCash will be all but dead at that point. The $125 level being broken to the downside opens up a move all the way back down to the $85 level. That obviously would be extraordinarily negative, and I do think that we would see a vicious move at that point, one that would happen very quickly as we would enter “crypto winter.”

Ultimately, this is a market that has had a nice run higher, a 50% pullback from the last rally, and now looks as if it is trying to continue that overall move.

The Ethereum market rallied during the trading session on Tuesday to show signs of life, as the $3000 level has been significant support. The hammer during the trading session on Monday has been a nice marker for support, and the fact that we have turned around and recovered the $3000 level is a very good sign. The 50 Day EMA and the 200 Day EMA are both slicing through the candlestick and going flat. Ultimately, this is a market that I think will continue to see a lot of noisy behavior, but if we can hang on to this $3000 level, it would be a very bullish sign.

If we break above the highs of the trading session on Tuesday, then it is likely that the market could go to reach the $3250 level, which is where we had sold off previously. Breaking above there then will allow the market to go looking to reach the $3500 level. The $3500 level is an area that has been massive resistance previously, and for that matter had been supported before then. Ultimately, this is a market that has had a nice run higher, a 50% pullback from the last rally, and now looks as if it is trying to continue that overall move.

The market breaking down below the bottom of the hammer on the Monday session would be negative, opening up the possibility of a drop to the $2750 level, maybe even the $2500 level. The $2500 level has been massive support multiple times, and therefore it makes sense that we would see that area offer a significant support barrier if we drop down to that region. If we were to break down below the $2500 level, then it is very likely that Ethereum could drop down to the $2000 level. The $2000 level of course has a certain amount of psychology attached to it, but I think if we start to press that issue, it is very likely we will have entered “crypto winter.”

In general, this is a market that I think will continue to be very choppy and noisy but is trying to do everything it can to recover. As things stand right now, I do think we have a good chance, but one long negative candlestick could change things rather rapidly.

US dollar strength or weakness can also come into play, so pay attention to the US Dollar Index.

Neo did very little during the trading session, and you can even draw a nice comparison between Neo and Bitcoin because they have moved in the same type of momentum over the last week or two. Because of this, I think it is obvious that Neo would need to see Bitcoin take off to the upside, which could show money flowing back into the crypto market. Keep in mind that Neo is much smaller than Bitcoin, so if we get a sudden “risk-on move” in the crypto market, it should be somewhat outsized in this market.

The $20 level offers a significant amount of support that extends down to the $19 level, so if we were to break down below that level, is very likely that we could see this market reach the $15 level over the longer term, which would show even more weakness in the neo-market. At this point, Neo is starting to lose its influence, so you need to look at influence from other markets to determine where it will go. This is not Ethereum, this is not Solana. It does not have a “feel-good story” behind it, but it does make a nice trading instrument to take advantage of and leverage the overall attitude of crypto traders.

Looking at this market, the 50-day EMA sits at the $23.66 level and is dropping. I think that the 50-day EMA will cause a certain amount of technical reaction, but if we can break above there then it is likely that we go looking to reach the $25 level. The $25 level would be a large, round, psychologically significant figure that will also attract a lot of headlines. That is essentially 20% from here, but we need to see some reason for crypto to take off. On the other hand, if we were to take out the support level underneath and drop to the $15 level, then it is possible that we will lose 25%. Neo does tend to be very volatile, but if you line up at the chart on top of the Bitcoin chart, it does follow quite nicely so keep an eye on both charts in order to navigate what happens here. US dollar strength or weakness can also come into play, so pay attention to the US Dollar Index.

I still look at this as a “fade the rallies” type of situation, although it should be noted that bear markets do have nasty rallies from time to time.

The S&P 500 has been all over the place during the trading session as the Federal Reserve meeting and announcement has come and gone. An addition of 25 basis points should not be a huge surprise, and quite frankly I think most of the market expected that. Because of this, by the end of the day, we had seen a little bit of a noisy session, but at the clothes, not much had changed. We are still fighting the same battle.

It will be interesting to see this plays out because quite frankly there are a lot of reasons to think that the S&P 500 is going to struggle going forward. After all, we have a lot of concerns when it comes to the tightening monetary policy, as higher interest rates themselves will be an issue, but what will be is the fact that the economy looks like it is slowing down. Tightening into a slowdown is a great way to cause not only a recession but a lot of financial damage.

The 200 Day EMA sits just above current pricing, and it is worth noting that the 50 Day EMA is starting to reach towards it in order to form the so-called “death cross.” Because of this, longer-term traders may look at this as a potential selling opportunity, but quite frankly there are so many other things out there to short the market based upon that I do not really care one way or the other if there is any efficacy to that signal.

Comparisons to earnings from last year are going to be horrific, as there is no real way to match them. After all, last year was about reopening the economy, and now we have to start thinking about trying to normalize things. We are a long way from normal, as inflation is out of control, and of course, the global growth picture looks anemic at best. Notice how I have not even mentioned the war in Ukraine, which is going to cause major problems with the food supply in various parts of the planet as well. I still look at this as a “fade the rallies” type of situation, although it should be noted that bear markets do have nasty rallies from time to time.