There is still a significant chance of upside momentum, but the economic picture does not make that as likely as a pullback would be.

• The DAX German index initially tried to rally during the trading session, but suddenly looks very vulnerable.
• This makes quite a bit of sense considering that the European Union has a lot of concerns right now, not the least of which of course will be the fact that natural gas could be running short.
• As long as Vladimir Putin holds the key to natural gas, it’s a tenuous situation at best.

When you look at the start, you can see that we ended up forming a bit of a shooting star, and we are hanging about a gap that formed previously, that I have a circle plotted at. Ultimately, I think it makes quite a bit of sense that from a technical analysis standpoint we have seen the market stall here as well. In other words, everything is lining up at the same time to show negativity right where you would expect it. Furthermore, it looks as if the €13,800 level has been important a couple of times, so it all plays together quite nicely.

The global economy is certainly being threatened, and that will have a major influence on what happens with the German economy. After all, Germany is a major exporter to the rest of the world, so it does not operate in a vacuum. If we break down from here and wipe out the bullish candlestick from the Wednesday session, that could be a sign that the market is ready to break down quite drastically. In that scenario, I suspect that the text, right along with other indices around the world, would probably continue to go much lower. On the other hand, if we were to turn around and break above the highs of the last couple of sessions, then it’s possible that we could go to the €14,000 level, maybe even as high as the 200 Day EMA, which is all the way up at the €14,600 level. So having said that, there is still a significant chance of upside momentum, but the economic picture in Germany, as well as the rest of the European Union, does not make that as likely as a pullback would be. It moved below the €13,000 level could open up the floodgates, perhaps sending this market back down to the crucial €12,500 level.

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Keep in mind that the market has been very noisy for a while, and even though we have had a nice move to the upside, we have not changed the overall trend.

• The German DAX Index rallied again Monday but gave back the gains to form a shooting star.
• By doing so, the market looks as if it will continue to hear a lot of noise right around the €13,650 level, a place where we had seen a bit of a gap previously.
• Because of this, it makes quite a bit of sense of the market may struggle here.

Selling Pressure Ahead

Furthermore, it’s difficult to imagine that the German economy is suddenly going to take off due to the fact that there are a lot of concerns when it comes to energy, and therefore it’s likely that we would see a lot of negativity here. Ultimately, the market is likely to continue seeing quite a bit of selling pressure due to the fact that we have seen so much in the way of negativity when it comes to the economic outlook that this market will continue to be faded.

The 50-day EMA underneath should offer a little bit of dynamic support, but I think given enough time we will see a lot of selling pressure to at least test that area. If we break down below there, then it’s possible that we could go down to the €13,200 level.

On the other hand, we could see this market break to the upside, based upon some type of FOMO. If that were to happen, it’s possible that we could go looking to the €14,000 level. The €14,000 level will be psychologically negative, but that does not necessarily mean that it would hold the market. At that point, you would have to see how other stock indices around the world are behaving, because they will all more likely than not move in the same general direction.

The markets are so interconnected right now it’s all about the growth prospects of not only Germany, but the rest of the world on the whole. After all, Germany is a major exporter of goods to various countries around the world, so if the global economy starts to fall, that most certainly will have an effect on the German economy also. Keep in mind that the market has been very noisy for a while, and even though we have had a nice move to the upside, we have not changed the overall trend.

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The downward pressure should continue, thereby pushing much lower over the next several months, perhaps to the end year.

• The GBP/USD currency pair fell Friday to crash into the 1.20 level.
• This is an area that has been important a couple of times, but I think at this point in time it’s more likely than not going to be an area that continues to attract a lot of attention.
• Ultimately, if we break down below the 1.20 handle, then it’s likely that we go down to the 1.18 level underneath.

Downtrend Continues

When you look at this chart, it’s easy to see that we have been in a downtrend, so therefore like many other currency pairs when it comes to trading against the US dollar. Interest rates in America rising will continue to put upward pressure on the value of the greenback, and therefore downward pressure on the British pound.

Was also worth paying attention to is the fact that the Bank of England raised interest rates by 50 basis points during the week, and the currency still fell. This was probably due to the fact that the Bank of England suggests that the English economy is going to slip into recession between now and the end of the year.

The 50 Day EMA sits just above and is dropping, so it looks like we are going to continue to see downward pressure and a bit of dynamic resistance in that general vicinity. If we do break above that area, which is extensively the 1.22 handle, then we could see the British pound try to squeeze to the 1.24 level. I would not hold my breath for that, as most rallies at this point in time will probably show signs of exhaustion on short-term charts that you can take advantage of. This is a market that has been rather negative for a while, and I just don’t see how that changes anytime soon considering that the geopolitical, macroeconomic, and interest rate situation has not changed much.

In this environment, it makes quite a bit of sense that the US dollar continues to see strength due to the fact that the market is trying to factor in a lot of negativity worldwide, which I think continues to be the main story. With that being the case, the downward pressure should continue, thereby pushing much lower over the next several months, perhaps to the end year.

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Bitcoin rallied a bit Monday, but pales in comparison to the massive selling that we had seen previously. Because of this, I think it is only somewhat positive, and we more likely than not will have plenty of headwinds above that continue to work against the value of the market. If that’s going to be the case, then I am more than willing to fade rallies as they occur.

In the short term, the $23,000 level looks to be a significant barrier, one that the market has no real momentum to break above. Even if it did, I suspect that there is a major ceiling near the $28,000 level that extends to the $32,000 level. While Bitcoin itself is still the “gold standard” when it comes to crypto, the reality is that it is just as sensitive to Federal Reserve monetary policy as gold. For the longest time, the argument was that Bitcoin was going to be a “hedge against inflation.” That has certainly shown itself to not be true.

You can’t call it a store of wealth either, because quite frankly anything like that can’t lose half of its value every time something bad happens. This is not to say that the market will go higher over the longer term, because I do believe that it will. It’s just that you need to understand that you are speculating in a highly volatile asset class, and you need to understand the inherent risks in doing so.

If and when we break down below the $18,000 level, and I do believe that’s more of a “when” than “if” type of statement, we should go looking toward the $16,000 level, and eventually the $12,000 level. There are so many people waiting for the $12,000 level to be tested, I suspect that there will be a lot of inflow into this market when that happens. It’s also worth noting that the $12,000 level was crucial before, so I do anticipate that a lot of “market memory” will occur there, causing previous resistance to be support. Because of this, I think you have plenty of time to accumulate a position, but if you choose to do so quietly and slowly, that’s also a possibility here. Either way, I am not expecting Bitcoin or any crypto for that matter to break out to the upside anytime soon.

I think the next couple of weeks will be noisy, but I do think that it is only a matter of time before rallies get sold into.

The British pound went back and forth on Monday as we continue to look a bit lost. At this point, the market had initially tried to rally but then gave back those gains that show indecision. The British pound has been difficult to trade over the last week or so, but it is worth noting that we are in a severe downturn. The 1.22 level underneath is a short-term support level, but if we were to break down below there, it opens up the possibility of a move down to the 1.20 handle.

If we do break above the highs of the last couple of days, it’s likely that the market could go looking to the 1.24 handle, possibly even the 50-day EMA above. After that, the British pound will have to deal with a 1.26 level as a major resistance barrier, something that I think will be very difficult to break above. If we did clear that, then it’s possible that we could see this market go to the 1.30 handle, but that would be an extreme move to the upside that would also have me thinking about the possibility of a change in trend.

The most likely scenario is that we break through those couple of hammers that are based around the 1.22 handle, as the US dollar is by far the strongest currency in the world right now, as people are trying to find some type of safety. At this point, the market is likely to continue to see a lot of concern out there, so it’s likely that the US dollar continues to be chased. Furthermore, interest rates in America continue to rise, so it makes quite a bit of sense that the greenback continues to be attractive.

If we were to break down below the 1.20 level, then the British pound could start to drift much lower, perhaps dropping to the 1.18 level. After that, the British pound could drop to the 1.15 handle, in what would be a rather significant move. I think the next couple of weeks will be noisy, but I do think that it is only a matter of time before rallies get sold into, and that’s exactly how I will be looking at this market, one in which I will be fading rallies that show the first signs of exhaustion.

I am looking for signs of exhaustion after short-term rallies that I can jump upon.

The Aussie dollar rallied a bit on Friday as we continue to see a lot of noisy behavior in most markets. The Australian dollar is especially sensitive to a lot of this noise, as it is highly correlated to commodity markets and China. The Chinese market is all over the place due to the fact that people are worried about various lockups, lockdowns, and whether or not there is going to be enough demand. That being said, the Chinese are starting to loosen monetary policy, so it is possible that it could offer a little bit of a bump higher for the Aussie economy.

The 0.68.50 level underneath is a significant support level, and if we were to break down below there, then it’s likely that the market could go lower, perhaps reaching the 0.65 level. Ultimately, this is a market that continues to see a lot of noisy behavior so you need to be cautious about your position size because this market can jump around on you for no apparent reason at this moment.

On the outside, we could make an argument for a move to the 0.70 level, but obviously, that would take a certain amount of momentum. At that point, the market will face more resistance, perhaps extending all the way to the 0.7050 level. This is a market that I think eventually will find plenty of the sellers above, especially as interest rates in the United States continue to pick up. The Federal Reserve is likely to continue its tightening cycle into the slowdown, so I think at this point in time it is only a matter of time before the US dollar picks up again.

That being said, if we were to break above the 0.7050 level, then it’s possible that we could go to the 0.72 level. At that point, it’s a major selling pressure point that I think if we could break above there, then everything changes. Until then, it still remains a “sell on the rally” type of situation going forward. Because of this, I am looking for signs of exhaustion after short-term rallies that I can jump upon. The markets continue to heara lot of noise, but in the end, I think Australia has a lot of problems in comparison to the US dollar as it is getting a boost from interest rates and a safety trade.

I’m looking for short-term rallies that I can take advantage of, to pick up value in the US dollar when we get an opportunity.

The GBP/USD pair initially tried to rally during the training session on Thursday but get back gain as we continue to see a lot of negativity. Furthermore, the CPI numbers coming out of the United States on Friday will certainly have a major influence on what happens with the greenback, and it looks is that the bond markets are trying to price the idea of a hotter than expected inflationary number. If that’s going to be the case, then it makes quite a bit of sense that the US dollar will continue to strengthen.

While we have not broken it down completely, it is worth noting that rallies continue to get sold into. If we break down below the lows of the Tuesday session, it almost certainly will send this market down to the 1.24 level, possibly even down to the 1.22 level. I do think that it is probably a scenario where we have more of a “sell the rallies” type of situation unless, of course, something changes completely.

If the CPI numbers come out lower than anticipated, that could cause a bit of a turnaround, but we also have a lot of resistance near the 1.26 level that extends to the 1.2650 level, where the 50 Day EMA sits and is going lower.

I believe at this point we have a situation where the British pound will have to prove itself, so unless it’s an absolutely astonishing number during the day on Friday, I just don’t see how this market changes the trend. Even if we were to break above the 50 Day EMA, the ceiling in the market is probably at the 1.30 level as there is such an obvious selloff at that point and by extension, quite a bit of supply. Breaking above that would be what it would take to change the overall trend of this market, something that I’m not anticipating seeing anytime soon. Because of this, I’m looking for short-term rallies that I can take advantage of, to pick up value in the US dollar when we get an opportunity. However, if we get a massive rally on Friday, then we need to look for signs of exhaustion unless of course we get that break out in daily close above the 50 Day EMA. Ultimately, this is a market that had shown quite a bit of exhaustion.

I think that a day or two of positivity might be a selling opportunity at the first signs of exhaustion.

The S&P 500 has broken down rather significantly in the futures market during the trading day on Thursday as we continue to see a lot of “risk-off” behavior around the world. Quite frankly, with the Federal Reserve doing everything that it is set to do, it is difficult to imagine a scenario where we see this market take off to the upside for anything sustainable. The 4000 level has been sliced through like a hot knife through butter, and therefore it tells you just how negative things are at the moment.

If we break down below the bottom of the candlestick for the trading session on Thursday, it opens up the possibility of dropping down to the 3800 level. However, it is probably worth noting that we are a bit oversold at this point, so I do think that it is probably going to be a scenario where we see every rally gets sold eventually. That being said, we are so oversold that it would not surprise me to see some type of short squeeze, but that will offer an opportunity to get negative yet again.

I see the area between 4140 and 4150 as being a major barrier, and it will more likely than not be difficult to take that thing out. If we were to break above there, then it is possible that we could go to the 4300 level above. The 50 Day EMA is sitting right there and dropping, so I think that offers a major barrier. If we were to break above all of that, it is likely that we will eventually see a turnaround. However, unless the Federal Reserve changes its overall attitude, I just do not see how that is going to be the case. Because of this, I think that a day or two of positivity might be a selling opportunity at the first signs of exhaustion.

On the other hand, if we could break down below the bottom of the candlestick for the trading session, then it is likely that we will break down rather significantly. Momentum certainly is to the downside, and therefore it is difficult to imagine how you can fight that. Given enough time, we could probably see continuation as stock markets continue to be very fragile and needless to say, struggle overall.

Ultimately, this is a market that has more working against it than for it, and that is something that you will have to keep in the back of your mind.

The S&P 500 gapped a little bit lower to kick off the trading session on Wednesday, only to bounce significantly. However, the market could not hang on to the gains so it looks as if we have further to go to the downside. We are currently sitting on top of a significant support level just above the 4100 level, and I think that it will more than likely try to break through there rather soon. If and when it does, this is a market that is ready to go ripping lower. 4000 would be very likely at that point because this is a market that is facing an uphill battle all the way around.

Inflation numbers continue to suggest that the economy is in trouble, not that the stock market has anything to do with the economy. It is about liquidity coming out of the Federal Reserve or the other central banks, and that is disappearing. This is why you see stock markets rise when the economy is in bad shape, because people can borrow cheap money and gamble with it on Wall Street. However, now that the Federal Reserve looks likely to turn off the spigot, there is an entire generation of traders on Wall Street who have no idea what to do with this information. This has a lot to do with what we are seeing currently, and it does suggest further pain ahead.

If we were to turn around and take out the 4300 level to the upside, I might be convinced to start thinking about going long. There is nothing on this chart to suggest that is going to happen anytime soon, but it should be noted that a lot of times you get these nasty rallies in a bear market that can give you massive headaches if you are on the wrong side of it.

At this point, any rally looks like it is going to be a selling opportunity, and I do not think that is changing anytime soon. With this in mind, I am more apt to be a seller of signs of exhaustion than I am to get involved in this market and try to pick things up again. Ultimately, this is a market that has more working against it than for it, and that is something that you will have to keep in the back of your mind.

I am simply waiting for some type of larger candlestick to give us an idea as to where we should be trading in which direction to use.

The Ethereum market initially rally during the trading session on Thursday but has given back gains to show signs of hesitation. By doing so, the market is likely to continue struggling right around the 200 Day EMA, which is also right on top of the 50 Day EMA. In other words, this is a market that does not understand where it wants to be at the moment. The $3000 level should continue to be an area of interest going forward, as it is a large, round, psychologically significant figure, and an area where we have seen buyers previously.

The Monday hammer is an area that you need to pay close attention to because it shows that the buyers were willing to step in and defend Ethereum. If we were to break down below the bottom of that candlestick, it would show a capitulation of the buyers. In that scenario, the market could send the market down to the $2750 level, and then possibly even the $2500 level. The $2500 level is an area that has been important more than once, so it is worth paying close attention to that area. If Ethereum breaks down below the $2500 level, then it is likely that we would see quite a bit of selling pressure to reach the $2000 level next.

On the upside, if we were to break above the highs of the last couple of candlesticks, that opens up a move to the $3250 level, and then the $3500 level. The $3500 level is an area that has been important previously as it was where the sellers came in to push Ethereum back down, so taking that would obviously be a very bullish sign. As things stand right now, this is a market that looks as if the buyers are trying to step in and support Ethereum after a dip, so the next couple of candlesticks could be very important. I do not necessarily believe that this is a market that is quite ready to make a bigger move, once it does it should be relatively obvious as to where we are going and how it is going to play out. With this, I am simply waiting for some type of larger candlestick to give us an idea as to where we should be trading in which direction to use.