I think this is a market that continues to see a lot of negativity unless of course the US dollar suddenly changes this trajectory, something that I can’t see happening based on interest rates and what they are doing right now. 

The NASDAQ 100 got crushed on Friday as Jerome Powell has finally talked the market into believing the fact that he is trying to fight inflation. In other words, interest rates will continue to be high, and that absolutely crushes growth stocks. Growth stocks make up the major push in this market, therefore it’s likely that we continue to go lower.

We are now below the 50-Day EMA, and closing at the bottom of the candlestick. In other words, it’s very likely that we continue to go lower, and therefore I think that we have now entered the next phase of the bearish market. If we break down below the bottom of the candlestick, we could see this market go down to the $12,000 level. Breaking down below there then opens up the possibility of a move down to the $11,000 level.

Looking for Signs of Exhaustion

• If we do rally, I will be looking for signs of exhaustion that I can start shortening, especially with the 200 Day EMA sitting just below the $13,500 area, which is where we topped out at.
• I think this is a market that continues to see a lot of negativity unless of course the US dollar suddenly changes this trajectory, something that I can’t see happening based on interest rates and what they are doing right now. Markets are all over the place, but it certainly looks as if a lot of people got on the wrong side of the trade.
• This is a scenario where I will be looking at an opportunity every time we get a rally and exhaustion, and therefore I will be watching this chart very closely.

The market certainly seems to have gotten a bit of a shock, and the fact that we are closing at the very bottom of the candlestick does suggest that we have further to go. In this scenario, I am very aggressively short on a breakdown, or at the first signs of an exhausting candle. I do like the idea of shorting the NASDAQ 100, and I think that it’s needed to happen for quite some time as the stock market has continued to ignore reality, but it got a huge dose of it during the Jackson Hole Symposium speech. 14 years of spoon feeding Wall Street has caused this train wreck, now it’s up to the Federal Reserve to end it.

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I think we will continue to see plenty of reasons for this pair to continue dropping.

• The EUR/USD currency pair fell hard on Monday, reaching down to the 1.0150 level.
• This is an area that has been supported previously, extending down to the 1.01 level.
• If we were to break down below that level, then it’s likely that this market goes much lower.
• In that general vicinity, I would anticipate that this market would hear quite a bit of noise.

EUR/USD Technical Analysis

If we break it down below the 1.01 level, then it’s possible that we could go looking to the parity level underneath, an area where you would expect to see a lot of interest. In fact, we had bounced quite significantly from there previously, so I think it does make quite a bit of sense that there will be a lot of “market memory” in that area. Breaking down to the parity level then opens up the possibility of a drop-down to the 0.98 level, perhaps even down to the 0.96 level.

The European Union continues to have major problems when it comes to the overall economic performance and the problem with energy that they will undoubtedly see this winter. The European Central Bank did a little bit of monetary tightening previously while promising to buy more assets. In other words, it was for show, and not much more.

It’s worth noting that the 50-day EMA has offered significant resistance previously, so it does make a certain amount of sense that we see that as a potential resistance barrier on any type of rally, so I think we continue to fade rallies that occur. The Monday candlestick is closing toward the bottom of the range, which certainly shows negativity that should be followed through.

On the other hand, if we were to turn around and break above the 1.04 level, then we could make a run to the 1.06 level. Breaking above the 1.06 level then has me switching my overall attitude and perhaps finally buying the euro. I don’t think that it’s going to happen anytime soon, especially considering the price action that appeared on Monday. I think we will continue to see plenty of reasons for this pair to continue dropping, so any time at rallies, I will be looking for signs of exhaustion that I can jump on, just like I have been doing for the last several months.

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