In the short term, it looks like a pullback is more likely than not, so I would not be surprised to see traders take profits heading into the weekend.

• The gold markets have gone back and forth during the session on Thursday, as we are sitting just below the $1800 level.
• Keep in mind that the gold markets have hit a major area of resistance, and it would make a certain amount of sense that “market memory” comes into the picture.
• If we break down the 50 Day EMA underneath, then it could open up further selling.

 

Looking at the bond market, interest rates had dropped quite significantly, and that makes gold much more attractive as yields in the paper market do not offer as much of a return. That being said, I would be a bit hesitant to jump into this market right away, because there’s so much noise in the bond market. After all, the bond market drives everything, as it can give you an idea as to whether or not there is a lot of risk-taking out there, or if people are running for safety.

The one nice thing about the candlestick during the day on Wednesday is that breaking above it is a clear sign of strength, and a lot of people would probably jump into the market at that point. The $1800 level of course is a large, round, psychologically significant figure, and it would attract a lot of headline noise. However, it’s not really until we break above the $1815 level that we clear all of that. If that happens, I would anticipate the gold would go looking to the 200-Day EMA.

On the other hand, breaking down from here could open up and move down to the $1750 level, which is an area that previously had been resistant. In general, when you look at this market you can see that there has been a lot more volatility as of late, and it suggests that we are in fact going to continue to see noisy behavior, perhaps a pullback. We are still very much in a downtrend, and you should keep that in the back of your mind. If yields start to rise again, that will put a lot of downward pressure on gold, just as the opposite could send it higher. In the short term, it looks like a pullback is more likely than not, so I would not be surprised to see traders take profits heading into the weekend.

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From a longer-term perspective, you can make the argument that we have a situation where we have been very noisy and have seen a lot of chop, which can be the beginning of a trend change, but we’ve got to do more work in the bond markets.

• The GBP/USD currency pair continues to chop around as it looks for some type of directionality.
• That’s been the case with almost everything I look at recently; the markets are simply grinding accounts up without driving any type of directionality on the charts.
• The British pound has been an excellent example of a place that you don’t necessarily want to put a lot of money into, because it doesn’t know where it wants to be.

Market Keeps Grinding Away

The 50-day EMA sits just above and that could cause a little bit of resistance, but at the end of the day, it does not seem very likely to be a major factor one way or the other, as the markets have simply decided to grind back and forth against each other in order to do as much damage as possible. This is the problem with so much noise out there because we have the Federal Reserve seemingly hell-bent on muddying the waters, and the result is the charts that you see here.

The Federal Reserve has lost so much credibility that people simply do not believe that it will do what it takes to fight inflation. They probably will, but right now the market does not believe that, and as a result, you are seeing the US dollar get hit. At the other end of the spectrum, you have the British pound which is a bit of a basket case itself, so it should not be a huge surprise to see that we have absolutely no clarity here. From a longer-term perspective, you can make the argument that we have a situation where we have been very noisy and have seen a lot of chop, which can be the beginning of a trend change, but we’ve got to do more work in the bond markets. The bond markets are starting to tell the world that the Federal Reserve is going to pivot, but the Federal Reserve is refusing to say so. Inflation is supposedly going down, but it is still at extraordinarily high levels. I suspect at this point the only true losers will be the American public. That being said, Wall Street is looking for its usual handout, and given enough time Jerome Powell probably will do that. They are anticipating that it’s going to happen quicker than he is likely to do. Because of this, we will continue to hear this noise.

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I’m much more comfortable going short than trying to buy this pair which looks so negative at the moment.

• The EUR/USD pair went back and forth Friday as we continue to see a lot of noisy behavior.
• The 1.02 level is an area that a lot of people will pay attention to as a magnet for price.
• The euro has been back and forth during the course of the week or so, so I think it’s only a matter of time before we have to break in one direction or the other.

If we break above the 1.03 level, then it’s likely that we go looking to the upside. The 1.04 level is an area that has a lot of “market memory” built into it, and it’s likely that we will see sellers in that area. The 50-day EMA sits just above that area as well, so I think it’s worth paying close attention to ultimately, if we were to reach that area, I think the first signs of exhaustion would be a potential selling opportunity.

Shorting at 1.02

Markets pulling back from that area have a bit of real estate to cover, so I would be more than willing to get short. Ultimately, the 1.02 level could be a target. If we break it down below there, then it’s likely that the euro drops back down to the parity level. Speaking of breaking down, if we slice through the 1.01 level, it’s likely that we go down to the parity level as well.

The parity level is something worth paying close attention to, as it has a lot of psychology attached to it. If we can get a breakdown below the parity level, then a daily close underneath there would confirm a lot of selling pressure. At that point, it’s likely that we could go down to the 0.98 level, maybe even down to the 0.96 level. I do believe that the European Union has a whole host of issues to worry about, most of which the United States does not have to. Because of this, it is likely that we will see downward movement. The market has been sideways for a while, so I do believe that once we get that break out, it could be somewhat volatile and violent. Regardless, I’m much more comfortable going short than trying to buy this pair which looks so negative at the moment.

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It looks to me as if people are anticipating that the market is going to continue to fall due to a lack of demand.

The German DAX index initially tried to rally on Monday, but the €13,400 level has caused enough trouble to turn things around and bring in fresh selling. At this point, the market looks as if it is trying to reach the €13,000 level again, as that has been an area of support. We have been sliding lower overall, and it’s clear that the German equity markets are going to continue to see sellers every time they rally.

The €13,500 level seems to be a bit of a barrier, right along with the €13,750 level. Just above there, the 50-day EMA comes into the picture and is sloping much lower. Ultimately, we are in a downtrend in the fact that we failed to break above this previous support level, which shows that there is plenty of “market memory” in this vicinity. The shape of the candlestick is a shooting star, and that does suggest that perhaps there is a certain amount of exhaustion already.

I do believe that it is only a matter of time before equities continue to sell off, but they have been oversold globally. Short-term rallies are possible, but I look at those as selling opportunities, unless the central banks around the world change their monetary policy, something that does not look very likely to happen. Inflation is raging across the planet, and there are a lot of people out there that are concerned about a slowdown globally. Remember that the DAX is full of major companies that export across the world. Because of this, other economies do have an effect on the DAX, as we are so interconnected. It looks to me as if people are anticipating that the market is going to continue to fall due to a lack of demand.

At this point, central banks around the world will continue to tighten monetary policy, thereby causing the markets to price in a slowdown in demand. That is the base case scenario now, so it would not be surprising at all to see this market reach the lows near the €12,500 level. Breaking down below there opens up the floodgates to the downside. If we were to rally, and are not sure yet where the trend changes, we will have to approach that as we get there.

I continue to look at this as a “fade the rally” situation.

Bitcoin fell on Wednesday to reach the $20,000 level yet again. Ultimately, you should pay attention to the fact that we did of forming a bit of a shooting star during the previous session. At this point, if the market were to break down below the hammer from the candlestick before, then it’s likely that the market could go down to the $18,000 level. The Bitcoin market looks very sick, and I don’t think that changes anytime soon.

Alternately, if we were to break above the shooting star from the Tuesday session, that would be a bullish sign, as we would be breaking above the 22,000 level, perhaps trying to get to the $23,000 level. A break above that level then opens up a significant “bear market rally” that could go all the way to the 50 Day EMA. That currently sits near the $28,000 level, so therefore that could be where we end up on some type of bullish news. The biggest problem of course is that there is not much in the way of bullish news.

Looking at this chart, it remains a “sell on the rallies” type of situation, as the entire crypto area is going to continue to be toxic. After all, the risk appetite of traders around the world has been decimated, so there’s nobody out there willing to put a lot of money into the market on the whole. Bitcoin is the only chart that matters at this point, because if the market starts to rally, then possibly some of the smaller markets could start to rally as well. That being said though, I would need to see Bitcoin break above the $30,000 level on a weekly close to believe that the trend has changed.

The signal that the Bitcoin market may look for in order to start rallying is the Federal Reserve looking to change its tight monetary policy. If they do, then it’s possible that Bitcoin can recover. However, until that happens it’s very unlikely that Bitcoin has any real momentum. With that in mind, I continue to look at this as a “fade the rally” situation. If we break down below that $18,000 level, then $16,000 will be targeted, and eventually $12,000, which is my longer-term target.

The West Texas Intermediate Crude market has initially fallen on Tuesday but then turned around to show signs of life again. By doing so, it looks as if the market is going to continue to go higher, and eventually smashed through the $120 level. The $120 level is an area that is psychologically significant and an area that will attract a lot of attention. Underneath, the $115 level is an area where we had broken out of resistance from previously, and therefore it should offer a bit of a “floor the market.”

The crude oil markets will continue to see a lot of noise due to the situation in Ukraine, and all of the Russian oil that is being diverted off of the world’s markets. Ultimately, I think this is a situation where we have noisy behavior more than anything else, but with an upward tilt. I like the idea of buying pullbacks to take advantage of value, as it will more likely than not continue to see plenty of value hunters coming back in. After all, oil has been one of the better performers most of the year, and I just don’t see that changing anytime soon.

If we were to break down below the $115 level, then it’s possible that we could see a more significant pullback, perhaps even going all the way down to the $110 level where the 50 Day EMA is approaching. I have no interest whatsoever in trying to sort this market, at least not until we break down through there at the very least. If we break down through there, then it’s possible that we could go to the $110 level. That’s an area that is going to be interesting to pay close attention to but at this point I think with everything that’s going on, it’s difficult to imagine that this market sells off with any type of momentum or permanence. I think than the oil market continues to be one of the better trades for the summer, and therefore I think we not only reach the $130 level above, but we are going to go much higher than that given enough time. This will be true based upon the “measurement” of the triangle as well. With demand and all of the technical factors, this looks very bullish to me.

Market participants will continue to see this as a “sell the rallies” type of situation, as the market has far too much to concern itself with right now to suddenly get wildly bullish.

The S&P 500 initially tried to recover on Tuesday, but as you can see we have given back all of the gains to show signs of extreme weakness. Ultimately, this is a market that looks as if it is scared to death of the CPI numbers coming out during the Wednesday session, which will give us an idea as to how bad inflation truly is. Because of this, I think the market will more than likely continue to see a lot of volatility, but it certainly looks as if we are “leaning” to the downside.

The S&P 500 continues to worry about the inflationary headwinds, and perhaps more importantly at this point in time, the Federal Reserve. The Federal Reserve continues to look as if they are going to be very tight going forward, and aggressive when it comes to monetary policy. If the CPI print comes out stronger than anticipated, that could be a very negative turn of events for this market. If we break down below the bottom of the candlestick, it is likely that we will continue to see some follow-through, perhaps opening up the possibility of a move down to the 3900 level.

On the other hand, if we get a reading that is lower than anticipated in the CPI figure, we may make a serious attempt to get to the 4100 level. There is a barrier between 4140 and 4150 that I think is going to be difficult to overcome, so keep that in the back of your mind. Market participants will continue to see this as a “sell the rallies” type of situation, as the market has far too much to concern itself with right now to suddenly get wildly bullish. It is worth noting that every rally has been sold into as of late, and it looks as if the negativity is going to continue to be a major factor in this market.

If we were to turn around and break above the 41 to 50 level, that would be an extraordinarily bullish move, but right now I just do not see the momentum of the market swinging that rapidly. It would take something rather remarkable coming out of the CPI to make that happen, something that I do not think we will get.

You need to pay close attention to the US Dollar Index, because it could give you a bit of a “heads up” as to where not only ZCash goes, but the rest of crypto for that matter.

ZCash plummeted during the trading session on Friday as we continue to see crypto underperform. ZCash has broken below the 200-day EMA, and perhaps more importantly, the hammer from two weeks ago. The market is now just below the $130 level, and it looks as if it is ready to go much lower, testing the $120 level next.

Furthermore, the market is closing at the very bottom of the candlestick, which typically means there is a bit of follow-through, and at this point, I think it is probably only a matter of time before we see the market break down below the $120 level. At this junction, if we see the market rally, I think the 200-day EMA would be a potential barrier, near the $145 level.

The size of the candlestick for the session on Friday does suggest that there is a lot of momentum jumping into the downside, and it is likely that we will continue to see ZCash fall right along with the rest of the crypto market. Keep in mind that Bitcoin has struggled during the day, so the losses are typically magnified in the smaller coins such as ZCash. The 50-day EMA is currently at the $151 level, and it looks as if it is going to break below the 200-day EMA, forming the so-called “death cross.”

On the downside, I think it is likely we are going to find plenty of support near the $85 level, which could be a potential floor in the market. Looking at this chart, I do think we have further to go, but if we were to turn around and take out the two moving averages, it would be a major coup for this market. We need to see Bitcoin and Ethereum turn around and rally significantly to make this market go higher. Until then, it is very likely that ZCash will continue to be very soft. Furthermore, this is measured against the US dollar which has been like a wrecking ball for almost all assets, so keep that in mind as well. You need to pay close attention to the US Dollar Index, because it could give you a bit of a “heads up” as to where not only ZCash goes, but the rest of crypto for that matter.

The bitcoin markets have pulled back ever so slightly during the trading session on Wednesday but have also found buyers underneath to push the market higher. This is a market that is trying to build up the necessary momentum to go higher, perhaps reaching towards the $50,000 level. At the $50,000 level, it is very likely that we will find a significant amount of psychological resistance as it is a large, round, psychologically significant figure.

Underneath, there should be plenty of support near the $45,000 level, right along with the 200 Day EMA. The area should be a significant amount of support just waiting to happen. A pullback to that area could be an interesting trade, but if we were to break down below the 200 Day EMA, the market then has a lot of support underneath.

The 50 Day EMA is starting to rise at this point, perhaps threatening the idea of crossing above the 200 Day EMA. If that were to happen, it forms the so-called “golden cross” that a lot of longer-term traders will pay close attention to. When that happens, the market tends to grind higher for quite some time. Breaking above the $50,000 region would open up the possibility of a move towards the $60,000 level. That is an area that has been both support and resistance at various times, so it is worth paying attention to as not only a target but a place where there might be a bit of profit-taking.

On the downside, we could see a move towards the $40,000 level, which has been important more than once. Breaking down below there, the market would show significant weakness as it would have been a completely “false breakout.” That being said, after the price action on Wednesday, it looks more likely that we go higher than lower, but obviously, a lot of this could come down to the risk appetite of traders around the world. The market has just broken out of a major consolidation area, so it will have captured the attention of traders around the world. The market participants will continue to look its dips as a bit of value, and people will continue to look at this as an opportunity. I have no interest in shorting this market anytime soon.