I remain bearish and have no interest in trying to fight the overall trend.

The DAX pierced support Tuesday as we continue to see a lot of negativity. The €12,500 level is an area that a lot of people would be paying close attention to, and it’s not a huge surprise to see that the market has tried to recapture it. That being said, I do not think that the market is likely to continue seeing any real fight, and it’s probably only a matter of time before this market breaks down again.

The size of the candlestick is worth noting as well, as it is a very long candlestick, suggesting that there’s a lot of momentum to the downside. The market breaking down below the bottom of the candlestick would signify even more negativity coming into the market, with fresh sellers jumping all over the DAX. Keep in mind that the market will continue to look at the reality of the European economy struggling. After all, we are even hearing stories of Hamburg having to limit hot water usage. This is not the sign of an economy that’s going to be doing well.

Rallies at this point should find plenty of sellers above, especially near the €13,000 level, and then eventually the €13,250 level. At that point, I would anticipate that the market will show plenty of exhaustion, and I don’t see any reason whatsoever in going long. Underneath, I think the market could find its way down to the €12,000 level, which is a large, round, psychologically significant figure, and an area where we have been noisy in the past.

It is not until we break above the €13,500 level that I would consider this as a market that I can be a buyer of. If that were to happen, then we could see a move to the €14,500 level. The 200-day EMA sits just below there, so I think that could offer quite a bit of resistance as well. Either way, the market looks very soft, and I just don’t see a scenario where I should be a buyer of the DAX. You will probably see the US recover much quicker than the European Union, especially Germany which has quite a few problems at the moment. With this being the case, I remain bearish and have no interest in trying to fight the overall trend.

Be cautious about jumping in with a huge position until you get reasonable confirmation for your trade.

The West Texas Intermediate Crude Oil market fell during most of the session on Wednesday but did see a bit of recovery late in the day. What’s interesting is that people are suddenly focusing on the lack of demand due to the recession, which is something that you would have thought had to cross their minds before. However, it does not look like it has, so we had a little bit of panic selling. It looks as if the crucial $100 level has held though, and that’s probably more important than the uptrend line.

This is going to come down to demand, and whether or not good signs of reopening in China are enough to overcome recessionary fear in the West. I think at this point it’s going to continue to be a bit of a battle, but it is worth noting that the commodities markets have seen sudden selling pressure and natural gas and copper as well, both markets that had previously been doing fairly well. There’s an old expression, something about shooting generals when things get bad. That might be what was seen here, so you will most certainly have to pay close attention to this market.

If we were to break down below the $100 level, that could change a lot of attitudes, perhaps even have people start to short this market. As things stand right now, I’m not necessarily comfortable shorting this market because we are still very much in an uptrend, and it is worth noting that there was a significant attempt to save the market today. If we can break above the $110 level, then I think the overall uptrend continues, perhaps strong enough to make a run toward $120 above.

You will have to keep an eye on inventory numbers, some of which come out on Thursday, employment numbers, GDP, consumer sentiment, and everything else in the world right now that seem to be throwing the markets around. If we are in fact going into recession, one would think that oil has only a limited amount of upside, but right now it looks as if nothing has changed, at least not enough to change the overall attitude of this market, so be cautious about jumping in with a huge position until you get reasonable confirmation for your trade.

If you are looking to buy the Euro you can take your time, as you should have plenty of it to spare.

The Euro initially tried to rally during the trading session on Thursday, but then fell rather hard to pierce the 1.08 level. This was a major breach of support, although we did recover a bit after that move. This tells me that there is still plenty of downward pressure on the Euro, and during the day we also learned that the EU considers paying for Russian natural gas in rubles as a breach of sanctions. Because of this, the energy question continues to be very difficult for Europe, and I think that might be something that we see in the currency markets.

Furthermore, the interest rate differential between Germany and the United States continues to widen, and therefore it will continue to favor the greenback. While the ECB has the added headache of having to deal with expensive energy, or perhaps even the possibility of very little energy, the Federal Reserve is extraordinarily tight and is looking to hike rates quite rapidly. With that being the case, it does make a lot of sense that the greenback will continue to overcome the Euro in strength.

The 50 Day EMA has broken below the 1.11 level and is sinking rapidly. I think you use that as the “ceiling in the market” on any type of significant bounce. I do not see that bounce happening, but of course, anything is possible. At this point, if we break down below the bottom of the candlestick from the Thursday session, it is likely that we could go looking to reach the 1.06 level underneath, which is an area where we had seen a lot of noisy behavior previously, therefore, I anticipate that a break down is going to be a slow and painful event.

At this point, I cannot see a legitimate reason to buy the Euro over the greenback, but if we were to break above the 1.12 level, I might consider it. Needless to say, as it is 400 points above, it is not something I am overly concerned about doing anytime soon. If we were to do that, it would more than likely be a trend change, which tends to be a longer-term event anyway. In other words, if you are looking to buy the Euro you can take your time, as you should have plenty of it to spare.

I do believe that it is probably easier to break down than it is to have a sustainable rally at this point, but it is possible that we will get some type of turnaround.

The West Texas Intermediate Crude Oil market fell on Monday to pierce a significant uptrend line. By doing so, the market looks very likely to continue going lower, especially if we break down below the lows of the Monday session because it would show even more continuation of the downward pressure. It is also worth noting that the 50-day EMA sits just above the last couple of candlesticks, so it certainly makes sense that we would continue to see downward pressure.

Furthermore, you can see that structurally we have been making lower highs along the way, and now we are getting close to making a very significant “lower low.” If that is going to be the case, the $90 level will be targeted, and then perhaps even lower than that. If we break down below the $90 level, then I think it is probably only a matter of time before we go looking to reach the 200-day EMA.

Alternatively, if we were to turn around and break to the upside, the $104 level would have to be overcome on a daily close. If that were to happen, then it is likely that we could go looking to the $110 level after that, which is a significant previous area, and an area where we had seen a bit of a struggle. Once we clear all of that, I might be convinced that the oil market is going to recover for the longer term, but at the end of the day, it is worth noting that there is a lot of demand destruction out there due to the fact that we are getting ready to have a massive recession in a lot of developed countries.

I do believe that it is probably easier to break down than it is to have a sustainable rally at this point, but it is possible that we will get some type of turnaround. At this point, it still favors the downside as we have seen a “lower high” on the longer-term chart as well. We just have not broken down below the support level from the parabolic move for a couple of months ago, and once that gives way, that would open up a massive amount of shorting opportunities.

The market will now have to make up its mind as to where it wants to go longer term.

The British pound fell significantly on Friday as we have sliced through the 1.30 handle. However, we started to see the market turn around quite significantly later in the day, as the British pound bounced from this obvious source of support. The question now is whether or not it can extend?

This is an area in which a lot of people have been looking for the British pound to recover, so I would not be surprised at all to see a little bit of a bounce. However, at this point in time, I think it is probably only a matter of time before the sellers would return, as we have been in such a strong downtrend. The 1.32 level is going to be significant resistance, especially now that the 50-day EMA is racing towards it. I think at this point it will be a “fade the rally” type of situation ahead.

On the other hand, if the market were to break down below the bottom of the candlestick for the Friday session, then it is possible that we could go looking towards the 1.29 level, possibly even the 1.28 level which is the bottom of a short-term consolidation area just below the 1.30 handle.

In general, the British pound is going to continue to suffer at the hands of risk appetite destruction across the world, as the US dollar is considered to be the first place people run toward if there is a lot of concern. That being said, if we do get a short-term rally, the first signs of exhaustion would be a signal for me to start selling. The market will continue to be very noisy, but at this juncture, I think that we are going to have to pay close attention to the bond markets in general. Ultimately, this is a market that is going to have to decide whether or not it is forming a “double bottom”, or if it is just simply a bounce on the way much lower. A little bit of patience will probably go a long way in this market, as you can see just how choppy it has been over the last couple of weeks. The market will now have to make up its mind as to where it wants to go longer term.