• The S&P 500 has rallied slightly during the trading session on Wednesday as we are waiting to see what Jerome Powell has to say on Friday.
• This sets up Thursday as being a very lackluster day, and probably one that more likely than not is going to be better off avoided.
• If you are a short-term trader, then we probably have a nice range bound to set up for the day.

The 200 Day EMA sits just below the 4200 level, and therefore I think it will offer a bit of the ceiling in the short term. Traders will more likely than not be a bit hesitant to get overly aggressive during the Thursday session, so I think at this point you’re probably going to be trading something along the lines of 15-minute charts. It’s likely that the market will continue to see Friday as the day that could set up the next move.

For myself, I will be placing a trade until Monday, because the day of the announcement and speech typically has a lot of noise. It’s not uncommon for Wall Street to run the market up in one direction, only to turn around the next trading day. This will be especially true if they have the entire weekend to “rethink their interpretation.”

Markets Waiting for Interest Rates

The 50-Day EMA underneath could offer support, and if we were to break down below the 50-Day EMA, then I think the market could unwind because the 4000 level will be challenged at that point. Anything below the 4000 level opens up a flight of selling. As far as getting bullish is concerned, I need to see a daily close above the most recent high, which is just above the 4300 level.

Take your time to pay attention to the interest rates coming out of the United States, because interest rates will directly counter what the stock market is going to do. Higher interest rates will drive the stock market lower, and vice versa. It appears to me that Wall Street is trying to convince itself that the Federal Reserve is willing to support it again, so the next couple of days should be rather important. Nonetheless, it’s astonishing to me how many people believe that the Fed will ultimately ride to their rescue.

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• BTC/USD has drifted a little bit lower during the trading session on Monday, losing 1%.
• We are sitting in an area that has been supported a couple of times in the past, and now looks to be important from a short-term perspective.
• The $21,000 level has been an area that people have been fighting over for a while, so it does make a certain amount of sense that we would see this market mess about in this area.

I anticipate that there is probably a lot of support extending down to the $20,000 level, so in this area, I would anticipate that there probably will be plenty of buyers. However, if we do break down below the $20,000 level, it is likely that the Bitcoin market will start to fall rather drastically, and probably drag the rest of the cryptocurrency market with it. It is worth noting that the US dollar is strengthening quite drastically, and therefore will have an effect on Bitcoin. Furthermore, as monetary policy continues to tighten, people will worry about risk appetite. Risk appetite falling leads to lower pricing of Bitcoin and other cryptos in general.

Rallies at this point will more likely than not end up being looked at with suspicion, with the 50 Day EMA sitting just below the $24,000 level offering a bit of resistance. Beyond that, we have the $25,000 level, which has recently offered quite a bit of selling pressure. Because of this, I think you need to keep looking at this market through the prism of one that is in a downtrend, and that has not changed. In fact, it’s very likely that we will continue to see a lot of negative pressure, and a breakdown below the $20,000 level could kick off a bigger move to the downside. If that happens, we could see Bitcoin unwind all the way down to the $12,000 level over the longer term. It is worth noting that the $12,000 level with where the entire bullish run had kicked off from.

On the upside, if we can clear the $25,000 level, then it’s likely that we will go looking to reach the $28,000 level, which is the beginning of a major area of noise that extends all the way up to the $32,000 level.

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This remains a “paid the rally” type of market, but perhaps more or less from a shorter timeframe than I normally trade from.

The GBP/USD currency pair continues to see a lot of noise right around the 1.20 level, an area that has been important multiple times. By hanging around this area, it shows that the market is not quite ready to break down, and therefore it’s likely that we will do more sideways action than anything else. This does make a certain amount of sense as the world is trying to figure out what central banks are going to do.

The Jackson Hole Symposium next week will almost certainly influence the markets as well, as several central bankers around the world will meet and give speeches. The British are now worrying about inflation that is running at over 10% year-over-year, although the Americans are still at 8.5%. This is a market that I think will continue to be very noisy and trying to figure out who’s going to be the more hawkish of the two.

The Federal Reserve continues to try to convince people that they are going to be hawkish, but it’s possible that they may already be looking at slowing down a bit if the June Federal Open Market Committee Meeting Minutes are to be believed. That’s obviously in the past, but that was released during the day, and it suggested that perhaps there are some second thoughts at this point.

Markets Continue to be Noisy

• If we break it down below the 1.20 level, then it’s likely that this market will go hunting the 1.18 level underneath, an area that has a lot of previous support.
• This is from a short-term perspective.
• Breaking down below that level then opens the possibility of even more US dollar strength.

At this point, it looks as if the world is going into a global recession, so I think that it is probably only a matter of time before the US dollar picks up strength on any bounce. In fact, I have no interest whatsoever in trying to buy this market until we get above the 1.26 level, something that I don’t see happening anytime soon. It remains a “paid the rally” type of market, but perhaps more or less from a shorter timeframe than I normally trade from. Markets continue to be noisy, so you may need to watch interest rates in both of these countries get a bit of a heads up.

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