At this point, I either fade rallies or celebrate down, because I believe that the British pound is going to find its way down to the $1.15 level. 

The GBP/USD has rallied slightly during the trading session on Thursday, as we are hanging around the 1.18 level. It’s worth noting that level has been a bit of a magnet for price for most of the week, but it’s also worth noting that the level is below the previous low, meaning that we are still very much in a market that is overall negative. I think at this point any time we rally, there will be plenty of people willing to jump into this market and start shorting again.

The 1.20 level above should be resistance, and I would also point out that the 50-Day EMA is racing toward that area as well. In other words, on rallies, I think there will be plenty of technical reasons for traders to get short again. On the fundamental side, the Federal Reserve will have to tighten monetary policy going forward, so the market has already started to price that in. The question is how much longer will they have to go? At this point, a lot of people will be waiting to see what Jerome Powell has to say on Friday about monetary policy and whether the Federal Reserve is getting close to pivoting.

Traders Ready to Pick Up Cheap Dollars

• I think a pivot is a bit of a pipe dream by those who were bullish on risk assets, but that does not mean that the market will not read the statement as such.
• Jerome Powell causes a long history of dropping the ball in situations, so anything is possible. Therefore, I hope this market bounces because quite frankly I’ll be able to short it at higher levels.
• Picking up “cheap US dollars” has been the trade all year, and I don’t see how those changes anytime soon. This is especially true considering that the Bank of England is already stated that the United Kingdom is going into a recession. Meanwhile, here in the United States, we just simply changed the definition of the word “recession.” It’s as if the British don’t understand this can be done!

Anyway, I digress. At this point, I either fade rallies or celebrate down, because I believe that the British pound is going to find its way down to the $1.15 level. That’s not going to be quick or easy, but I think we continue to grind the way we have been over the last several months.

Ready to trade our daily Forex forecast? Here’s a list of some of the best Forex brokers to check out.

All things being equal, this is a market that I think remains bullish due to the idea of the Bank of Japan continuing to do whatever it takes to keep interest rates down.

The USD/JPY has pulled back just a bit during the trading session on Thursday as we continue to wait for Jerome Powell to bloviate at Jackson Hole, Wyoming on Friday morning. He will give a statement/speech that will hopefully give people a bit more clarity as to what the Federal Reserve is going to do. If history is any indication, he will say one thing, while the market will interpret the exact opposite. This man is horrible at his job.

We are sitting at an extreme high and aren’t too awfully far from breaking out to a fresh, new high. The ¥140 level would be an area of the target, as well as an area of resistance. The range over the last several days has been rather tight, so therefore it’s obvious that we are waiting on something. If we do pull back from here, it’s likely that the market could go down to the 50-Day EMA, looking for some type of support. On the other hand, if the market rallies from here, then it’s likely that we will challenge that previously mentioned ¥140 level.

The Dollar is Expected to Strengthen

All things being equal, this is a market that I think remains bullish due to the idea of the Bank of Japan continuing to do whatever it takes to keep interest rates down. The 10-year note in Japan is being artificially suppressed at the 0.25% level. The Bank of Japan has pledged to buy “unlimited bonds”, so therefore it’s likely that we will continue to see the Japanese yen suppressed. On the other side of the trade, we have the Federal Reserve looking to tighten monetary policy, so therefore it should continue to push this market to the upside.

A lot of back and forth will be the norm, but we are still very much in an uptrend. In fact, if we stay above the ¥132 level, I don’t see anything to be concerned about. If we were to break down below that level, then it’s likely that we could drop down to the ¥128 level. The ¥128 level is the area where the 200-Day EMA is rapidly approaching, so it should offer a significant support level on any pullback. It’s not until we break the role that that I would be parish of this pair.

Ready to trade our Forex daily forecast? We’ve shortlisted the best Forex brokers in the industry for you.

I do think that a big move is coming, but I would not be surprised at all to see a lot of noisy shakeouts over the next couple of days, so you need to be very cautious.

The S&P 500 E-mini contract has done very little during the training session, as we sit just below the 200 Day EMA. The 200-Day EMA is an indicator that a lot of people pay close attention to, and therefore it does make a certain amount of sense that we are hanging around in this area. It is also worth noting that we are between the 50-Day EMA underneath, and the 200-Day EMA, suggesting that we are getting ready to squeeze.

The size of the candlestick leaves a little bit to be desired, so at this point in time, I think we are simply waiting to see some type of decision from Jerome Powell and how the market reacts to any statement that he makes. I think the market will try to find some type of reason to make his statement dovish, and clearly, Jerome Powell is not good enough for communicating to make that not happen. It’s very common for the market to read what once into a statement, take a little bit of time, and then come back into the fold again.

Noise Ahead

• I think it’s very likely that we continue to see a lot of noisy behavior, and therefore I think the volatility is probably only going to get worse.
• Clearly, Jerome Powell has made a career of doublespeak, but now that the reserve governors are not out there day trading, they may not have the same drive to support Wall Street.
• I do think that a big move is coming, but I would not be surprised at all to see a lot of noisy shakeouts over the next couple of days, so you need to be very cautious.

If we break down below the 50 Day EMA, then it’s likely that we go down to the 4000 level, which of course is a large, round, psychologically significant figure. On the other hand, if we turn around and go to the upside, it’s obvious that the 4300 level is an area where we have seen a lot of selling pressure, so I would anticipate that the area could be rather resistant to upward pressure. This is a market that I think continues to see a lot of noisy behavior, and therefore position sizing will be paramount.

Ready to trade our S&P 500 daily forecast? Here are the best CFD brokers to choose from.

• The NASDAQ 100 has done very little during the trading session on Wednesday as we continue to sit just above the 50 Day EMA.
• This is a market that is going to be waiting on Jerome Powell and his speech on Friday.
• The Jackson Hole Symposium features several central bankers and speeches that will give us an idea of where their thoughts are.

If we were to break down below the 50 Day EMA, then it’s possible that we could unwind down to the 12,500 level. Underneath, then the market could open up a move down to the $12,000 level. On the other hand, if we turn around a break to the upside, then the 200 Day EMA is sitting at the 13,500 level. This is a market that had recently broken out, and now it is looking for an opportunity to find some type of support underneath to turn things to the upside. We are also between the 50-Day EMA and the 200-Day EMA, which typically signifies that we are about to see a squeeze.

Traders Worried About the FED

The market breaking down will more likely than not have a lot to do with the speech coming out of Jerome Powell on Friday, which if interpreted as extraordinarily hawkish, while traders worried about plenty of downward pressure on the economy. Furthermore, interest rates could continue to be a major driver of war we go next, so if interest rates rise after that statement, it will make people more interested in that asset as opposed to stocks. High-growth technology companies tend to follow the cheap money, so it needs to see cheap money and low interest rates in order to take off.

I think the only thing that you can count on Thursday is a lot of lackluster trading, and unless something is leaked, I anticipate that everybody is going to be waiting around for that Jerome Powell speech at 10 AM on Friday. Market participants are waiting to see whether or not the Federal Reserve is looking to pivot, which is a story that Wall Street has told itself. At this point, people are completely ignoring what the Federal Reserve says, so it’s not necessarily going to determine that we are breaking down the market. After all, Wall Street will find some type of narrative to help. However, if Jerome Powell is aggressive in his speech, we may actually see a selloff on Friday. Thursday is about waiting.

Ready to trade the NASDAQ 100 Index? Here are the best CFD brokers to choose from.

• The AUD/USD has fallen a bit during the trading session on Wednesday as the market continues to drift around the 0.69 level.
• The Aussie dollar is acting much like the other currencies around the world, as we are waiting to see what the Jackson Hole Symposium is going to bring.
• The candlestick for the day is a bit lackluster, and therefore it’s likely that we will continue to see this market hang about until we get the speech from Jerome Powell at 10 AM Eastern Standard Time on Friday.

Looking at this market, you can see that we have been somewhat sideways for a couple of days, and therefore the market will more likely than not continue to see a lot of choppy short-term behavior. Between now and that announcement/speech, I think what we’ve got going on is a lot of Brownian motion, which is essentially going nowhere.

Noise Ahead

The Australian dollar is highly levered to the commodity markets, so you do need to be cautious going forward, as central banks are more likely than not going to continue to tighten monetary policy, which should drive down demand for commodities, lease in the short term as it will lead people to believe that economies around the world are going to slow down. The market will more likely than not continue to see a lot of nonsense over the next couple of days, so I would not necessarily put a lot of money into it. However, by the time we get to the weekend, we may have a little bit more in the way of clarity as to how the market reads Jerome Powell.

If we break down below the lows of the last couple of days, it’s likely that the Australian dollar will go down to the 0.67 level. On the other hand, if we turn around a break above the 0.70 level, it’s likely that the market will probably go looking into the 0.71 level. Breaking above the 0.71 level could open up the possibility of a bigger move, and therefore it’s likely that we would see the overall trend change. I don’t think that’s going to happen, but it’s likely that we will continue to see a lot of uncertainty, which should lead more of a charge towards the US dollar overall.

Ready to trade our Forex daily analysis and predictions? Here are the best Forex brokers to choose from.