Ethereum has recently been a little bit negative but previously had seen a massive move higher based upon the idea of “The Merge” coming soon, and the idea that Ethereum will become much cheaper as far as transactions are concerned, and a whole host of other features.

• The ETH/USD market rallied a bit during the trading session on Monday, getting over 7%.
• However, you need to keep in mind that a 7% gain from here is much smaller than it would have been a couple of weeks ago. It most certainly is quite a bit smaller than it was a year ago.
• The market is likely to continue seeing a lot of noisy behavior, so at this point, I’m not necessarily sold on the idea of Ethereum suddenly taking off.

If we break down below the bottom of the candlestick for Monday, you can see that there’s been a little bit of support in that area, and it’s likely that we could drop down from there to reach the $1000 level. The $1000 level is an area where we have seen a lot of action in the past, and obviously, the $1000 level will have a lot of psychology attached to it. Breaking down below the $1000 level would be extraordinarily negative, and that could open yet another leg lower. Ethereum has recently been a little bit negative but previously had seen a massive move higher based upon the idea of “The Merge” coming soon, and the idea that Ethereum will become much cheaper as far as transactions are concerned, and a whole host of other features.

Bounce not Likely to Last

The reality is that the market has more likely than not already priced this in. Furthermore, you must keep in mind that risk appetite is going to be a major driver of what happens in this market, as well as everything else related to cryptocurrency. I don’t necessarily think that the market is out of the woods yet, and I would fully anticipate that we drop again. However, the question at this point is whether the Ethereum market rallies toward the 50 Day EMA, and then beyond, or if it just starts falling.

A lot of this is going to come down to central-bank behavior, and how hawkish they are. Pay attention to bond markets, because if interest rates continue to rise, that would of course work against risk appetite, and thereby work against Ethereum. Ethereum does seem to be one of the better performers in this financial asset class over the last several weeks.

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I believe that the market will continue to respect the 200 Day EMA, currently sitting at the 4200 level and going sideways. 

• The S&P 500 has done very little during the training session on Monday after initially gapping lower.
• The fact that we have bounced is a bit surprising, but it’s also indicative of just how many traders out there don’t believe the Federal Reserve.
• The market seems to be respecting the 4000 level in the E-mini contract right now, and the fact that we sold off so viciously on Friday seems to be something that people are willing to look past, at least in the short term.

Massive selloffs like we had on Friday very rarely happen in a vacuum, so I think it is more likely than not that any rally that we see gets sold into. I believe that the market will continue to respect the 200 Day EMA, currently sitting at the 4200 level and going sideways. That also happens to be at the top of the candlestick from the Friday session, so it all ties in together quite nicely. A short-term rally opens the possibility of shorting at a better price, but I also need to see signs of exhaustion to get short again. After all, I don’t want to sell the market just for the sake of selling it.

Monetary Tightening Likely to Put Pressure on Markets

The alternate scenario would be that we break down below the lows of the candlestick on Monday, which should open and move down to the 3900 level. The 3900 level being broken to the downside opens the possibility of a move down to the 3700 level, which is roughly where we bottomed it previously. Furthermore, you need to be cautious about the fact that even though Wall Street is willing to ignore the Federal Reserve, quantitative tightening has just started, and there are a lot of signs of stress in other markets. Of note would be the credit markets, which are starting to show signs of an issue.

It’s not until we break above the 200 Day EMA that I look at this as a market that’s willing to take on the 4300 level again. If we were to break above there then you can make an argument for a bit of an inverted head and shoulders, which would obviously be a very bullish sign. I’m not holding my breath for that, just am keeping that in the back of my mind.

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The Dax German index plunged drastically during the trading session on Monday, losing over 2.25%. The market is absorbing the idea that the Russians are going to shut down part of the Nordstream pipeline system, thereby punishing Europe yet again for a few days. This is extensively to do a bit of maintenance, but either way, it demonstrates acutely just how vulnerable the European Union is right now.

If natural gas starts to get cut off again, it’s likely that we would see the German economy get hit especially hard, because its manufacturing base is so crucial. Because of this, we have seen companies in Germany sell-off during the day, which makes perfect sense. Furthermore, we also have central bankers speaking at Jackson Hole this week and are likely to continue seeing the opportunity as a possible way to push the markets lower as the central banks around the world tightening monetary policy will work against stock markets.

The €13,000 level underneath is likely to be a bit of a floor but considering that we have fallen as hard as we have, it would not surprise me at all to see this market continue going lower. Underneath, the €12,500 level is an area that you need to pay close attention to, and of course, recognize that we have already formed a bit of a “double bottom” in that area. Breaking below that area would obviously set markets on fire, but right now that is still off in the distance.

Rallies at this point will have to deal with the 50 Day EMA, which is at the top of the candlestick for the Monday session. If we rally from there, then the €14,000 level should be paid close attention to, as it’s where we had pulled back from, and it’s just below the 200 Day EMA indicator, something that a lot of people will pay close attention to.

• I think it continues to be a “pay the rally” type of situation as Germany will continue to struggle through the prism of a European Union that is in trouble.
• The size of the candlestick for the day suggests that we must certainly have further downside ahead.
• We continue to expect that DAX to continue going lower over the next several sessions.
• Fading rallies will continue to be my trade strategy going forward.

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This continues to be a market that I want to take advantage of every time it tries to recover and shows a long wick to the upside.

The German DAX Index went back and forth on Monday as traders still have no real clue as to what they want to do. The €12,775 level has seemingly held for the session, but we are drifting lower overall. Remember, as Germany goes, so goes the rest of the European Union. In other words, this is a chart you should be paying close attention to, because it will have an effect on other indices such as Paris, Amsterdam, and Milan. Furthermore, it can also have an effect on the euro and vice versa.

The fact that we are continuing to slide lower tells me that we have further to go, and rallies at this point in time should be looked at with the utmost suspicion. In fact, I think of them as “gifts” for those who jumped in and tried to front run any type of bounce. Furthermore, if you have the ability to short this market, may very well find this a tempting set up on any signs of exhaustion after a bounce.

Take a look at the €13,600 level, it looks as if it is a ceiling in the market, and that’s only assuming that the market can break above the €13,200 level, which I’m not entirely convinced that it can. Ultimately, it’s more likely that we continue to break down and reach toward the €12,600 level, followed by the €12,500 level. Anything under there would have me looking for €12,000 rather quickly.

Keep in mind that DAX is highly levered to global trade, as most of the major players on this index are massive exporters of industrial goods. Because of this, the DAX will continue to suffer due to the fact that it looks like we are heading into a global slowdown. In that scenario, there’s no real reason to think that stocks go well, be it in Germany or anywhere else. The market has been very noisy to say the least, but the one thing that has been clear at this point is that sellers certainly have the advantage. Ultimately, this continues to be a market that I want to take advantage of every time it tries to recover and shows a long wick to the upside. We would need to break above €13,600 to even begin the conversation of this market looking bullish.

It’s difficult to get bullish on this pair anytime soon.

The euro initially tried to rally against the US dollar during Monday trading, but gave back almost all of the gains in yet another sign of weakness. Monday was Independence Day in the United States, so obviously volume was a major issue. The fact that the euro could not capitalize on the lack of American trading probably says more than I ever could about the overall direction of this market.

Bond yields in America continue to climb and outperform the European Union. Because of this, the pair is more likely than not to continue going lower. I will continue to fade rallies, as I see so much in the way of noise above. The 1.06 level looks to be extraordinarily resistive, while the 1.08 level is essentially the “ceiling in the market” at the moment. We would have to break through all of that for me to start to explore the idea of a trend change.

On the downside, the market clearly has been negative for some time, and we have broken through the bottom of the 1.04 level couple of times, so if we were to make a “lower low”, that would be nothing but negative for the euro going forward. I do believe this will happen given enough time, with the euro looking to reach the 1.02 level, followed by the parity level sometime later this summer. With the ECB doing everything it can to keep the economy limping along, it’s very unlikely they will be able to do more than a token interest rate hike or two. At this point, the consensus is that they may do 50 basis points. On the other side of the equation, you have the Federal Reserve which hass already promised yet another 100 basis point rate hike, so it will continue to make US bonds much more attractive, most certainly above the European Union.

Ultimately, the direction of this pair is probably in the hands of the Federal Reserve than anybody else, but we also have external factors such as the war in Ukraine, the lack of energy in Europe, and the fact that there is such a huge dichotomy between all of the member states as far as where they are economically. With that in mind, it’s difficult to get bullish on this pair anytime soon.

One thing that could help is if the Federal Reserve decides to loosen monetary policy again, which they almost certainly will do sometime late next year.

Ethereum did very little on Monday as it looks like the $1250 level is going to continue to offer a little bit of the barrier. At this point, the market looks as if it is ready to roll over again, perhaps challenging the $1000 level. While the recent price action has been somewhat encouraging, the reality is that Ethereum has a long way to go before turning the attitude of the entire market around.

Quite frankly, if Bitcoin cannot pick itself off the floor, there’s no reason to think that Ethereum will. This is a “fade the rally” type of market until something drastically changes, not the least of which would be a final completion of the rollout of upgrades for the network. Beyond that, there have been a lot of security breaches on Ethereum-based ecosystems, although not necessarily Ethereum itself.

While I do think that Ethereum has some type of future, we are still trying to figure out what that future is. Yes, I am fully aware of the fact that we are heading into “crypto winter”, a time when you can accumulate vast amounts of crypto in an attempt to benefit quite nicely once things start to take off. This is my plan, but I’m only going to do it with coins that I believe are going to have a future. Luckily, Ethereum is most certainly one of those.

That being said, I do think that we have further to go to the downside, and even if we do start to turn things around from this day forward, we have a long way to go before any significant recovery would have occurred to make me think that I had “missed the trade.” I will think of this more or less as a savings account, perhaps adding a bit here and there, accumulating over the next several months or years as we try to carve out some type of basing pattern.

One thing that could help is if the Federal Reserve decides to loosen monetary policy again, which they almost certainly will do sometime late next year. This is because the economy is almost positively going into a recession, so eventually they will have to let go of the inflation argument, if for no other reason than to save their own portfolios.

Make sure that you build up your position slowly.

Gold markets were quiet on Monday, which should not be a huge surprise considering that it was Memorial Day in the United States, and futures trading was somewhat limited. Because of this, I would not read too much into the candlestick other than that the market is hanging around the 200-day EMA yet again. We are in an area where the market will have to decide its next move rather quickly.

The 50-day EMA is above the $1875 level and dropping. Because of this, I think there is still a significant amount of technical pressure on this market, but ultimately, we have to determine where we are going next. Alternatively, this is a market that I think will have a lot of noise attached to it as the interest rates in America have been all over the place. Recently, they have been falling, but I think that traders are starting to jump into the bond market for safety, so I would not read too much into it. Because of this, a pullback is very possible, and if we were to break down below the $1850 level, I suspect that we may have to reset. The $1800 level underneath should be an area where a lot of support could be found, so as long as we stay above there, we have the possible making of a longer-term uptrend. However, if we give up that area, it could get ugly rather quickly.

If it moves like that, it would almost certainly have to do with the US dollar spiking and value. I do think that both gold and the dollar can rally, but it’s going to depend on global macro conditions. At this point, things look rather tenuous at best. If we can break above the 50-day EMA, that could kick off a huge move higher, perhaps sending gold to the $1925 level, maybe even the $2000 level over the longer term.

When I look at this chart, at the very least I would anticipate a bit of a pullback so that we can build up momentum and continue to rally. If we break down below the hammer that pierced the $1800 level, gold will fall apart and go much lower. In these types of environments, it’s very difficult to get overly bullish or bearish on anything with size. Make sure that you build up your position slowly.

The German DAX Index rallied a bit on Monday, reaching the €14,600 level in the cash market. However, you can see that we have pulled back a bit to form a shooting star. At this point, the market looks as if it is testing a significant amount of resistance, but at this point, I think we need to find an opportunity to short this market based on recent action. That is not a mean that the DAX is going to fall apart, just that it’s likely that we need to pull back.

On the other hand, if we were to break above the 200-day EMA, then it’s possible that we could go looking to the €15,000 level. The market will more than likely look at that as a major barrier. Whether we can break above the €15,000 levels is a completely different question, and I think it would be difficult for that to happen right away. At this juncture, I think that a pullback probably will find a little bit of a support level near the 50-day EMA, so don’t be surprised at all to see that we are supported in that area.

If we were to break down below the €14,000 level, then it’s likely that we will go looking to reach down to the €13,500 level underneath, and breaking down below there it’s likely that we would go looking to the €12,600 level. Looking at the chart, it’s obvious that we are trying to break out to the upside, but I think we are going to have a very noisy market going forward, as the European Union has to deal with a lot of noisy behavior, as there are major concerns when it comes to energy supply. Given enough time, we will have more clarity, but it looks as if we are at least trying to turn things around. At this point, I do think that you are more likely going to have a short-term pullback. If we break through the €14,000 level, things get ugly. As we are between the 50- and the 200-day EMAs, it’s likely that things will remain volatile as per usual. I believe that if the European Union is going to recover, then it’s likely that it will show up in the DAX before others. However, if we go the other way, the same can be said.

Rallies are to be sold into at the first signs of exhaustion and is likely that Ethereum has much further to go over the longer term. 

The Ethereum market initially tried to rally on Monday, but then gave back the gains to form a less-than-impressive candlestick. Because of this, it looks like Ethereum will continue to struggle, as we are hanging around the psychologically and structurally important $2000 level. That being said, the market is going to continue to be volatile, and at this point, it looks as if Ethereum will continue to struggle.

If we break above the highs of the last couple of days, it could kick off a relief rally to go looking towards the $2500 level. That is an area that I think would be a major barrier, and as a result, if we were to break above there it would be an extraordinarily bullish sign. That being said, I think that the market would need a lot of external pressure to make this market go higher. There is a little bit of an overbought condition in the US dollar, so that could have something to do with what we see next, and as a result, the market participants will have to continue to see a huge change in risk appetite to make Ethereum look viable.

If we break down below the lows of last week, is very likely that Ethereum will crumble, looking to reach the $1500 level. After that, we could have a significant collapse as well. That being said, I think that the market is more likely than not going to continue to see plenty of negativity, as the crypto markets are in serious trouble. Whether or not we have reached the bottom is a completely different question, but at this point, it is very unlikely that the attitude will change enough to make that happen, and unless something drastic happens.

Keep in mind that the US dollar is like a wrecking ball to almost everything, and Ethereum will be no different. Rallies are to be sold into at the first signs of exhaustion and is likely that Ethereum has much further to go over the longer term. The market would of course have a completely different attitude if we managed to break above the $2500 level, but that would take something rather extraordinary to happen over the next couple of days to make that happen. More likely than not, we will break down and go much lower.

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.