There is no change in my technical view for the performance of the GBP/USD pair. 

• At the beginning of this week’s trading, and despite the holiday in Britain, the price of the GBP/USD currency pair fell to a stronger support level, towards 1.1648, its lowest since the height of the market crash in 2020. It settled around the 1.1700 level at the beginning of trading today, Tuesday.
• The US dollar is still the strongest against everyone with expectations of a strong raise of the US interest rates in the coming months to contain US inflation, which has reached its highest level in 40 years.
• The sterling faces strong expectations of a British economic recession and the uncertainty of the political future in the country to choose a new prime minister.

Federal Reserve Chairman Jerome Powell delivered a stark warning on Friday about the Fed’s determination to fight inflation by raising US interest rates further: it will likely cause pain to Americans in the form of a weak economy and job losses. The message arrived with a heavy blow to Wall Street markets, sending the Dow Jones Industrial Average down more than 1,000 points on the day.

“These are the unfortunate costs of lowering inflation,” said Powell in a high-profile speech at the Federal Reserve’s annual economic symposium in Jackson Hole.

Investors had been hoping for a signal from Powell that the Fed may adjust US interest rate hikes soon later this year if inflation shows more signs of abating. But the Fed chief indicated that time may not be soon, and stocks have fallen in response.

Runaway price hikes have left most Americans nervous about the economy, even as the unemployment rate has fallen to a half-century low of 3.5%. It also caused political risks for US President Joe Biden and congressional Democrats in the fall elections, as Republicans decried Biden’s $1.9 trillion financial support package, approved last year, as driving up inflation.

Some on Wall Street expect the US economy to fall into recession later this year or early next, after which they expect the Federal Reserve to reverse itself and cut interest rates. However, a few Federal Reserve officials have opposed this idea. Powell’s comments suggest that the Fed aims to raise the benchmark interest rate – to about 3.75% to 4% by next year – but not so high that the economy falters, hoping growth slows long enough to conquer high inflation.

GBP/USD Forecast:

There is no change in my technical view for the performance of the GBP/USD pair.  The general trend is still bearish and stability below the 1.2000 psychological support motivates the bears to move further down, amid clear ignoring the movement of the technical indicators on the daily chart to oversold levels.

There will be no chance for the sterling to recover for a while without sudden indications from the Bank of England, which is determined to raise interest rates with no fear of economic recession. According to the performance on the daily chart, breaking the resistance 1.2080 is important for the bulls to launch and change the direction, even for a short time.

On the downside, the general trend is the strongest so far, the closest support levels for the currency pair are 1.1640, 1.1580 and 1.1500, respectively. After returning from a British holiday, money supply figures, net lending to individuals and mortgage approvals will be announced. From the United States, the US consumer confidence and the number of job openings will be announced.

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Gold markets rallied a bit during the trading session on Tuesday to show signs of life again as the market has threatened to break above the $1750 level. If you can do that, then it’s likely that we could go looking into the 50-Day EMA above, which is near the $1775 level.

Looking at this chart, it’s obvious that the market has seen a lot of volatility and negative pressure, so even if we do rally, I think we probably have a lot of work to do before we start to turn around and rise for the longer term. Interest rates in America continue to rise, and that does work against the value of gold. So does the US dollar rising, although all of these things can go higher at the same time, depending on the situation that is going on. At this point, it looks to me as if gold is trying to at least get a short-term rally going, so pay close attention to the next couple of days and the statements coming out of the Jackson Hole Symposium, because it could have a lot to say as to where we are going next.

Underneath, I think the 6 $1720 level could be short-term support, but if we were to break down below there, it’s almost a given that we will test the lows again. Breaking down below the lows that we made several weeks ago could open up even further selling pressure, which would probably coincide with interest-rate spanking, and of course, the US dollar strengthening. Because of that, you need to be aware of the fact that we have a lot of concerns coming out of the bond market.

It All Depends on Interest Rates

• If the rates in America continue to rise, it will make bonds a lot more attractive than gold, which of course you have to pay to store.
• There is a lot of resistance above that if we broke through, you’d have to consider a trend change, namely, the $1800 level and the 200 Day EMA. If we can clear all of that, then gold becomes more or less a “buy-and-hold” asset.
• The only thing you can count on in the short term is going to be a lot of noisy behavior and therefore you need to be cautious about the position size that you put on in this market.

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A breakdown below 0.6882 would be a bearish sign.

My previous signal last Monday was not triggered as there was no bullish price action when the price first reached the support levels which I had identified that day.

Today’s AUD/USD Signals

Risk 0.75%

Trades may only be taken before 5pm Tokyo time Tuesday.

Short Trade Idea

• Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.6964 or 0.6993.
• Put the stop loss 1 pip above the local swing high.
• Adjust the stop loss to break even once the trade is 20 pips in profit.
• Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.

Long Trade Ideas

• Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 0.6882, 0.6797, or 0.6784.
• Put the stop loss 1 pip below the local swing low.
• Adjust the stop loss to break even once the trade is 20 pips in profit.
• Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

AUD/USD Analysis

I wrote in my previous forecast on 15th August that if the AUD/USD currency pair could make two consecutive lower hourly closes below the support level at 0.7063, that could be a good short trade entry signal, as the price would then have a lot of room to fall before reaching another support level – the next level is not until 0.7010. I also thought it was a relatively good time to be trading this currency pair as it was in the market’s focus as a key risk barometer,

This was a good call, as following it would have got you in short at 0.7045 until the price began to bottom out, at least temporarily, at about 0.7000, so there was a nice 35 pips of profit available there.

We saw further falls over the week, as risk sentiment continued to sour and the US Dollar made a strong recovery. Friday saw an especially strong move, with the price trading as low as 0.6859. This presented a bearish technical picture as the market opened this week, however we have seen strength in the AUD today and the price was able to break up above the former resistance level at 0.6882 which may now act as support. Yet, I think that the price will probably turn bearish again later, and I doubt that the bullish retracement will make it to the next resistance level at 0.6964, but if it did, that could be a spot for a short trade entry for swing traders.

If the price quickly gets established back below 0.6882, that will be a bearish sign, and then it may become possible for shorter-term traders to sell on rallies on short-term time frames.

There is nothing of high importance due today regarding either the AUD or the USD.

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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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We may see a little bit of short-covering heading into the jobs report.

The Euro initially tried to recover on Thursday but then turned around to show signs of weakness. Ultimately, the 1.02 level is an area that had been important previously, so now that we are trying to break above there, it’s interesting to see that the sellers have stepped back in. This is a market that has formed a bit of a potential inverted hammer, so it’ll be poignant as to which direction we break at this point.

If we turn around and break above the top of the candlestick, then it’s possible that the market could rally all the way to the 1.04 level. This is an area that previously had been a massive support, so a lot of “market memory” could come into play in that area. I would anticipate seeing a lot of sellers in that general vicinity, as there is a strong downtrend. The 50 Day EMA is now slicing through the 1.06 level and driving even lower. I do believe that the 50 Day EMA is going to reach the 1.04 level sooner or later, perhaps sooner being the keyword.

All things being equal, the Euro has a lot to worry about, not the least of which will be the fact that the ECB cannot tighten monetary policy anytime soon. Yes, there may be a couple of token interest rate hikes of 25 bps, but that’s about as aggressive as they will get. On the other hand, the Federal Reserve has already promised at least 100 bps of rate hikes over the next couple of months. Because of this, I think it’s probably more likely than not that we see market participants favor the greenback over the longer term.

We may see a little bit of short-covering heading into the jobs report, but quite frankly it would take a pretty shocking turn of events in the United States from that announcement to suddenly have people buying the euro. Yes, it will have to be volatile around 8:30 AM New York time, but beyond that, we should see the longer-term downtrend reassert itself on any attempt to recover. As for buying, I don’t really have a situation where I would do so, at least not until the Federal Reserve steps away from its tightening cycle, something that it simply cannot do or will have lost its credibility completely.

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.

ETH/USD continues to traverse in a rather tight price range early this morning, giving speculators a chance to test their short term outlooks.

ETH/USD is trading near the 1085.00 vicinity in early trading this morning.  A rather consolidated price band has emerged in Ethereum taking into consideration its rather volatile conditions which have been self-evident the past week. The 1100.00 level technically looks like a close resistance level, and in the past handful of hours ETH/USD has not been able to sustain value above this mark. On the 21^st of June ETH/USD did enjoy a solid short term reversal higher and came within sight of the 1195.00 level.

However, ETH/USD certainly remains within a troubling lower value range. Speculators looking for the potential of upside momentum will likely want to keep their ambitions relatively conservative when looking for moves higher. If the 1100.00 value can be penetrated and sustained, some technical speculators may feel that it is tempting to look for 1125.0 to 1150.00 for take profit wagers.

Short-term trading in ETH/USD remains choppy, even though it is in a rather tight price mode. The broad cryptocurrency market continues to look rather fragile, particularly as the major digital assets: Ethereum and Bitcoin fail to puncture resistance levels which could signal a shift in sentiment. Until ETH/USD breaks above the 1200.00 level and maintains this juncture, and begins to demonstrate price velocity, skeptics will likely continue to command the trading environment.

The near term remains rather negative regarding outlook for ETH/USD.  Optimists will certainly argue this point, but traders looking for more downside price action to emerge cannot be faulted. If ETH/USD were to fall below the 1055.00 mark and not bounce higher, this would be a poor signal. ETH/USD has not been below the 1040.00 value since the 19^th of June with any sincere force, but if this support level is proven vulnerable speculators may want to target the 1025.00 level and lower.

The near term is likely going to remain choppy and traders will need to remain hyper vigilant.  Take profit orders are advised for traders who do not want to find themselves holding a position which needs to be held for long durations. If ETH/USD falters in the short term and current support levels cannot hold back nervous sentiment, trading conditions could become fast and dangerous and test the fortitude of all speculators.

Ethereum Short-Term Outlook

Current Resistance: 1130.00

Current Support: 1055.00

High Target: 1176.00

Low Target: 1011.00

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.