It looks like we are threatening a major breakout.

The US dollar has rallied during early trading on Wednesday to reach the 50 Day EMA against its Japanese counterparts. Because of this, it looks like we are threatening a major breakout, and if we can get above the highs of the trading session, it’s very likely that the US dollar will continue to climb and go looking toward the highs yet again.

The FOMC Meeting Minutes came out during the day, and some traders thought of them as being a bit dovish. Because of this, we have seen a bit of a pullback from the highs of the day, but it’s also probably worth noting that the pullback was relatively small, so there still seems to be a certain amount of conviction. I believe that the uptrend is still very strong, and it is probably only a matter of time before we see buyers resume their efforts.

• Pullbacks at this point should be thought of as potential buying opportunities, especially near the ¥131 level.
• I think there is a lot of support near the ¥127 level as well.
• We are essentially looking at the ¥127 level as a “floor in the market”, and a “flooring the trend”, at least for the time being.

On the upside, we have the ¥140 level as a potential target, but it’s probably going to take a while to get there. The ¥140 level is a large, round, psychologically significant figure in an area that we have seen a lot of fighting at in the past. It would not surprise me at all to see the market test that area again and cause a lot of noise once it gets there.

What Do We Anticipate for USD/JPY?

I anticipate that the USD/JPY market will continue to be very noisy and erratic, following the bond markets as the Bank of Japan continues to fight higher yields. They are essentially doing the same thing as printing yen consistently, while the rest of the world is tightening monetary policy. This is why all Japanese yen-related currency pairs are moving in lockstep at the moment because this is more about Japan than anything else currently. If we see yields rise in the United States, that only adds more fuel to the fire.

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There’s nothing on this chart that looks remotely bullish.

Cardano has done very little over the last couple of weeks, as it has been hanging out just above the $0.45 level. This is a market that looks as if it is killing time until it decides what its next move is. The fact that we have sat in the same area for a little while does provide a little bit of comfort for those who were bullish on Cardano, but at the end of the day, the fact that we have not rallied it all should probably be the focus.

If we were to break down below the $0.45 level on a daily close, then I think Cardano has further to fall. Regardless, Cardano is going to struggle in this environment, as the crypto world itself is falling apart. There are a lot of projects out there that have absolutely no business being traded because they are never going to do anything. I’m not saying that about Cardano, but there is going to be a great reckoning over the next year or two, because we have reached the point as we did in 1999 with tech stocks.

Eventually, you have to turn some type of profit or actually be used for something other than a pet project. As things stand right now, crypto has a lot of promise but at the end of the day, it’s not overly useful the moment. Because of this, and the massive speculation that we had seen in some of the smallest coins, there is a lot of financial destruction that people will have to sit on top of before they can dip their toes back into the water. There have been a lot of people wiped out by the crypto meltdown, so it’s going to take some time to build that trust back up. However, if you are a longer-term believer in the Cardano ecosystem, and I certainly think there is something to be said about it, you should welcome these breakdowns because they will offer longer-term investing opportunities. As far as trading goes, the only thing you can do with crypto right now is short every rally that comes along. The 50-day EMA sits at the $0.60 level and is dropping toward the current price action. There’s nothing on this chart that looks remotely bullish.

It looks like things are going to get much worse before they get better.

The British pound tried to recover a bit on Tuesday but then collapsed at the 1.22 level to turn around and fall straight through the floor. In fact, by the end of the day, we were threatening the 1.20 handle, an area that looks like it is going to break apart. This is a downtrend that has legs at this point, especially as the US dollar continues to strengthen overall, and the interest rates in America continue to climb as well.

As the world heads toward a potentially devastating recession, I do think that it is probably only a matter of time before we see the US dollar act like a wrecking ball against almost all currencies, this one included. Rallies at this point should be selling opportunities, as we are in such a strong downtrend. At this point, I don’t necessarily have a longer-term target, but I would anticipate that the 1.18 level could be the target over the next several weeks. Quite frankly, this is a horrific-looking chart, and it looks like we are going to go much lower given enough time. The fact that we are closing at the very bottom of the range does suggest that we have more follow-through coming, and with that in mind, I think that the market is going to continue to see reasons to get short.

At this point, the 50-day EMA sits at the 1.26 level and is currently lower. That should be a significant amount of dynamic resistance as well, so I think we are looking at a scenario where we need to break above there on a daily close at the very least, and really at this point, I don’t see that happening. Any balance should be an opportunity to pick up “cheap US dollars” going forward. Because of this, the market will continue to see plenty of downward momentum.

The Federal Reserve is going to have to get extraordinarily tight with its monetary policy, and I think that’s going to continue to be the case. As long as that’s the case, the US dollar is the king of all currencies. In fact, it looks like things are going to get much worse before they get better.

I believe that anytime Cardano rallies, you need to be looking at it as an opportunity to start shorting again, as the trend is so firmly ensconced.

Cardano tried to rally a bit on Tuesday but gave back quite a bit of the gain. At this point, it looks as if the market is trying to threaten the $0.45 level underneath, which is an area that has been supportive multiple times. The $0.45 level has been important for a couple of weeks in a row, but I do think it’s only a matter of time before breaking through there. If we do slice there, then it’s likely to go looking to the $0.20 level after that.

The 50-day EMA sits above the $0.60 level and is sloping lower. It looks as if we are going to continue to see plenty of sellers on rallies, so I don’t have any interest in trying to get long. If we do break above the 50-day EMA, then we could recover to the $0.80 level, but it seems to be very unlikely to pick up that type of momentum while the rest of the crypto markets are so disastrous.

Furthermore, Cardano seems to have no real momentum going forward as far as completing some of the projects is concerned, and it’s taking a ton of time to make all of these things happen. Because of this, the market is likely to continue to get punished much more than many of the other projects out there, and at this point, there are a lot of questions as to whether or not Cardano is ever going to get it all together. Do not get me wrong, I believe that the Cardano project has a lot of potential, but at this point in time it’s not living up to it. Furthermore, money is not looking for speculative places to go to work, so Cardano is going to continue to suffer at that point. I believe that anytime Cardano rallies, you need to be looking at it as an opportunity to start shorting again, as the trend is so firmly ensconced. Furthermore, when you look at the chart, it is almost a textbook example of what a downtrend should look like. I believe $0.20 will be targeted over the next several weeks, and perhaps even lower than that. There are currently no crypto markets I’m willing to buy.

Ultimately, it’s easier to go higher than lower here.

The US dollar rallied a bit on Wednesday as we continue to see US dollar strength overall. That being said, the market continues to see a lot of noisy behavior in general, and it certainly looks as if the 0.98 level is going to cause some issues. If we can break above that, then it’s likely that the US dollar will go racing toward the parity level.

Keep in mind that this pair is a major divergence of central-bank policies, as the Swiss National Bank has no interest in trying to tighten, while the Federal Reserve most certainly will. However, the Swiss franc has a safety factor attached to it, so it’ll be interesting to see if investors continue to look to the US, or if they run toward Switzerland or safety. That being said, the market is likely to continue seeing a lot of volatility and concern out there, but it’s also worth noting that the US dollar is also a safe currency. In other words, it’s likely that we will see a lot of back-and-forth in this market, but ultimately it looks as if the US dollar is winning the battle due to the interest rate differential.

Underneath, we have the 50-day EMA that sits just above the 0.96 level, so it’s a very bullish sign and it makes sense that we would see that as a potential area of buying pressure. Ultimately, I have no interest whatsoever in trying to short this market, at least not until we break down below that level. It’s also worth noting that the 61.8% Fibonacci retracement level has offered support as well so that being said, the market looks as if it is trying to reach to the upside.

The US dollar continues to attract a lot of inflow, and with the 10-year yield over 3%, it makes sense that we will continue to see a lot of that in contrast with the Swiss who do everything they can to keep interest rates much lower. Because of this, I do believe that we will revisit the parity level, perhaps even an opportunity to break above there over the next couple of weeks. Ultimately, it’s easier to go higher than lower here.

All the gains of the GBP/USD currency pair collapsed since trading last week during yesterday’s session. It was exposed to selling operations that pushed it towards the support level 1.2458 after the recent rebound gains, it reached the resistance level of 1.2666, and settled around the 1.2491 level at the time of writing the analysis. The selling operations came as investors returned to buying the US dollar as a haven, in addition to the stronger expectations of the future of raising US interest rates. We are also preparing for the announcement of US jobs numbers today and tomorrow, which may constitute the future of the closing week’s trading for the currency pair.

The British Pound has become the subject of increasingly bearish and extensive press coverage in recent days following a number of suggestions from within the analyst community that it may be on the cusp of a major downward move. But much about the emerging narrative only reflects a repetition of long-standing, polluted views of Brexit, which have gained little market momentum since the end of December 2020 for the Brexit transition period, giving renewed importance to the following October 2021 note.

Meanwhile, the new elements reported in the Sterling trial are couched deeply within the questionable idea that the UK is somewhat of an exception to the European economic trend toward high inflation and a low growth environment that is partly the result of Russia’s invasion of Ukraine. There are also inadvertently self-defeating suggestions of a “connectivity problem” at the BoE as well as allegations that the BoE may struggle to keep pace with peers as interest rates rise in order to rein in hyperinflation over the coming months.

Inflation continues to rise and reached 5.2% in May, while first-quarter GDP was revised down.

According to the technical analysis of the pair: the recent move threatens the future of the bullish channel for the GBP/USD currency pair, which was formed recently. The bears’ control will increase again if the currency pair moves towards the support levels 1.2440 and 1.2360, respectively. As I mentioned before, the breach of the 1.3000 psychological resistance will remain of great importance to break the current bearish outlook for the currency pair.

Amid the British holiday today, the GBP/USD pair will all focus on the US ADP economic data for the change in non-farm employment, weekly jobless claims, non-farm productivity rate and US factory orders.

A breakdown seems more likely than not, perhaps a move to the 1.06 level, followed by a move to the 1.04 level.

The euro tried to break above the crucial 1.08 level on Tuesday but has been found wanting again. Because of this, it looks as if the 1.08 level will continue to be a major problem for the bulls, and it would be a bit surprising to see this market break above there. At this point, it’s obvious that we do not have enough momentum to make that move.

It might be worth noting that the 50-day EMA is in this current region, suggesting that we are going to continue to see a lot of noisy behavior. That being said, when you look at the longer-term chart it is obvious that we have been in a downtrend, and none of the fundamental reasons have changed, although Christine Lagarde has suggested that 25 basis point rate hikes could be coming. That being said, the European Union is still far behind the Federal Reserve when it comes to monetary tightening, so I think we still have a huge advantage for the US dollar.

Furthermore, you have to keep in mind that as risks continue to pile up out there, people will want to own US dollars. There are serious issues in emerging markets right now with debt that is denominated in greenbacks. It is a bit of a death spiral just waiting to happen. Because of this, a breakdown seems more likely than not, perhaps a move to the 1.06 level, followed by a move to the 1.04 level. In fact, I think sooner or later we may even test parity if economic conditions start to deteriorate again.

Alternatively, if we were to turn around and break above the 1.09 level, then I think you could see an even bigger rally to the 1.12 level, but that is going to take quite a bit of effort to make happen, and we would more likely than not see US dollar weakness across the board in that scenario. Because of this, I think it is easier to fade rallies as they occur, and we certainly saw a lot of that early on Tuesday. While we have not broken down significantly, the ferocity of the selloff at one point was a bit concerning.

The crude oil markets have been bullish for quite some time, and now that we have worked out a lot of volatility, it’s likely that we will be able to stabilize and grind higher.

The West Texas Intermediate Crude Oil market initially pulled back just a bit on Friday but turned around to show signs of life again. By doing so, the market will have traders thinking that a breakout is imminent. I recognize that there is an area between the $115 and the $116 levels that is a bit difficult. Breaking above there is the next challenge but based on the candlestick that we have formed for the Friday session, that’s likely to happen rather soon.

Keep in mind that there are a lot of concerns about supply to begin with, but now that China seems to be ready to reopen, that should drive more demand going forward. That is the biggest story right now, perhaps right along with the Russian invasion of Ukraine. Nonetheless, we are entering a traditionally bullish time of year anyway, as the summer driving season begins. Now that the market is pricing in a reopening trade and of course China will only exacerbate that, there are plenty of reasons to think that this market is going to go higher.

It’s also worth noting that the most recent pullback stopped just above the 50-day EMA, so in that scenario, it has performed much better than it had in the three previous breaks, which tested the uptrend line. Ultimately, this is a market that is more likely than not going to continue to attract a lot of value hunting, and it’s very difficult to imagine a scenario where you could be a seller. In fact, it’s not until we break down below the uptrend line that there is a potentially negative setup. Anything between now and then that is a pullback will more likely than not will be thought of as a value proposition.

As far as a target is concerned, the recent highs at the $128 level could be a potential target. The crude oil markets have been bullish for quite some time, and now that we have worked out a lot of volatility, it’s likely that we will be able to stabilize and grind higher. That does not necessarily mean that it will be an easy trade, but it certainly looks as if it is the most likely of direction going forward.

The best scenario is that you fade exhaustion candles.

The DAX rallied a bit on Monday as we initially gapped above the €14,000 level in the futures market. The market seems to be hanging around the 50-day EMA, and now the €14,250 level comes into the picture to offer resistance. Ultimately, I believe it is only a matter of time before the sellers come back in and start pushing this thing lower. Rallies at this point will continue to be looked at as a potential selling opportunity.

In fact, the market is essentially at the top of a major descending triangle, and therefore sellers would probably be attracted to that as well. If we break down below the bottom of the candlestick for the trading session on Monday, I would anticipate that we could threaten the €14,000 level, an area that will be important. If we break down below there, the market then could open up the possibility of a move down to the €13,500 level. In general, when you look at this chart you can see that we have given up gains every time we tried to rally, and equities, in general, have been rather difficult to get excited about.

However, if we were to break above the €14,250 level, then it is possible that we could go looking to the €14,500 level, which would be a psychologically important area, especially as we have seen sellers enter that area as well. Furthermore, the 200-day EMA is sitting above there and is drifting lower. In general, this is a situation in which I think you should be looking for selling opportunities, but you also have to keep in mind that the DAX will move right along with other indices around the world.

Tightening central banks, and of course, the global economy slowing down, continue to be a negative for the DAX, which makes quite a bit of sense as there are so many major exporters on the index. After all, the major exporters are going to need to have customers to export to. As risk appetite continues to fade in multiple economies around the world, it is difficult to imagine that Germany is going to be any different. This is especially true as the European economy itself looks so vulnerable over the last several months. The best scenario is that you fade exhaustion candles.

Markets tend to take a long time to turn around after move like this, so I assume we will continue to find plenty of pressure.

The German DAX Index rallied on Tuesday as we continue to see money flow back into equities in general. That being said, there is a lot of risk out there, and it would not take much to spook the markets. Ultimately, the €14,250 level looks to be difficult to get beyond, and I think we have a scenario where you will eventually find sellers as the market is skating on thin ice and is at the top of the overall channel. The 50-day EMA would offer a little bit of technical resistance as well, so it would remain to be seen whether or not it holds.

If we do fall from here, a break below the €14,000 level could bring fresh selling in, sending the market down to the €13,500 level. Any test of that area that breaks down could send this market much lower, as it would be a bit of capitulation by the markets again. On the other hand, if we were to turn around and break above the €14,250 level, then we have a shot at eating the €14,500 level. After that, then we have the 200-day EMA which is just above the €14,750 level. In other words, every €250 or so, we are going to have a little bit of a fight on our hands.

Keep in mind that the DAX is highly sensitive to global markets and of course global economies as it is such a major exporter. Because of this, you need also to pay attention to what is going on in places like China and the United States. With the massive amounts of inflation that we are seeing, I do think that it is probably only a matter of time before all stock indices get hit again, but bear markets do tend to have massive rallies occasionally, only to sell off quite drastically again. Because of this, I would be wary of any type of rally until we get confirmation, perhaps globally. In the short term, I think that the first signs of exhaustion will be jumped upon rather aggressively, as we had been in such a strong downtrend for quite some time. Markets tend to take a long time to turn around after move like this, so I assume we will continue to find plenty of pressure.