The BTC/USD has been very quiet during the trading session on Tuesday as we continue to hang around the $21,000 region. At this point, the market is likely to see a bit of hesitation until we get through the Jackson Hole Symposium. This is because various central bank speakers will be bloviating on what they are going to do next, in the fight against inflation. While many crypto traders have no idea, the reality is that whatever happens in the fiat world greatly influences what happens in the crypto world.

If monetary policy tightens, which is essentially what all central banks have been suggesting, it will work against risk-taking, and therefore work against the value of Bitcoin. After all, Bitcoin needs to see a lot of risk appetite to go higher. The massive selloff from 4 days ago suggests that we are going to see further downside momentum. If we break down below the $20,000 level, it’s likely that we would continue to go much lower. If we were to break down below that level, could open up a move all the way down to the $12,000 level, which has been a longer-term target for quite a few traders.

Market Struggles to Go Higher

• The 50-Day EMA sits just above, and it should offer quite a bit of resistance as well. The Bitcoin market is one that I would look to fade rallies at the first signs of exhaustion because the $25,000 level has offered quite a bit of resistance.
• After that, the market could go to the $28,000 level, which extends to the $32,000 level. It’s not until we break through all of that that I would consider the overall trend of the market changed.
• Because of this, it’s very likely that we will continue to see a lot of hesitation to go higher, so fading rallies probably work.

If and when we finally get down to the $12,000 level, at that point I would start to build a longer-term position as we could enter an accumulation phase. Bitcoin has done this before, fallen quite drastically and then did nothing for a couple of years before taking off. I don’t know that we are done selling off, because I don’t think that the risk appetite has returned strongly enough to send the market much higher.

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I suspect we may be drifting a little bit higher, only to turn around and fall apart again.

The S&P 500 was all over the place on Tuesday as it looks like traders are trying to figure out what to do with themselves. At this point, the 3800 level seems to be a bit of a magnet for the price, so it’s likely that we will revisit this area often. That being said, there are a lot of questions out there when it comes to the future of the market, and what we are going to do going forward.

The candlestick does look a little bit supportive, as it is a bit of a hammer. In this scenario, buyers could come in on dips, but I think it’s going to be short-lived in general. After all, the market has plenty to worry about, not the least of which will be the fact that the Federal Reserve is going to continue to tighten monetary policy, so it’s very likely that we continue to see downward pressure over the longer term. Because of this, the market continues to see opportunities for selling on rallies that show signs of exhaustion, something that I think is almost certainly going to be coming.

The 3900 level is an area that should be resisted, right along with the 50-day EMA which is breaking below the 4000 level and dropping. The 3750 level should offer support, and if we break it down below there it’s likely that the market goes down to the 3700 level. After that, the market could unwind quite drastically. The attitude of the market continues to be one that’s very tentative, but keep in mind that bear market rallies can be very violent. That might be part of what we had seen during the day, as the futures markets had melted down during Asian and European trading. Nonetheless, we are not that far from seeing selling pressure again, so I will simply stand on the sidelines and wait to see how it plays out over the next couple of days. Remember, Friday has the jobs number coming out of the United States, and it’s worth noting that the market will probably be kind of quiet once we get to Thursday. I suspect we may be drifting a little bit higher, only to turn around and fall apart again.

The stock market is oversold at the moment, and I think this rally is simply a way to remedy that.

The S&P 500 did rally a bit on Tuesday, showing signs of life again, but at this point it’s likely that we will continue to cease selling pressure eventually. The 3800 level is an area that could cause some resistance, due to the fact that we had bounced from there, but if we break above there, then the market is likely to go looking to the 3900 level, possibly even the 5000 level.

The S&P 500 will have to contend with higher interest rates in the United States, as the Federal Reserve is looking to tighten everything. Ultimately, the market will continue to see plenty of reasons to fall, and I just don’t see how traders will have a longer-term bullish outlook on the market, at least not at this point. The market will continue to be very noisy and I think that anytime somebody gets an opportunity to short this market, they will do so.

The 50-day EMA currently sits near the 4100 level, as it is going to continue to draw from here. If we see the 50-day EMA continues to drop from here, it will be dynamic resistance. Ultimately, signs of exhaustion will get jumped upon, and I will most certainly not hesitate to take advantage of that. The 3650 level is an area that I will be paying close attention to as well, as it has been important previously. If the market broke down below there, then it’s likely that we could go down to the 4500 level.

The Federal Reserve will continue to be very tight with its interest rates, and the market is doing everything it can to price in massive quantitative tightening. Ultimately, this is a situation that will find plenty of reasons to drop. However, I would anticipate that if the market were to break above the 4200 level, it would be a major shift in attitude, and it could be a sign that the market is finally changing trends. However, it does look very likely to happen until something changes with the Fed itself. Yes, inflation could be slowing down a bit, but it is still extraordinarily elevated and will continue to be. The stock market is oversold at the moment, and I think this rally is simply a way to remedy that.

I feel that there’s no compelling reason to be a buyer at this point.

Litecoin pulled back ever so slightly on Tuesday as we try to figure out whether or not there is any real hope for the crypto markets turning around. We did have a decent Monday, but it should be noticed that it was Memorial Day in the United States, so a lot of the American institutional traders were not trading.

It’s also worth noting that there is a lot of noise just above as we had been going sideways for a couple of weeks, broke down below that level, and now are retesting that same area. In other words, we may see more sellers jump back into the market. It looks to me as if the 50-day EMA above will continue to cause downward pressure as well, which currently sits near the $83 level.

If we do break down, it’s very likely that Litecoin will go looking to reach the $50 level, and then maybe even the $40 level after that. This is a market that has been in a downtrend for quite some time, and it’s worth noting that the spread between the 50-day EMA and the 200-day EMA is almost perfect as far as a picture of a sustainable downtrend is concerned.

It’s very likely the crypto is about to see a lot of coins disappear because most of them have no real use case scenario. I personally have used Litecoin, and I like it a lot. However, adoption is a major problem and I think we are getting close to a situation where we will probably see half of these coins disappear, if not more than that. This is the natural cycle of things when it comes to technology, as we had seen in 1999 when so many of the hot tech stocks disappeared.

In an environment where risk appetite is scarce, it’s difficult to imagine that a lot of major institutional players are going to throw a ton of money at Litecoin. However, it’s very likely that it will survive, but I think that we have a rough couple of months at the very least ahead of us, so I feel that there’s no compelling reason to be a buyer at this point. In fact, what I would like to see is a lot of sideways and quiet action where people get used to whatever price we are trading at.

I would not get too excited about any rally at this point though, because the trend is most decidedly against crypto in general.

The Bitcoin market fell significantly on Tuesday but found enough psychological and structural support near the $30,000 level to bounce a bit. The resulting candlestick was somewhat neutral, and I would also point out that the volume was rather strong. This could be a short-term bottom, but at this point, it is premature to think that the trend is suddenly going to change.

Looking at this chart, if we were to break down below the $30,000 level, I think at that point you would start to have serious thoughts about a “crypto winter”, as it would more than likely have people running away from the entire crypto space in general. You would see smaller coins get eviscerated, while Bitcoin would probably do almost nothing at lower levels.

While I do not necessarily think that Bitcoin is going to zero, we are certainly pressing the issue at this point and one would have to think that it may not take too much to get Bitcoin to break down. The CPI numbers coming out of America during the trading session on Wednesday could be the next catalyst because it could drive the US dollar much higher, which would work against Bitcoin in general. On the other hand, if there is less likelihood of an aggressive Federal Reserve after the CPI figure, a falling US dollar might allow Bitcoin to rally a bit.

I would not get too excited about any rally at this point though, because the trend is most decidedly against crypto in general. Furthermore, the US dollar will continue to be bullish from a longer-term standpoint, mainly because there is a lot of risk aversion out there. In other words, I think any rally at this point will more than likely be an opportunity to start shorting again. As far as buying is concerned, I do not have any interest in doing so, and as things stand right now we would have to wipe out the candlestick from the Monday session at the very least. As things stand, crypto does not look very healthy, and at this point, I would be very cautious about buying any. I know that a lot of people jumped in with Michael Saylor during the trading session as this is roughly near his cost basis, but that has nothing to do with anything that can make your money.

The next 24 hours could be rather quiet followed by a significant amount of negative pressure.

The euro initially rallied on Tuesday to show signs of strength, as we had been testing the 1.05 level for support. This is a large, round, psychologically significant figure, and an area where we had previously seen support and resistance. The last couple of days have solidified this, so it looks to me as if the market will continue to respect the 1.05 level.

All of that being said, it is interesting to note that the market had initially tried to rally but then turned around to give up about half of the gains. This suggests to me that we are going to continue to see a bit of hesitation near the 1.06 level, an area that looks to be resistive based on the last couple of sessions. The short-term markets will continue to favor more of a back-and-forth type of action, and if we break above the 1.06 level, then that rally will more than likely be faded as well. After all, the 1.08 level looks to be a bit of a ceiling in the market, and then we have the 50-day EMA above that is starting to fall toward it as well.

Any rally at this point will be an opportunity as far as I can see, and I have any interest in trying to get long of the euro. In fact, it is not until we break above the 1.0933 level that I would be a buyer of the euro, and it would have to be after the Federal Reserve suggests that they are going to be quite a bit more dovish than people anticipated. That would be a complete reversal by the Fed, so I do not necessarily think that is likely to happen anytime soon.

The next 24 hours could be rather quiet followed by a significant amount of negative pressure. The massive downtrend should continue to be a major driver of where we go, so pay close attention to the fact that it takes a lot to turn things around. At this point, I think if you are patient, you should get an opportunity to pick up “cheap dollars” every time we rally. The markets continue to be scared of what the Federal Reserve does, so keep in mind that the press conference could be a major market moving event.

I think more likely than not, we are going to get short-term rallies that can be sold on signs of exhaustion unless something changes quite drastically.

The DAX fell initially on Tuesday to break down below the €14,000 level, and at one point looked like it was ready to take off to the downside. However, we have turned right back around to form a bit of a hammer, suggesting that perhaps there are still plenty of stubborn buyers underneath. This sets up an interesting situation because if we can break above the top of the hammer, that could open up recovery in the DAX to attempt a move to recapture the €14,500 level. It is worth noting that the 50-day EMA sits right there as well.

On the other hand, if we were to break down below the bottom of the hammer for the trading session on Tuesday, that would be a very negative sign as it would show that the sellers have gotten very aggressive, not allowing the market any real opportunity to take off to the upside. When I look at the longer-term charts, I can still clearly see that we are overall in a downtrend, but this action over the last 24 hours does suggest that perhaps we are not quite ready to break down.

With that being said, if the market does rally from here, I think it is short-term relief more than anything else. If we were to take out the 50-day EMA, then we could go as high as €15,000, but that obviously would take a lot of bullish pressure. It is difficult to imagine a scenario where stocks do well in this environment because there is so much in the way of negativity out there when it comes to not only market sentiment, but inflation. The European Central Bank has no interest in trying to tighten monetary policy, so that might be the one thing that is bullish here.

That being said, I think more likely than not, we are going to get short-term rallies that can be sold on signs of exhaustion unless something changes quite drastically. If the ECB decides to start loosening monetary policy even further, that might make the DAX jump. Beyond that, I simply do not see a situation where I want to get overly aggressive for stocks in general, let alone Germany which is dealing with an energy issue.