If we turn around and break down below the bottom of the candlestick from Thursday, I’m not going to hesitate to buy the US dollar, but I would not necessarily do it here.

• The AUD/USD currency pair rallied a bit Friday as we continue to climb ever so slightly.
• This is an interesting candlestick and move during the day because we had formed such a massive shooting star from the Thursday session.
• At this point, the market looks as if it is stalling a bit, but it is rather impressive given the fact that the US dollar has strengthened so much against other currencies.

Resistance at 200-Day EMA

Looking at this chart, the 200-day EMA sits just above, and that could offer a little bit of resistance. The 0.72 level above there opens up the possibility of resistance as well, and it’s likely that we will see sellers come back into this market before it’s all said and done. That being said, it comes down to the bond markets and whether or not traders believe that the Federal Reserve is going to continue to tighten. It’s interesting that they don’t, because it shows just how much the credibility of the Fed has been destroyed.

The Australians are more likely than not going to tighten a bit as well, but they also have the added concerns about China slowing down. The market is highly sensitive to the Chinese economy, due to the fact that the Australians are the biggest supplier of copper and other metals to the Chinese. That being said, the market is likely to continue to see noisy behavior, and although the Aussie has been a bit of an outlier when it comes to fighting the strength of the greenback, it does not necessarily mean that I want to jump in and start buying it.

If we turn around and break down below the bottom of the candlestick from Thursday, I’m not going to hesitate to buy the US dollar, but I would not necessarily do it here. I think we would probably see the euro and the British pound fall much further, so I am more or less going to use this market right now as an indicator. However, I would also point out that if we broke above the 0.72 level, then it’s likely that we go much higher. At that point, it would be a very strong turn of events. The last couple of candlesticks have been relentless, and if you believe in the bullish flag, there is the possibility that we could go all the way to the 0.74 level.

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The Europeans are going to struggle to keep the lights on, and that has a lot to do with economic output. 

• The EUR/USD currency pair rallied a bit on Wednesday as CPI numbers in the United States came out lower than anticipated.
• This suggests that the rate of inflation could give the Federal Reserve a bit of a break, keeping them from having to be so aggressive with its monetary policy.
• That being said, it’s very unlikely that we will see that happen, due to the fact that the inflation numbers have still come in at about 3 to 3-and-a-half times the Fed’s desired target.

The size of the candlestick was somewhat impressive, but the later we get into the day, the more we pulled back. This suggests to me that there is no real follow-through ready to happen, and I think it is a potential problem just waiting to happen. The 50-Day EMA has offered a little bit of dynamic resistance, so that’s worth paying attention to as well. The 1.04 level above their offers resistance as well, so I do think that it is probably only a matter of time before the overall downtrend continues.

Lack of Energy

When you look at the European Union, it has a whole host of issues, not the least of which is going to be the fact that the energy situation is going to be a very big problem. After all, the Europeans are going to struggle to keep the lights on, and that has a lot to do with economic output. As long as the economy is going to struggle to live up to its full potential, the ECB will have to remain relatively loose with its monetary policy, despite some of the rhetoric that had recently been stated.

The 1.04 level being broken to the upside opens up the possibility of a much bigger move, perhaps to the 1.06 level. It’s not until we break above the 1.06 level that I would consider this trend completely changed. On the downside, I think that the parity level is worth paying close attention to, because it has a lot of psychology attached to it and of course will attract a lot of headline attention. If we were to break down below there on a daily close, then it would open up a trap door selling pressure. That would take a bit of work, but ultimately, I think it’s probably only a matter of time.

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I will more likely than not be looking at a breakdown to start buying.

The Bitcoin market rallied ever so slightly Wednesday as we continue to see a lot of noisy behavior. That being said, the market is likely to be very noisy, to say the least, therefore I think volatility is something that you will need to get used to. The 50-day EMA sits above and is drifting lower. The market is likely to see dynamic resistance due to that, and it is possible that we could see sellers come back into the market at the first signs of exhaustion. Furthermore, we need to pay close attention to the recent high and the $24,000 level.

If we were to break above that high, then it’s possible that we could go looking to the $28,000 level. The $28,000 level is the beginning of the next major resistance barrier that extends to the $32,000 level. If we break above that level, then it’s possible that we could go much higher. Having said that, it’s very likely that we are going to see exhaustion before it’s all said and done. Signs of exhaustion will be looked at as a potential opportunity because quite frankly Bitcoin still has a long way to go before it changes its overall attitude.

With the central bank in the United States being so tight, as well as many others, it makes it very likely that crypto markets around the world will continue to suffer. While Bitcoin is the leader, the reality is that it will just be “less bad” than many others. If we break down below the $18,000 level, this is a market that could fall apart rather quickly, perhaps reaching down to the $15,000 level, perhaps even down to the $12,000 level.

The $12,000 level underneath has been an important level multiple times over the last several years, so I think that you could have a lot of people looking to get involved and build up a larger position. I do think that’s where the monies are to be made next time, building up a longer-term position for the next pump higher. Even though it’s been relatively bullish over the last 24 hours, it’s difficult to think that we have changed attitude completely, so I will more likely than not be looking at a breakdown to start buying.

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I do believe that ultimately we will have a situation that allows for bigger moves to the downside than up, so pay close attention, scale into your positions, and ride the waves lower. 

• The GBP/USD currency pair had a rough session on Wednesday as we are well below the 1.20 level.
• It ended up recovering a bit towards the end of the day, but we are so beaten down that it’s difficult to imagine that anybody with any sense at all would be a buyer.
• There could be short covering rallies at times, but those are going to be opportunities to get out.

At the first signs of exhaustion after a shorter rally, I anticipate that a lot of traders will come back into the market, especially near the 1.20 level, followed by the 1.22 level. The 50-day EMA continues to drop, and now it looks as if it is trying to break down below the 1.24 handle, meaning that it will offer dynamic resistance sooner or later. I think given enough time, we probably have a market that is willing to go much lower, with the possibility of 1.18 being targeted.

Breaking Down Below 1.18

If we were to break down below 1.18, then I would be looking at 1.15 before it’s all said and done. That being said, the market is a little oversold at this point so we are probably due for some type of bear market bounce. Nonetheless, if you are patient enough you should get an opportunity to pick up “cheap US dollars” at lower levels and take advantage of what has been a very strong and obvious trend. The market is one that you cannot fight right now, so standing on the sidelines and waiting to see how it all shakes out over the next couple of days is probably the best way forward. The British pound is struggling right along with other European currencies and economies, and as long as the Federal Reserve continues to be the tightest central bank out there, it makes quite a bit of sense that the US dollar will strengthen. I do believe that ultimately we will have a situation that allows for bigger moves to the downside than up, so pay close attention, scale into your positions, and ride the waves lower. If we were to break above the 1.26 level, then we could be talking about a trend change, but that is so far away I’m not even thinking about it right now.

The longer-term trend should hold.

The euro rallied again on Monday but continues to find resistance just below the 1.06 level. The 1.06 level is an area that continues to be important, and as a result, it’s likely that we will continue to fade in this general area. This is especially true considering that the 50-day EMA is right here as well, so a certain amount of technicality comes into the picture.

The interest rates in America continue to climb, and that is something that cannot be ignored, as it does make the US dollar much more attractive. On a break down below the low of the Monday session, I am more than willing to short this market, although I recognize it is probably going to be choppy than anything else. I’m not expecting clean moves at all, but that’s nothing new in the EUR/USD pair, because that’s the way it typically behaves.

If we were to break down below the 1.05 level, it’s likely that the market could drop another 100 points, but we need to see a little bit of momentum come into the picture in order to make this happen. Ultimately, if we break down below that level, the 1.04 level is an area that could be difficult to break through, as it is a bit of a “double bottom.” If we were to break through that double bottom, that could open up a move down to the 1.02 level, possibly even parity, which is my target by the end of summer.

However, if we do get above the 50-day EMA, it’s likely that the market could go to the 1.08 level. The 1.08 level is an area that’s been imported a couple of times, and it’s not until we break above that level that I would be convinced of the double bottom being confirmed. At that point, you could make an argument for a bit of a trend reversal, but I think it’s a bit early to anticipate that type of move. Interest rate differential continues to favor the US dollar, although the European Central Bank is looking to tighten a bit. It should be noted that the Federal Reserve is still going to outpace the ECB when it comes to monetary tightening policy. Because of this, the longer-term trend should hold.

This is all about risk appetite at this point, so keep that in mind.

The US dollar rallied on Friday to close out the week against the rupee. Looking at this chart, any time we pull back, it’s likely that we will find plenty of buyers underneath. After all, the market has been in an uptrend for quite some time, and interest rates in the United States continue to climb.

Furthermore, you need to worry about emerging markets in general, due to the fact that the global economy slowing down should continue to be disastrous for economies like India. After all, the market continues to see a lot of money running away from more emerging markets beyond India, so that being said the market is likely to continue to see the US dollar gaining against not only the rupee but other emerging market currencies such as the Brazilian real, Mexican peso, and so on.

The ₹77.50 level underneath should be supported, like the 50-day EMA starting to reach that area. Ultimately, I think it is only a matter of time before we see buyers come in and pick things up, and need to look at this chart through the prism of “finding value.” The market will continue to see a lot of support underneath, and it’s not until we break below the 200-day EMA that I would be concerned about the overall uptrend. However, if we did break through that level, then it’s likely that we will see the US dollar will probably be selling off in multiple markets, perhaps not just emerging markets, but at that point I would anticipate that we would see major currencies will continue to be strengthening as well. After all, if traders are willing to buy the Indian rupee, they are most certainly willing to buy the euro and the British pound.

Once we break above the ₹70.50 level, I believe that the USD/INR pair could very well go to the 80.00 level, perhaps even higher than that. If we do get some type of financial issue, via a recession or perhaps even something a little uglier, I expect this market to go much higher, therefore sending the US dollar skyrocketing against less trustworthy currencies such as the rupee and smaller markets like that. This is all about risk appetite at this point, so keep that in mind.

We expect natural gas to rise during its upcoming trading.

Spot natural gas prices (CFDS ON NATURAL GAS) stabilized at a decrease in its recent trading at the intraday levels, to record slight daily losses until the moment of writing this report, by -0.34%. It settled at the price of $6.434 per million British thermal units. It reached -6.68%, and during the past week the price fell by -11.61%.

Nymex natural gas futures fell sharply over the past week, amid a poor near-term weather outlook. After the price touched a week high at $8,065 on Monday, the May contract settled on Friday at $6.534, which is part of an ongoing profit-taking technical correction.

Russia will investigate the cause of a major fire at an oil storage facility near the country’s border with Ukraine, Reuters reported on Monday. The facility in Bryansk caught fire in the early hours of Monday morning, with unverified footage on social media showing what appeared to be two explosions followed by a column of fire, the report said.

Reuters said in the report that the facility is owned by the Russian oil pipeline company Transneft. The news agency reported, citing the Russian Ministry of Emergency Situations, that no one was injured and there was no need for evacuations in any part of Bryansk.

On Thursday, the US Energy Information Administration reported an injection of 53 billion cubic feet, raising domestic inventories to 1,450 billion cubic feet, still 428 billion cubic feet below last year’s levels and 292 billion cubic feet below the five-year average.

The EIA said South Central stocks broken down by region rose by 33 billion cubic feet net, including 18 billion cubic feet in non-salt stocks and 15 billion cubic feet in salts. The Midwest added 11 billion cubic feet of storage, while the East added 9 billion cubic feet. Pacific stocks were flat during the week, and the Midwest pulled 1 billion cubic feet.

Technically, natural gas continued to decline in its recent trading in an attempt to search for a bullish bottom to take as a base. This might help it gain the necessary positive momentum to regain its recovery and rise again. It can reach its recent decline to rely on the pivotal support level of 6.412, in conjunction with the arrival of the relative strength indicators to very saturated areas. Selling operations, exaggeratedly compared to the price movement, which suggests that a positive divergence is beginning to be formed, especially with the emergence of a positive crossover in it.

All of this comes with the price’s trading along a major bullish slope line in the medium term, with the continuation of positive support for its trades above its simple moving average for the previous 50 days.

We expect natural gas to rise during its upcoming trading, especially in the event that the support level 6.412 remains intact, to target the first resistance levels at the price of 7.078.

The argument against oil is that there is a significant amount of demand destruction going on right now due to the fact that the world is very likely to go into a global recession.

The US dollar rallied significantly on Monday to break above the top of a shooting star candlestick from Friday. Because of this, it looks as if the market is trying to break out to the upside, perhaps reaching the 1.27 handle, maybe even the 1.29 handle. At this point, the market is in the process of bouncing around in a larger consolidation area.

That consolidation area is measured from 1.29 on the top and the 1.25 level on the bottom. Because of this, the market is likely to see a lot of back and forth, and we are approaching the middle of the overall area, but ultimately the CAD tends to run based on what is going on in the oil market. For what it is worth, the oil market has broken through a major uptrend line, although it has not completely collapsed. If we start to see an acceleration to the downside when it comes to crude oil, that should hammer the CAD.

The argument against oil is that there is a significant amount of demand destruction going on right now due to the fact that the world is very likely to go into a global recession. Recessions are absolutely horrible for the price of oil, as demand falls through the floor. If that truly is going to be the case, then the Canadian dollar will certainly pay the price. Furthermore, the Federal Reserve is very aggressive in its tightening cycle at the moment, and it certainly looks as if it is going to continue to be the case. In this scenario, is very likely that the USD/CAD pair will reach the 1.29 level above.

I do not necessarily know that we can break out of this overall range, but it is always possible, especially if there is going to be some type of major “risk-off event.” Nonetheless, this is a market that has found a lot of buying pressure underneath the 1.25 handle, and I think it is more likely that we go higher than lower over the next several weeks. In fact, it is really not until we break down below that massive hammer from last week that I would consider this market likely to break down. Currently, it does not look likely.

Ethereum has rallied a bit during the trading session on Thursday to reach a minor downtrend line. It looks like we may go looking towards the 50 Day EMA, as Ethereum continues to be a relatively stable performer. This will mean that we need to get beyond the downtrend line first before we can have that argument.

 

On the downside, the $2500 level continues to be supported, extending down to the $2400 level. If we were to break through all of that it could open up fresh selling in the Ethereum market, which I still believe is a very likely possibility. If that happens, we could break down towards the $2000 level, which is a large, round, psychologically significant figure. The $2000 level will attract a lot of attention, just as a breakout to the upside and a test of the $3000 level could be.

This is a market that recently had seen the “death cross”, and therefore longer-term traders may look at this as a market that is ready to go much lower. The crypto market has been struggling due to the fact that monetary policy is tightening, and the risk appetite out there will continue to slide as a result. As long as that is the case, crypto will continue to cause some issues, and therefore I have a hard time believing that you should be dumping all of your money in right now. If we do see a turnaround, you should have plenty of time to get involved.

The only thing I think you can count on is a lot of volatility, and you need to pay attention to Bitcoin which has been a bit sluggish, so that is probably going to continue to be the case over here as well. Because of this, I think we need to see the market grind back and forth in general and perhaps build up a bit more stability before going “all in.” Furthermore, we need to see more risk appetite out there for a sustained move in order for crypto to follow along with other assets. The Federal Reserve certainly looks as if we are going to see them hiking rates almost every meeting between now and the end of the year, so tightening monetary policy will continue to work against this market.

The Euro has rallied rather significantly during the trading session on Thursday to reach towards the 1.11 handle. The market has a significant amount of resistance built into it between the 1.11 level and the 1.12 level. This is an area that previously had been a lot of support, so I am waiting to see whether or not we get some type of exhaustion that we can start shorting. Yes, I recognize that the Euro has rallied over the last couple of days quite nicely, but it is only a matter of time before US dollar strength could come back into the picture.

As the Federal Reserve is going to continue to tighten monetary policy, that could lift the US dollar, and therefore push this market lower. The Euro had gotten a bit oversold recently, so the fact that we have rallied the way we have is probably not a huge surprise.  I have no interest in buying this pair, at least not until we see a major breakout, something that has yet to happen.

The 1.12 level is an area that we need to clear at the very least, as that previous support level being recaptured would be a strong sign. Furthermore, the 50 Day EMA sits right in the same area, so it all ties together quite nicely. I will be watching this market on Friday, as it is more likely than not that traders may not want to carry a bunch of risk into the weekend. Furthermore, you have to worry about the Euro due to the fact that the European Union looks as if it is in serious trouble economically, although it must be said that the entire world is probably heading towards a slowdown.

Pay close attention to the interest rate differential, because if it does in fact continue to stretch between the two, that should help the dollar over the longer term. We had a nice bounce at this point, and that was probably something that was needed for a while. Signs of exhaustion will be jumped upon by me, but as I said, if we get a daily close above the 1.12 handle, then it may reassess the situation, especially if we close heading into the weekend above that level. Expect volatility, but that can be said about anything at this point.