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.

Ready to trade our DAX prediction? Here’s a list of some of the best CFD trading brokers to check out.

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.

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

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.

I do think that eventually it will become bullish again, but that might be a story for 2025 or so.

Bitcoin struggled again Friday after initially showing a bit of promise. Ultimately, this is a market that is going to continue to drop, and I suspect that the $18,000 will give way sooner or later. When it does, it’s very likely that we will flush much lower, with an initial target of $16,000.

After that, the market will go looking to the $12,000 level, where a lot of people are looking to get involved. I suspect that is probably about as far as we will go to the downside, but given enough time the best case scenario for most of market participants is going to be that we go sideways for a while, allowing you to pick up bits and pieces in order to build a larger position size.

This is exactly what happened last time during the “crypto winter” a few years ago, which then saw this market break above $60,000. It took a lot of effort, but we eventually did turn things around. This is the first time that Bitcoin has had to deal with a tightening monetary policy, and it has completely failed. Because of this, we will need to see the Federal Reserve change its overall attitude before any real strength can be found.

If we did break above $22,500, it would allow for short-term relief rally. More likely than not, there will be plenty of people waiting to short this market again, so that’s probably my play. It’s not until we break above the $32,500 level that I would be convinced we are going higher. Fading rallies will continue to be the best way to play this market, as it has no real fundamental reason to go higher.

I do think that eventually it will become bullish again, but that might be a story for 2025 or so. It would not surprise me at all to see this market do very little for a year or two, just like it did the previous time. With this, you can be an accumulator at lower levels, but you have all of the time in the world. The only thing that could change this is if the Federal Reserve loosens its monetary policy again. Some traders are hoping that will happen early next year, but inflation has to be kept under control.

This is a market that continues to see plenty of sellers.

The euro fell on Wednesday as we continue to see US dollar strength increase. We have been in a downtrend for quite some time, so it does make sense that we would see the euro fall because of it. That being said, the market is likely to continue to be one that looks at these rallies as selling opportunities. The overall attitude of the market will continue to see quite a bit of noisy behavior, as there are quite a few different things going on at the same time that greatly influence what happens with the US dollar.

It’s interesting that the Austrian central bank chief had suggested 50 basis points of rate hikes would be necessary, and the euro promptly fell. This shows just how weak the currency is, and how the recent rally was absolute nonsense. Given enough time, it’s likely that we would see the euro sell off every time there seems to be a rally, and it’s likely at this point we will go looking to reach the 1.04 level over the longer term. The euro continues to suffer at the hands of every weak economy and the fact that growth is more likely than not going to be a major issue.

Even though the ECB may start to raise interest rates, they are far behind the United States and that will continue to be a major factor in where this pair goes. It is obvious that the 1.08 level has offered significant resistance now, and it has become apparent that the previous support has now been a significant area of selling. Looking at the chart, I believe that the 1.05 level could be a bit of a target over the next several days, and if we can break down below that level, then we will go looking to break through the recent lows. Given enough time, we could even see parity, but that’s something that comes down the road. Obviously, the trend remains very negative, and you cannot fight it. In fact, it’s not until we break above the 1.09 level that we would have to think about buying, and then we also have to deal with the 200-day EMA as well. This is a market that continues to see plenty of sellers.

At this point, it would take some type of major shift by the Federal Reserve for me to start thinking about buying this market.

The S&P 500 initially rallied on Wednesday, but the stronger than anticipated CPI numbers had a lot of volatility entering the market. Because of this, the market has given up a lot of the gains at the end of the day, as it looks like we are continuing the trend of expecting the Federal Reserve to become extraordinarily tight. There are a lot of other concerns out there, of course, so it should not be a huge surprise to see what has happened.

The market did break above the 4000 level at one point, but you can see we have closed well below there. In fact, the candlestick ended up being an inverted hammer, which suggests that we are going to continue to see a lot of negativity. At this point, the 3900 level is more likely than not going to be targeted, and if we can break through there, it is likely that we have yet another leg lower. At that point, I would anticipate a lot of momentum entering the market, and a massive and nasty selloff being the norm.

Rallies at this point in time should be selling opportunities, as we will continue to see a lot of concern out there when it comes to the attitude of the market due to inflation, a tightening Federal Reserve, and the recession that is almost certainly coming down the road. Because of this, think the markets will be very hesitant to become “risk-on” going forward. Any rally at this point in time should be a nice selling opportunity, and I think that is how you have to look at this market: one that will continue to be shorted occasionally. It should be noted that the market breaking down below the bottom of the range from the previous session and closing at the very bottom of the candlestick does, in fact, suggest that we are going to continue seeing a lot of negativity that will see a certain amount of follow-through. Typically, when you close at the very bottom of a range, sellers are going to show up during the next session as well. At this point, it would take some type of major shift by the Federal Reserve for me to start thinking about buying this market.

Market participants will continue to see this as a “sell the rallies” type of situation, as the market has far too much to concern itself with right now to suddenly get wildly bullish.

The S&P 500 initially tried to recover on Tuesday, but as you can see we have given back all of the gains to show signs of extreme weakness. Ultimately, this is a market that looks as if it is scared to death of the CPI numbers coming out during the Wednesday session, which will give us an idea as to how bad inflation truly is. Because of this, I think the market will more than likely continue to see a lot of volatility, but it certainly looks as if we are “leaning” to the downside.

The S&P 500 continues to worry about the inflationary headwinds, and perhaps more importantly at this point in time, the Federal Reserve. The Federal Reserve continues to look as if they are going to be very tight going forward, and aggressive when it comes to monetary policy. If the CPI print comes out stronger than anticipated, that could be a very negative turn of events for this market. If we break down below the bottom of the candlestick, it is likely that we will continue to see some follow-through, perhaps opening up the possibility of a move down to the 3900 level.

On the other hand, if we get a reading that is lower than anticipated in the CPI figure, we may make a serious attempt to get to the 4100 level. There is a barrier between 4140 and 4150 that I think is going to be difficult to overcome, so keep that in the back of your mind. Market participants will continue to see this as a “sell the rallies” type of situation, as the market has far too much to concern itself with right now to suddenly get wildly bullish. It is worth noting that every rally has been sold into as of late, and it looks as if the negativity is going to continue to be a major factor in this market.

If we were to turn around and break above the 41 to 50 level, that would be an extraordinarily bullish move, but right now I just do not see the momentum of the market swinging that rapidly. It would take something rather remarkable coming out of the CPI to make that happen, something that I do not think we will get.

When a market gets parabolic the way this one did, it quite often is a sign of significant overextension.

The West Texas Intermediate Crude Oil market initially rally during the trading session on Thursday to retest the 50 Day EMA and of course the previous uptrend line. Because of this, it looks as if the downtrend is intact, and I do think that it is probably only a matter of time before crude oil breaks rather significantly, perhaps reaching the $95 level early during the session on Friday, and maybe even breaking down below there.

If we do break down below that level, then I will be targeting the $90 level. The market is going to be concerned about the fact that gasoline demand is dropping, which of course is a situation where perhaps the market had gotten so far ahead of itself that it forgot that the “cure for higher prices is higher prices.”

As the world looks likely to head into recession, this is weighing upon the crude oil market because it will drive demand down. There is a structural problem with supply over the longer term, but perhaps a recession might give the oil industry a chance to catch up. As we had been locked down due to the pandemic, it is not a huge surprise that when the economy opened up around the world that the demand shock pulled prices much higher. Now that it looks like the tide is turning, we may see oil drop rather significantly.

On the upside, if we were to take out the top of the Wednesday candlestick, then it is possible that the WTI Crude Oil market could go higher, perhaps reaching the $110 level, maybe even the $115 level. All things have been equal, it looks as if oil is starting to lose its mojo, making lower highs along the way. As long as that is going to be the case, then I think that you continue to fade rallies, but you should keep in the back of your mind that oil markets have been extraordinarily volatile, especially with the Russian supply essentially being taken off of the open market. The US dollar has its influence as well, but this market has been rather strong for a while, and now it looks like it is finally running out of momentum. When a market gets parabolic the way this one did, it quite often is a sign of significant overextension.

In the short term, this is a market that looks more likely than not to go sideways with more of a downward tilt than anything else.

The British pound initially tried to rally on Tuesday but gave back gains to show signs of weakness. By doing so, the market looks as if it is going to continue to see a lot of trouble above. The 1.32 level above is an area that has seen a significant amount of resistance, and we have the 50-day EMA dropping towards that area as well. With all of that being said, it looks as if rallies will continue to be sold into.

The shape of the candlestick is an inverted hammer, and a breakdown below the bottom of the candlestick could kick off even more selling, perhaps sending the British pound to test the 1.30 level. This is an area that is psychologically important and will attract quite a bit of attention not only from a psychological standpoint but a structural one as well as we have seen so much in the way of action at the 1.30 level over the last several years.

On the upside, if we can get above the 1.32 handle and the 50-day EMA, I might be convinced to start buying, but I would also need to see the US dollar falling in general, which is something that I do not anticipate being part of the markets anytime soon. After all, there are plenty of reasons to worry about risk appetite right now, which is something that the market would need to have in order for this pair to continue rising. I do not necessarily think that we will mellt down, I just recognize that this is a market that still has plenty of downward pressure on it, and not much has changed.

If we were to break down below the 1.30 handle, then there is a “zone of support” down to the 1.28 handle, and I think there is a lot of noisy behavior between those two levels. If we break down below the 1.30 handle, I would anticipate a move to the 1.28 level, but I also would anticipate that it will be very hard-fought, and choppy to say the least. Any breakdown below the 1.28 level would be extraordinarily negative, allowing more of a “trapdoor effect” in this market. In the short term though, this is a market that looks more likely than not to go sideways with more of a downward tilt than anything else.

Full-time employment went up by 97,000 last month after a decrease of 20,100 in September.

So far this week, the Australian dollar has advanced against the US dollar, gaining 0.08 percent and continuing its three-week gaining streak, raising concerns about the appreciation of the US dollar. It seems that the Australian dollar has been benefitting from the greenback’s recent weakness, which has lost 0.23 percent against a bundle of its main competitors.

The Reserve Bank of Australia recently released its notes, in which the Reserve Bank states that members are not willing to set negative interest rates yet and that any further action would involve the expansion of the bank’s bond purchasing program. The notes also state that monetary and fiscal stimulus will be needed for a long term, and that cash rates will not be raised for the next three years.

A special focus was placed on the current low interest rate levels which, according to the board, is affecting exchange rates and asset prices. This could push the bank to further lower its interest rate levels, which currently stand at 0.1 percent. According to Bank Governor Phillip Lowe, if other central banks decide to bring their cash rates into negative territory, the RBA would be forced to follow them.

The coronavirus crisis seems under control in the Australian territory. Nevertheless, the State of Victoria recently decided to restrict its border given the surge of cases in southern Australia. So far, 27,785 cases have been reported on the island, as well as a death toll of 907.

On Wednesday, the Australian Bureau of Statistics reported that the Wage Price Index stood at 1.4 percent in the third quarter (year-on-year), after being at 1.8 percent in the previous month. The figure was lower than expected, as analysts predicted it to be at 1.5 percent. In monthly terms, it stood at 0.1 percent, also lower than analysts’ expectations of 0.2 percent and lower than the previous month’s figure, which stood at 0.2 percent.

Unemployment figures for October were lower than expected. The unemployment rate in October was at 7 percent, an increase from the previous month’s 6.9 percent but lower than analysts’ expectations of 7.2 percent. Employment change was at 178,800 after a change of 29,500 in the previous month, also beating analysts’ expectations.

Full-time employment went up by 97,000 last month after a decrease of 20,100 in September. Similarly, part-time employment increased by 81,800, after going down by 9,400 in September. The participation rate stood at 65.8 percent, increasing from the previous month’s 64.8 percent, and was higher than analysts’ expectations of 64.7 percent.

Tensions with China, Australia’s main trade partner, have also been on the rise. Regarding this, Reserve Bank of Australia’s Governor Phillip Lowe said that there is a need to keep a strong trading relationship with the Asian country. The government has been also making efforts to get closer to Beijing, though not enough, according to the Chinese. China has stated that Australian representatives should “take concrete actions to correct their mistakes”.