Gold markets are notoriously volatile to begin with, so this type of environment is only going to be exacerbated and you need to be concerned about your account more than anything else. 

• Gold markets rallied a bit Tuesday only to find a lot of resistance near the 50-day EMA.
• Furthermore, we are sitting just below the $1800 level, so it does make quite a bit of sense that we would see plenty of sellers.
• The $1800 level has been important support in the past, so it’s only a matter of time before “market memory” comes into the picture.

Finding Answers at the $1720 Level

The shape of the candlestick is a shooting star, and that of course is negative. Because of this, it’s very likely that we will continue to see plenty of downward pressure, but I don’t necessarily know that it would be the end of the gold market trying to rally, just that it might be ready to pull back. I think the real question is found answered at the $1720 level. If we break down below there, then we could put a serious attempt into the idea of breaking down below the $1680 level. If we break down below there, then the market will unwind, perhaps going down to the $1500 level.

On the other hand, if we were to break above the $1800 level, we could see a move higher, but I think it’s not necessarily until we get above the $1815 level that it becomes important. At that point, then we might make a move to the 200-day EMA. I don’t know if we can get there but obviously would make quite a statement.

When you trade gold, you need to be aware of interest rates in the United States, which spiked during the trading session, which also works against the value of gold at times. Furthermore, the US dollar strengthened, which doesn’t help gold markets overall. Because of this, I think that at the very least we are going to see a bit of a drop from here. I think the only thing you can probably count on is a lot of volatility, so you will need to be cautious about your position sizing, as it’s likely we continue to see noise overall. Gold markets are notoriously volatile to begin with, so this type of environment is only going to be exacerbated and you need to be concerned about your account more than anything else. The giveback was quite impressive.

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I think we will have a situation where shorter-term traders will be jumping out, while longer-term traders may be picking it up.

• The BTC/USD currency pair initially tried to rally Friday but gave back quite a bit of the gain showing exhaustion.
• This is a market that I think will be very noisy as we have seen a lot of questions asked about the crypto markets in general.
• We still have a lot of concerns out there when it comes to the global markets, and Bitcoin is not going to escape that.

Bitcoin Likely to Fluctuate

The $24,000 level has been important a couple of times now, so it does make a certain amount of sense that we would see the markets pull back from here. However, that does not necessarily mean that we have to break down from here. More likely than not, we will see a situation where we go back and forth until we can sort things out. I do not believe Bitcoin has seen the bottom yet, but it is at least making a significant argument for stabilization.

If we break above the $25,000 level, that could open up the possibility of a move to the $28,000 level, but that’s an area that is resistant as well. It extends all the way to the $32,000 level, so I believe it would be difficult to break above there. If we did, that would change the entire trend, perhaps sending Bitcoin to extreme highs.

Looking at this chart, it’s obvious that we have been in a downtrend for quite some time, so it’s going to be difficult to be bullish at this point. I think that rallies will continue to get sold into, as the US dollar is still strong, despite the fact that the US dollar has pulled back just a bit. Ultimately, this is a market that will continue to see a lot of selling pressure given half a chance, as there is a lot of negativity out there, and I think it will not take much to scare traders. That being said, some of the longer-term holders have been using this recent area to pick up a little bit of value, but have a longer-term perspective than most traders. Because of this, I think we will have a situation where shorter-term traders will be jumping out, while longer-term traders may be picking it up.

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Expect a lot of noise, but expect more negative pressure than positive going forward. 

The euro initially tried to rally on Friday but gave back gains after the jobs number came out. At this point, we started to see interest rates rise slightly in the United States, which made people run towards the US dollar again. The 1.08 level above is an area that has been important multiple times, and now it looks like the sellers are willing to stand in front of it and start shorting again. Ultimately, the market is likely to continue the overall downturn, and I think it’s likely that we could go down to the 1.04 level.

The market extends resistance to the 1.09 level, so if we were to break above there, the market is likely to go looking to the 1.12 level. Ultimately, it’s not until we break above the 1.09 level that I would be looking to buy this market. This is a market that will continue to be noisy, but that’s nothing new for the EUR/USD pair.

If we were to break down below the 1.04 level, then it’s likely that the euro could go looking to the 1.02 level, possibly even the parity level. I don’t think that happens in the short term, but over the longer term, it’s very possible that will happen, especially if we start to see some type of global recession. At this point, I don’t necessarily think that the euro is going to rally for the longer-term move, but traders are starting to look at the possibility of the ECB having to raise interest rates. I think they may do so, but it’s going to be nowhere near as aggressive as the Federal Reserve.

The balance that we have seen is the garden-variety correction to a huge trend. While it has made four handles to the upside, it’s still not that impressive when you look at the trend over the last several years. If the world is going into a recession, there will be another reason for people to start buying bonds, especially as the US bond market offers more in the way of return on yield than most others, including Germany and the rest of the European Union. Expect a lot of noise, but expect more negative pressure than positive going forward. Look to the short-term charts for signs of exhaustion.