The Dow Jones Industrial Average declined during its recent trading at the intraday levels, to break with a series of gains that continued for five consecutive sessions. It recorded losses in its last sessions by -0.50%, to lose the index towards -171.69 points. It then settled at the end of trading at 33,980.33, after rising in trading on Tuesday, by 0.71%, to reach this rise to its highest level since late April.

Minutes released from the minutes of the Federal Reserve’s July meeting showed that members of the Federal Reserve’s Monetary Policy Committee decided at their meeting last month that they would continue to increase benchmark lending rates until inflation fell significantly. They are using incoming macroeconomic data to determine how high rates will go.

In an effort to combat hot inflation, the Federal Open Market Committee has raised interest rates at each of its meetings since March, including two back-to-back increases of 75 basis points at its last two meetings, with more increases expected in upcoming meetings. However, despite these measures, inflation remains at its highest levels in four decades.

Economic Outlook

US retail sales were flat in July, less than an expected 0.1% increase in a Bloomberg poll and after a 0.8% rise in June. However excluding a 1.6% drop in auto sales, retail sales rose 0.4%, compared to an expected drop of 0.1%. Gas station sales fell 1.8% in July, due to lower prices.

Dow Jones Technical Forecast

• Recent decline in the index came as an attempt to reap the profits of its recent rises.
• It is also trying to drain some of its clear buying saturation with the relative strength indicators.
• This is especially with the start of negative signals from them, to gather its positive forces that may help it recover and rise again.
• The index has helped in the resistance level 34,118 to remain intact.

Continued positive support for its trading above its simple moving average for the previous 50 days is being affected by the earlier exit from the range of a bearish corrective price channel that had limited its trading before in the short term, as shown in the attached chart for a (daily) period.

Therefore, our expectations suggest a return to the index’s rise during its upcoming trading, but it must first cross the resistance hurdle 34,118, and then target the resistance level 34,821 immediately.

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The trend is very strong, and I think it will continue to be so as we have seen so much in the way of momentum.

• The US dollar has broken to a fresh, new high against the Japanese yen during trading on Thursday, as the uptrend looks to be continuing.
• We just completed a “W pattern”, which could send this market looking to much higher levels.
• The measured move is for the ¥140 level to be targeted, so we will have to wait and see whether or not that actually occurs.

Strong USD/JPY Uptrend

Regardless, the USD/JPY currency pair has been in an uptrend for some time, so there’s no real point in trying to fight it. The trend is very strong, and I think it will continue to be so as we have seen so much in the way of momentum. The market might have a big fight ahead of it in this general vicinity, but I just don’t see anything that will keep this market from rising over the longer term. This will be especially true if the interest rate differential between the United States and Japan continues to widen, I think given enough time, we probably have a scenario where the markets are going to eventually break out.

Keep in mind that the Federal Reserve has to do something about inflation, and therefore interest rates will have to continue to climb. However, the market is currently fighting the Fed, and it’s also worth noting that the Jackson Hole Symposium is happening next week, so it does make quite a bit of sense that the central bankers around the world will continue to try to talk the markets down because quite frankly they are working against what the central banks are trying to accomplish. Because of this, I would anticipate that interest-rate markets will probably be all over the place next week.

With this being the case, keep in mind that it is going to be noisy and perhaps even dangerous overall, therefore you need to be cautious about your position size. However, we have clearly made a statement on Thursday that the US dollar is going to continue to work against the yen. If we do turn around and break down below the ¥132 level, then it’s possible that we could go down to the ¥127 level. That is where we currently see the 200 Day EMA, so it makes for a nice target and a potential floor.

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This is a market that has been noisy, but reliably positive. 

• The USD/JPY currency pair rallied significantly Friday to break above the ¥135 level.
• A lot of this has come down to the fact that the interest rates in America spiked after the jobs number came up much stronger than anticipated.
• Keep in mind that a lot of questions are being asked about whether or not the Fed is going to have to continue tightening or not, and by the end of the day on Friday it seemed that consensus has shifted from a potential 50 basis points in September to the possibility of 75.

Buyers to Come in On Dips

Looking at this chart, it’s obvious that we have a lot of the interest rate differential pricing, but at the same time, we have the Bank of Japan doing everything it can to keep interest rates down to 0.25% on the 10-year JGB. Because of this, the Bank of Japan continues to have to buy unlimited bonds, which is the same thing as printing unlimited yen. Because of this, the market is quite likely to see buyers coming in on dips, due to the fact that the Japanese are doing everything they can to keep those rates down. On the other side of the equation, you have the Federal Reserve which is in the process of tightening monetary policy. In other words, it sets up a “perfect storm” for a continuation.

Underneath, the ¥132 level is an area where you would expect to see support, just as we had previously. If we break it down through there, then the ¥128 level began significant support going forward, possibly being trend-defining level as well. Ultimately, it’s worth noting that we are breaking above the 50-day EMA as well, as it is an area that a lot of technical traders pay close attention to.

If we can continue going higher, it’s very likely that the markets will find plenty of reason to test the highs again. Quite frankly, this is a market that has been noisy, but reliably positive. The action that we had seen during the session on Friday should continue to add credence to the idea of this pair continuing to climb over the longer term. Breaking above the ¥140 level could be a huge deal going forward, allowing for more of a “buy-and-hold” scenario.

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I think you have to be cautious and take profits as soon as you can, because this is a market that has decided it no longer has any interest in panicking

• The NASDAQ 100 Index exploded to the upside, hanging about the 13,250 level.
• This is an area that I think will continue to be crucial, so it’ll be interesting to see how we behave.
• Thursday is obviously going to be overshadowed by Friday, which is the Non-Farm Payroll announcement.
• Because of this, I think it’s likely that we will see the market somewhat quiet on Thursday, but I must admit that breaking above the dual shooting stars is a very bullish sign.

Pullback Likely

However, if you look to the left, you can see that there is a lot of noise between here and 13,600, so I think we may get a little bit of a pullback. (Full disclosure here, I thought that yesterday as well.) That being said, markets eventually need to come back, but it looks like Wall Street is in a frenzy right now based upon the idea that the Federal Reserve is going to come and save them. This has people piling into technology stocks, which of course have reported better than expected earnings on the whole, but the outlook is a bit of a question at this point.

If we turn around and break down below the 13,000 level, it’s possible that the market could go to the 12,800 level, possibly even lower than that.

I believe that the real rubber meets the road after the jobs number, because if the jobs number comes in really hot, then we have the possibility that people will start to worry about the Federal Reserve raising rates again. Quite frankly, this is a market that is flying in the face of the fundamentals, but that’s nothing new. Keep in mind that markets are built to go higher, so it only takes a handful of companies in the NASDAQ 100 to move this thing to the upside. If we break above the 13,600 level, this thing is going to launch towards 14,000 rather quickly.

On a breakdown, I think you have to be cautious and take profits as soon as you can, because this is a market that has decided it no longer has any interest in panicking. As long as Wall Street thinks they are going to be bailed out, there’s a good chance this market will find plenty of buyers.

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This is a market that is trying to form a bottoming pattern, but the financial conditions do not warrant this, so I think we are getting closer to the top than anything else.

The NASDAQ 100 Index rallied significantly Wednesday after the Federal Reserve raised interest rates by 75 basis points. That being said, traders are starting to look at this through the prism of a relief rally, and it’s also possible that traders are thinking that the Federal Reserve may not be as massively hawkish as thought. At this point, I think it’s probably a scenario where the market will probably start selling off again given enough time.

When I look at this chart, the most obvious area of resistance is the 13,000 level, and that’s an area that I think probably has a lot to do with where we defined the trend as going. The market has been extraordinarily noisy for a while, and while we did rally quite significantly, the reality is that the market is still coming from a point of extreme weakness. Yes, the buyers had their day, but that’s typically the case on Federal Reserve Day. Furthermore, what’s most likely to happen is that we will either sell off on Thursday or Friday because that’s what has been the case going back several meetings. There is a certain amount of hope that Jerome Powell will come into the picture and save everybody’s skin, which is what people have been conditioned to think.

However, what this sets up is a situation where the market will perhaps try to bounce a bit, but eventually will have to focus on the next economic numbers when it comes to inflation. If they continue to be very hot as far as inflation is concerned, then it’s likely that we would see further selling in this market.

The 12,250 level being broken to the downside could open up fresh selling, as it would be a bit of capitulation, which is something that the market will probably see sooner or later. However, if we can break above the 13,000 level, then it’s possible that we could go to the 13,500 level next and start to think about the idea of more of a “buy-and-hold” type of scenario. Ultimately, this is a market that is trying to form a bottoming pattern, but the financial conditions do not warrant this, so I think we are getting closer to the top than anything else.

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There have been horrific losses as of late, and it looks like there is no real demand for Bitcoin going forward.

The Bitcoin market went back and forth on Tuesday as we continue to see negativity, but eventually, the market needs to take a bit of a breath. That’s what we saw on Tuesday, as markets don’t go in the same direction forever. At this point, it’s likely that we will see rallies sold into, as Bitcoin is nothing short of dead money. Even if we do get a nasty rally, it’s going to be very difficult for Bitcoin to break above the $32,000 level.

Speaking of the $32,000 level, the 50-day EMA is sitting at that area and drifting lower. The 50-day EMA tends to be an indicator that a lot of people pay attention to, so it’s likely that we would see further downside even if we do get to that area as a lot of people who “bought the dip” as Bitcoin started to hang around the $30,000 level will be looking to get out at break-even if they can. After all, there have been horrific losses as of late, and it looks like there is no real demand for Bitcoin going forward.

We have yet to see a real-life use case for Bitcoin. Although there have been a few examples here and there, it just has not seen the widespread adoption that people would need to get involved then to make Bitcoin worth anything. Yes, I recognize that Bitcoin has been bid up rather high, but I look at it as a speculative instrument, simply digits on a computer that I can trade back and forth. That’s not me deriding Bitcoin, because I feel the same way about foreign currency markets.

On the other hand, if we do break down below the bottom of the candlestick for Tuesday, that means that we will see even more negativity, and Bitcoin will attack the $20,000 level. I fully anticipate this happening sooner or later, and for that matter, I believe that Bitcoin will break through it. At this point, I have a price target of $12,000, and there’s not much on the longer-term charts that suggest we could not get down to that area. As far as buying is concerned, the best-case scenario I can think of is that we fall rather hard, do nothing for several months or years, and start accumulating again like we did last time Bitcoin fell apart.

AVAX/USD continues to see downward pressure and its price is lingering near the lower part of its long term value.

AVAX/USD as of this writing is slightly above the 23.50000000 level. Avalanche continues to demonstrate downward momentum like many of its major counterparts in cryptocurrency. On the 22^nd of November 2021, AVAX/USD was trading near the 135.00000000 vicinity. Avalanche enjoyed a terrific honeymoon in 2021 and was considered one of the new digital assets with a bright future. As of this writing it is the 15^th largest cryptocurrency regarding market capitalization.

However most of the positive glimmer of AVAX/USD has lost its shine and the digital asset is now traversing support levels that are dangerous. AVAX/USD is still above its lows from July of 2021 and its ability to maintain some support is intriguing, but the ‘intrigue’ technically can be perceived to be negative. On the 27^th of May AVAX/USD traded near the 21.25000000 juncture, this was below the price it hit on the 12^th of May when Avalanche momentarily spiked to a low of 22.30000000 approximately.

The negative trend in AVAX/USD mirrors the price action of its major counterparts, but its relatively new shelf life since it really only became a full trading digital asset in many respects during 2021 leaves room for consideration.  The reason for this is because technically if AVAX/USD were to break below the 20.00000000 value and suddenly find that it is testing mid-August 2021 prices it could spark additional nervous selling.

If the 19.00000000 were to be tested in the near term and AVAX/USD continues to experience nervous selling sentiment, it could open the door for a test of values seen in July of 2021 which were under 10.00 USD. Speculators who choose to wager with selling orders on AVAX/USD should keep their ambitions realistic. Before AVAX/USD touches July 2021 prices, it obviously would need to break below August 2021 values. A loss of an additional 50% of value in Avalanche does looks potentially possible, but the broad cryptocurrency market could reverse higher before that happens and the 10.00000000 may never be seen again. Rome was not built in a day, nor was it destroyed in a day.

AVAX/USD remains volatile and it moves with sudden bursts of energy that all speculators need to be prepared to manage. If AVAX/USD remains negative and the broad cryptocurrency market stays in a selling mode near term, new short term lows may be seen and this perception may entice speculators who believe the bearish trend will remain in effect.

Avalanche Short-Term Outlook

Current Resistance: 24.32000000

Current Support: 22.76000000

High Target: 26.73000000

Low Target: 19.18000000

I have no interest in shorting, at least not yet.

The US dollar initially pulled back during the trading session on Thursday but found enough buyers underneath to send it above the 16 Rand level. This is an area that previously had been trouble, so be interesting to see if we can keep up this type of momentum. We are overbought, but that does not matter when the bond markets are freaking out. Furthermore, a lot of people are shunning the idea of emerging market currencies or dad, so that will continue to have major ramifications when it comes to the USD/ZAR pair.

Underneath, I see a significant amount of potential support at the 15.60 Rand level, so a pullback would more than likely find buyers in that area. Nonetheless, it should be noted that we started to accelerate to the upside again during the end of the session in New York, suggesting that perhaps we are going to see a run much higher. If that is the case, then I think that we are going to see an explosive move sooner rather than later. The question now is whether or not people will want to hold South African Rand into the weekend on any type of bigger move? I suspect that if we do get a pullback on Friday, it will be nothing more than a bit of profit-taking.

Underneath, you can see that the 50 Day EMA is sitting just above the 15 Rand level and is curling higher. It is about to cross above the 200 Day EMA, which is a bullish sign and kicks off what is known as the “golden cross.” While I am not necessarily a huge fan of this technical indicator, I recognize that a lot of longer-term traders pay a certain amount of attention to it. Because of this, you have the potential longer-term institutional “buy-and-hold money” coming back into the market as well. The US dollar seems to be about the only game in town, so for a currency like the South African Rand to struggle, there is not a lot of imagination needed to see this happening. Furthermore, if commodities continued to get sold off a bit, that will also work against the South African Rand as it is so highly correlated to hard assets such as gold and other minerals. I have no interest in shorting, at least not yet.

The Dow Jones Industrial Average declined during its recent trading at the intraday levels, to break a series of gains that continued for four consecutive sessions, recording losses in its last sessions by -0.19%. It lost the index about -65.38 points to settle at the end of trading at the level of 35,228.82, after it rose 0.97% in trading on Tuesday.

The performance of the 30 components of the index was equal, as 15 of them rose and the rest closed in the red zone. The share that declined the most by percentage was Home Depot Inc. Shares of -2.91% and Salesforce.com Inc. By -2.87%, while on the other hand, UnitedHealth Group Inc.’s shares topped the list of the highest percentage gainers. by 1.98% and Walmart Inc. By 1.79%.

Shares fell on Wednesday after Russia downplayed peace talks with Ukraine and intensified its attacks on Ukrainian cities. This helped return the price of West Texas Intermediate crude oil more than 2% to return concerns about an increase in already high inflation. This may lead to more aggressive intervention by the Federal Reserve in an attempt to curb this inflation by raising interest rates at its next meeting by half a percentage point instead of the expected quarter point.

On the economic data front, US fourth-quarter GDP growth was revised to 6.9% annualized from 7%. The ADP showed that the private sector added 455,000 jobs in March. Economists polled by Dow Jones Newswires and The Wall Street Journal had forecast an increase in private sector jobs of 450,000.

Technically, the recent index’s decline came as an attempt to reap the profits of its recent rises. It also tried to drain some of its clear overbought by the relative strength indicators, especially with the emergence of a negative crossover in them. It will help it gain positive momentum that might help it to rise again.

This is ahead of the continuation of the positive support due to its continuous trading above its simple moving average for the previous 50 days. This is affected by leaving the range of a bearish corrective price channel that was limiting its previous trading in the short term, as shown in the attached chart for a (daily) period.

Therefore, we expect the index to rise again in its upcoming trading, to target the important and close resistance level 35,631.20, in preparation for attacking it.

Last week, the pound sterling recovered against the US dollar, gaining 0.98 percent and closing Friday’s session at the 1.3040 level.

The pound sterling benefited from the optimism that took over the market regarding the post-Brexit talks. EU Brexit Negotiator, Michel Barnier said that a deal with the UK government is within reach, while a new round of negotiations were announced.

On Sunday, the Bank of England’s Governor, Andrew Bailey made a reference to the possibility of setting negative cash rates, though according to his comments the bank would only be willing to do so when the UK experiences an economic upturn.

“Our assessment of negative interest rates, from the experience elsewhere, is that they probably appear to work better in a more wholesale financial market context, and probably better in a nascent economic upturn,”  he said.

On Monday, the Bank of England’s Deputy Governor, Jon Cunliffe said that British hedge funds that rely on borrowed money to fund their financial activities should be scrutinized, given that they are a potential threat to financial stability.

On Wednesday the bank published the Consumer Price Index, which stood at 0.4 percent in September (month-to-month), after dropping 0.4 percent in the previous month and below the analysts’ expectations, who foresaw it to be at 0.5 percent. In yearly terms, the index stood at 0.5 percent, higher than the previous month’s 0.2 percent and remaining in line with the analysts’ expectations.

The Retail Price Index went up by 1.1 percent, below the analysts’ expectations who foresaw it to be at 1.2 percent and higher than the previous month’s 0.5 percent. The Producer Prices Index Core Output went up by 0.3 percent, after being at 0 percent in the previous month and over the analysts’ expectations, who foresaw it to be at 0.1 percent.

On Thursday, the Confederation of British Industry released the Industrial Trends Survey for October, which showed an improvement from September’s -48 percent, at -34 percent and way better than the analysts’ expectations, who foresaw it to be at -45 percent. Consumer confidence dropped to -31 in October, after being at -25 in September and worse than the analysts’ expectations, who foresaw it to be a -28.

The Bank of England’s  Chief Economist, Andy Haldane said during a conference at the National Institute of Economic and Social Research that the UK’s household spending is remarkably resilient, pointing out the US case and claiming that the UK could follow the same path.

On Friday, the Office for National Statistics published that Retail Sales went up by 4.7  percent, after climbing by 2.7 percent in August and way better than the analysts’ forecasts, who expected it to rise by 3.7 percent. In monthly terms, retail sales went up by 1.5 percent, after being at 0.9 percent in the previous month, and higher than the analysts’ expectations, who foresaw it to be at 0.4 percent.

IHS Markit reported that the preliminary Manufacturing PMI for October stood at 53.3, signaling a slower expansion of the sector compared to September’s, which stood at 54.1, and better the analysts’ expectations, who foresaw it to be at 53.1. The services PMI was at 52.3, below the analyst’s expectations, and showing a slower expansion of the sector, as the previous month’s figure stood at 54.