Gold markets went back and forth during the trading session on Tuesday, as we continue to dance around the 50 day EMA. This is a market that will obviously be paying close attention to the idea of stimulus out the United States and of course whether or not the global economy will get better, or possibly even worse. Gold is longer-term bullish, but it does look to me like we are continuing a slow drift lower.
Gold Price Predictions Video 21.10.20
Gold markets of course are reacting to various issues, not the least of which would be fear, but we also have to worry about whether or not the US dollar is going to strengthen. It is very well could, especially if we do not get stimulus anytime soon. After all, this is a market that is typically priced in US dollars, but we also have the longer-term aspect of central banks around the world flooding the markets with liquidity. In other words, gold should be bullish against a multitude of currencies, not just the greenback.
A lot of traders are paying attention to whether or not Congress can get stimulus through anytime soon, and quite frankly it looks very unlikely considering that the election is so close. Once the market finally gives up on the idea, that could send the US dollar much higher and therefore put more downward pressure on gold. I believe that ultimately the gold market is going to find plenty of support underneath at the $1850 level, and most certainly at the $1800 level which is now starting to attract the attention of the 200 day EMA as well.
The US dollar has rallied a bit during the trading session on Tuesday, reaching towards the 50 day EMA. The 50 day EMA is an indicator that a lot of people have been paying attention to for the last several months, as it is dynamic resistance. The fact that the candlestick broke above the ¥105.50 level suggests that perhaps there is more of a “risk on” feel to the market during the day, but we have seen this happen multiple times and therefore it is only a matter of time before we probably rollover again. After all, the US dollar is still in the crosshairs of potential stimulus, so that in and of itself could cause the greenback to pull back a bit.
USD/JPY Video 21.10.20
Ultimately, this is a pair that seems like it is trying to build up the necessary momentum to finally break down below the ¥105 level. Breaking down below there opens up the possibility of a move down to the ¥104 level, followed by a break down to the ¥102 level. With the bonds in Japan offering more yield than in the United States, that is another reason we have been seeing this market drift lower.
That being said, there are a lot of questions out there as to whether or not we are in a “risk on” or possible “risk off” type of environment, so that will continue to cause issues. That being said, I have found the easiest way to trade this market lately has been to simply short signs of exhaustion on smaller time frames for smaller positions.
The British pound initially rally during the trading session on Tuesday, reaching towards the 1.30 level which of course is a very significant large, round, psychologically significant figure. This large number has caused quite a bit of resistance so at this point it is not a huge surprise to see that we have pulled back a bit. Between the 1.30 and the 1.31 levels, there seems to be a significant amount of selling pressure. To the downside, the market continues to look at the 1.28 level as potential support, as well as the 1.2750 level. Just below there, we have the 200 day EMA which of course is very important to pay attention to.
GBP/USD Video 21.10.20
To the upside, if we were to somehow break above the 1.31 handle, then the British pound will more than likely go looking towards 1.33 level followed by the 1.34 handle. That being said, it would take some type of good news when it comes to Brexit or some other such event. Another possible driver of that move could be the stimulus package in the United States actually being shoved through, but at this point it is still difficult to understand exactly what it is that Congress can do between now and the election.
All things being equal, when you look at this chart it does appear that we are running into a significant amount of resistance that we could very easily find this market breaking back down. Regardless of what you choose or see, you need to keep your position relatively small.
The British pound initially rallied a bit during the trading session on Tuesday, breaking above the 50 and the 200 day EMA indicators on the chart. Both of those are flat though, so it tells you that we are simply going sideways. Ultimately, this is a market that I think continues to see a lot of questions when it comes to directionality, and at this point I am essentially looking at the market as a hostage to the Brexit nonsense that will continue to cause issues.
GBP/JPY Video 21.10.20
The market certainly sees a lot of support underneath at the ¥135 level, which has been important for a long-term standpoint as well, but at the same time we have seen a lot of resistance at the ¥138 level. As we are essentially in the middle of that range, it is likely that the market is simply going to chop back and forth. Ultimately, I look for this market to reach the outer levels of the range in order to play against those areas. Ultimately, this is going to come down to the latest headline coming out of Brexit, so it is almost impossible to trade this market with any type of real confidence.
Furthermore, it is also a currency pair that is highly sensitive to risk appetite, and if risk appetite falls apart that will work against the value of this pair as well, as people start looking towards the Japanese yen for some type of safety. Ultimately, I think the one thing that you probably need to take away is that you need to keep your position size relatively small.
The Euro has rallied significantly during the trading session on Tuesday, reaching just above the 1.18 level by the time New York got on board. The question now probably focuses on whether or not there is going to be stimulus coming out of the US, because Nancy Pelosi suggested that Tuesday was the “deadline” to get anything done between now and the election. My suspicion is they will find a way to cause some type of issue, as politicians in the United States continue to become more childless each day. However, the market seem to cling on to some kind of hope so that is something worth paying attention to.
EUR/USD Video 21.10.20
There is the possibility that we get a “sell the news” type of event when it comes to stimulus, meaning that the markets may do exactly opposite of what you expect. After all, we have been pricing in the idea of stimulus for so long that perhaps people will start to take profit. While that is not my base case scenario, it is something worth paying attention to. To the downside, I believe that the 1.17 level will probably continue to be crucial, and therefore if we were to break down below there it opens up the possibility of a move down to the 1.16 handle.
To the upside, I see the 1.1850 level as offering resistance, just as the 1.19 level is above there, and of course the 1.20 level which has been a massive amount of noise. If we can break above the 1.20 level, then the Euro can continue a longer-term move to the upside, but we are clearly quite a way from having that happen right now.
The Australian dollar has broken down a bit during the trading session on Tuesday, to break down towards the 0.70 level. If we can break down below the 0.70 level, the market is likely to go looking towards the 200 day EMA. Breaking down below there allows the market to go down to the 0.68 handle. That of course is a very significant round figure and could kick off a larger move to the downside. Ultimately, a lot of this is going to come down to a lack of stimulus in the United States but we have also recently seen the Reserve Bank of Australia suggest that interest rate cuts are in fact coming, so that will weigh upon the Australian dollar as well.
AUD/USD Video 21.10.20
Ultimately, the market is likely to see a lot of selling on rallies, unless of course we were to somehow break above the 0.73 level. If we break above there, then it is likely that the overall uptrend should continue to go higher, perhaps reaching towards the 0.75 level. However, that is not my default position right now, so at this point it is likely that we will continue to see downward pressure. I do not know that it necessarily means that we are going to break down significantly, but it seems very likely that we are going to be negative in general. Ultimately, this is a market that will continue to be noisy and of course you have to keep in mind that the risk appetite is going to be a moving target. That being said, the more volatility that we get in other assets, the less likely this pair is to go higher.
The S&P 500 did rally a bit during the trading session on Monday, reaching towards the 3500 level. That is a large, round, psychologically significant figure that will attract a certain amount of attention, and it has caused a bit of a reaction every time we approach it. Furthermore, it is worth noting that the Thursday candlestick was a hammer, the Friday candlestick was a shooting star, and now the Monday candlestick is looking very much like one that is showing resistance as well. Because of this, the technical analysis looks like we are certainly looking at a range as well.
S&P 500 Video 20.10.20
This setup a nice trade for those of you looking towards short-term charts, as we can go back and forth and show opportunities in both directions. Although one could make an argument that we have just formed a “double top”, I think that is probably jumping the gun. I would anticipate that there is a lot of support below at the 3400 level, and it is likely that we would find the 50 day EMA reaching towards that area by the time we get there. All things being equal, we are still very much in an uptrend, so that is something worth paying attention to.
At this point, the market is focusing on the idea of whether or not we get some type of stimulus, and of course the value of the US dollar. If the US dollar continues to strengthen, then it is very likely that will continue to weigh upon the stock market.
Silver markets have rallied a bit during the trading session on Monday, breaking above the 50 day EMA. Ultimately, this is a market that is trying to figure out where to go next, so having said that it is a scenario where we are probably going to continue to see buyers on dips. However, keep in mind that silver is highly sensitive to the trajectory of the US dollar, and therefore it is worth paying attention to the US Dollar Index if you are going to trade silver. As a general, and certainly over the last 90 days, we have seen a bit of a negative correlation. Having said that, if the US dollar is starting to strengthen, that probably works against silver insensate to lower levels.
SILVER Video 20.10.20
The $24 level should offer minor support, and most clearly the $22 level well. The 200 day EMA is sitting just above the $21 level, and of course the $20 level is psychologically and structurally important from previous trading. Because of this, I am not necessarily looking to short silver, but I do recognize that there is still a significant amount of headwinds out there that could come into play.
Given enough time, you also have to question whether or not we are going to see industrial demand as well, because the market also have to pay attention to whether or not there is going to be industrial usage, which is a major influence on what happens next with silver. While it is a precious metal, it play second fiddle to the gold market in that aspect.
The West Texas Intermediate Crude Oil market has done almost nothing during the trading session as we continue to dance around the same area that we have been in previously. The 200 day EMA sits just above, just as the 50 day EMA sits just below. Ultimately, this is a market that cannot seem to get its direction together, and therefore we simply go back and forth. There are concerns about demand, which of course is going to be an issue if we are going to have multiple economies around the world starting to slow down or even locked down. On the other hand, we also have an oversupply issue. The one thing that may send this market higher is the idea of stimulus.
Crude Oil Video 20.10.20
The Brent market also is going back and forth around a very tight range, as the 50 day EMA is currently sitting right at the $43 area. Ultimately, this is a market that also need to see some type of stimulus coming out of the United States in order for the rest of the world to suddenly jump in the idea of more demand for crude oil. If we do break higher, the 200 day EMA sitting just below the $45 level is going to be a major issue. Signs of exhaustion will be sold into, and that is from what I see the best trade available right now. To the downside, the $42 level is somewhat supportive, and most certainly the $40 level will be. We are essentially stuck in some type of tight range.
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Natural gas markets have rallied a bit during the trading session after initially gapping lower on Monday, showing signs of confusion in choppiness yet again. The $2.65 level has offered a short-term support level, while the $2.80 level above is significant resistance. I think that given enough time we are probably going to see a lot of noisy behavior in this general vicinity, with the $3.00 level above offering a massive amount of resistance. Because of this, it is very likely that we continue to see a lot of back and forth, but it does appear that the upward trend continues. With that being the case, I do not have any interest in trying to get too cute with this trade, I simply want to buy it on short-term dips.
NATGAS Video 20.10.20
The 50 day EMA underneath will of course attract a certain amount of attention, especially as the indicator has been relatively reliable in the recent uptrend. If we can break above the 3.00$ level, then it is likely that the market can continue to go much higher. I do think that it does, as we are heading into a colder time of year for the northern hemisphere.
Furthermore, we have had a significant amount of bankruptcies in the United States, so that has taken some of the supply out of the market. Nonetheless, this is a cyclical time of year for natural gas the typically go higher, so that is something to keep in the back of your mind.
Gold markets rallied a bit during the trading session on Monday, breaking above the 50 day EMA quite decisively, but gave back those early gains to form a less than impressive candlestick. This suggests that gold still has further to go to the downside and quite frankly if the US dollar strengthens, that will be the main reason. While we have seen this market drift lower over time, I do not necessarily think that gold is something that you should be selling, because quite frankly there is a lot of risk out there and that is of the way gold works.
Gold Price Predictions Video 20.10.20
To the downside, the $1850 level is an area where we could be seen a certain amount of support in the future, and it does make a decent target if you were in fact to short the gold market. However, I do not think that shorting is the best way to go as the longer-term fundamental certainly do look like they are going to be good for gold. Below the $1850 level, we have the massively important $1800 level which has previously been the scene of a major breakout, and it is more than likely going to be an area where we see a bit of “market memory” come back into play.
Beyond that as well, we have the 200 day EMA which is approaching that level. It is because of this that I think somewhere between $1800 and $1850 we will find the buyers return into this market to continue the longer-term uptrend. I do not like trading against the overall trend, so I am perfectly content to simply look for value in gold and take advantage of it slowly, building up a bigger position as the market extends gains.
The US dollar initially tried to rally during the trading session on Monday but gave back the gains as we continue to see a pressing lower. In fact, it is very likely that the market is trying to build up enough pressure to finally break down below the ¥105 level. That being said, the market is likely to see noisy trading more than anything else, but we are in a downtrend, and therefore I have no interest in trying to buy this pair.
USD/JPY Video 20.10.20
When you look at the pair, the Japanese yen has been strengthening over time, but it is a very choppy and slow move. This is because both of these are considered to be safety currencies, but ultimately the market is likely to go looking towards the ¥104 level underneath, which has been the recent bounce. Ultimately, I do think that we go through there and go looking towards the ¥102 level. The market may take some time to make that move, but ultimately, we are clearly forcing ourselves lower.
The Japanese bond markets are paying more of a return than the US bond markets, and what looks to be like an alternate reality for anybody who has been in the Forex game for more than about 20 minutes. With this, we continue to see downward pressure on the US dollar due to the massive amount of stimulus that people are expecting in America as well.
British pound traders started buying again at the beginning of the week on Monday, reaching towards the 1.30 level. Ultimately, the market continues to pay attention to this round figure in order to get some type of guidance. Quite frankly, with Brexit out there still causing headaches for a lot of traders, I believe that this is a market that will remain very volatile. The 1.31 level above is going to be the top of the overall range, but clearly the 1.30 level has been an area that has attracted a lot of attention.
GBP/USD Video 20.10.20
To the downside I see the 1.29 level offering a little bit of support, as well as even more support down at the 1.2750 level. That being said, the 200 day EMA is near there as well so that could cause a bit of support as well. Ultimately, I think that the market is going to continue to chop back and forth as we see a lot of noise. I do believe that the British pound has very serious risk out there when it comes to the idea of Brexit going right or wrong, and of course the US dollar looks to be making an argument to stabilize.
At this point, I do think that we are more likely to pull back then go higher, but quite frankly the real move will come later once we finally get some type of resolution to whether or not there is going to be a deal when it comes to Brexit. In the meantime, expect the latest headline or rumor to move the market back and forth as we continue to see volatility pick up.
The British pound rallied significantly during the trading session on Monday to kick off the week, as we continue to see a lot of noise in this general vicinity. The 50 day EMA and the 200 day EMA both have come into the picture to show significant resistance in of course a bit of hesitation as the moving averages are both very flat. The size of the candlestick is of course relatively bullish as well, but ultimately, we are in an area of congestion and that should be paid close attention to.
GBP/JPY Video 20.10.20
The pair is of course very risk sensitive so that is something worth paying attention to as the risk appetite of traders around the world will continue to see things a bit different. Looking at this chart, it is easy to see that we have been in a bit of a range for a while so having said that this is likely to be a scenario where we have a lot of back and forth going forward, because quite frankly there are far too many things out there that could cause major issues in the short term. With this, expect “The Dragon” to be very noisy.
Unfortunately, we have to worry about Brexit and the occasional headline that is going to be coming out, which of course will throw a bit of a wrench into the works at times, but in the end this is a pair that I think is going to continue to bounce around between ¥138 above and ¥135 below until something more substantial happens.
The Euro rallied significantly during the trading session on Monday, reaching towards the 1.18 level. This of course is a large, round, psychologically significant figure, and should be paid attention to for that reason. Furthermore, the uptrend line above should offer resistance, while the 1.17 level underneath offers plenty of support. At this point, the market looks very likely to continue chopping around and going sideways in general.
EUR/USD Video 20.10.20
The 50 day EMA is sitting underneath, sitting just above the 1.17 handle, so that of course is something that people will pay attention to. If we can break above the uptrend line that we had broken through, then we could go looking towards the 1.1850 level, and then the 1.19 level. There is a ton of resistance above, so I think that any rally at this point is probably going to be sold into. Having said that, we have recently made what could be thought of as a “higher low”, but I think it is up bit premature to call it that yet. After all, there are a lot of concerns out there that could drive money into the US dollar, so it is most certainly worth keeping that in the back of their mind. If we do break down below the 1.17 handle, then we could go down to the 1.16 level, and then possibly down to the 1.15 handle after that.
This pair is somewhat sensitive to risk appetite, so if something ugly happens, it will certainly sell this market. Furthermore, the European Union has to worry about the possibility of lockdowns and a continuation of plenty of new coronavirus infections that are rapidly increasing.
The Australian dollar has rallied a bit during the trading session on Monday to break above the 0.71 handle. That being said, there is still a lot of resistance above, and it could continue to cause some issues. Furthermore, the 50 day EMA is sitting above as well, and a certain amount of attention will be paid to that indicator as per usual. Ultimately, this is a market that has recently broken an uptrend line, and now we are going to pay attention to the Aussie going forward as far as any potential weakness.
AUD/USD Video 20.10.20
Further exacerbating the situation has been the fact that the Reserve Bank of Australia has recently hinted very strongly that there were interest rate cuts coming down the road. If that is going to be the case, then it should work against the value of the Aussie in general. Underneath, there is significant interest and support right around the 0.70 level, as well as the 200 day EMA racing towards that figure. Ultimately, if we were to break through all of that then it would almost certainly bring in a significant break down in this pair, perhaps sending it down to the 0.68 level and beyond.
Looking at this chart, I believe that we are probably going to see a lot of back and forth type of trading, at least in the short term as we try to figure out where to go next. Keep in mind that this is also a very risk sensitive currency pair, so depending on what is going on in the world, there may or may not be a drive towards the US dollar.
The S&P 500 went back and forth during the course of the week, as we are getting towards the extreme highs again. Ultimately, the market is likely to see a lot of noise in general as we worry about the idea of stimulus, which of course is good for stocks as we have seen over the last 12 years. That being said, it is likely that we will continue to see a lot of noise in general, and now the 3600 level above continues to be massive resistance. To the downside, the 3400 level underneath is likely to see massive amounts of support, and every 100 points underneath.
S&P 500 Video 19.10.20
Looking at this chart, the market is likely to continue to find buyers given enough time, and as a result it is simply a matter of waiting for value underneath. I do believe that longer-term traders will continue to look for the market dipping and offering the ability to go higher. However, even if we break down at this point, I think it is only a matter of time before the Federal Reserve would jump in and lift the markets as much as they can.
That is the way this market has been functioning for the last 12 years or so, and I do not see anything changing anytime soon. If we were to break above the 3600 level, then the next obvious target would be the 4000 handle. Because of this, I do believe it is only a matter of time before you can pull back, buy little bits and pieces, and then build up a larger position as most money managers have been doing.
The silver markets initially tried to rally for the week, but then rolled over to show signs of weakness. The market broke below the $24 level, only to turn around and close above it. Nonetheless, we are looking to the markets in a very cautious manner. The market is likely to find buyers at lower levels, and this is how I am looking to trade the markets. The $22 level underneath is another longer-term area of demand that I think we might test. After that, the $20 level is a major figure that the markets will more than likely pay attention to.
SILVER Video 19.10.20
The fact that central banks around the world continue to loosen monetary policy should continue to drive up demand for hard assets such as silver and therefore I think it is only a matter of time before we continue to climb. However, when I look at the huge red candlestick that we have not come close to wiping out yet, I anticipate that there is probably more downward pressure coming. This is not to say that I would be a seller of silver, rather that I would be looking for value underneath.
I believe that the $20 level is a perfect area, due to the fact that on the daily chart you see the 200 day EMA coming into play, and on the weekly chart you see the 50 week EMA coming into the picture. I do not know if we go that low, but I will be looking for buying opportunities on these pullbacks that I am almost positive are coming going forward.
The WTI Crude Oil market initially pulled back during the week, breaking below the $40 level but has turned around to show signs of life again, which was exacerbated by a slightly better than anticipated inventory figure coming out of the United States. This of course is bullish, but at this point we still have to worry about the longer-term demand. After all, a lot of the economies around the world are starting to slow down and even lock down now, which of course cannot be good for the idea of crude oil demand.
Just above current trading is the 50 week EMA, and of course a major supply area in the $43.50 region. Because of this, I believe that it is only a matter of time before the markets start to see selling pressure yet again. Alternately, if we break down below the bottom of the candlestick for the week, then we probably drop down towards the $37.50 level. Looking at this chart, I think we could get a little bit of a short-term pop, only to see sellers jump back in.
WTI Oil Video 19.10.20
Brent markets of course are going to act very much the same but have a little bit further to go to the upside before the major supply comes into the technical analysis. The US dollar looks likely to make another attempt to strengthen sometime next week, so that will probably coincide with what is the inevitable pullback. Just as in the WTI market, if we break down below the hammer for the week, then we go much lower.
Natural gas markets have been rather noisy during the trading sessions making up this past week, reaching down towards the 200 week EMA before turning around to form a bit of a hammer shaped candlestick. This does not mean that the market is necessarily ready to take off to the upside, but it clearly has a proclivity to gain. Because of this, I like the idea of buying dips and of course this lines up quite nicely with the time of year as more demand for natural gas is typically the norm. With that in mind, the market is likely to be a “buy on the dips” scenario, but I think that eventually we will try to break above the $3.00 level.
NATGAS Video 19.10.20
Breaking above the $3.00 level, then we would be looking at a potential move towards the $3.25 level, possibly even followed by the $3.50 level. I do not like the idea of shorting this market, at least not this time of year. There is a lot of noise underneath and of course that means that there is a lot of order flow. That order flow gives the opportunity for traders to take advantage of liquidity, thereby buying more contracts.
If we were to break down below the $2.40 level, then we may have to “reset” closer to the 50 week EMA, and of course the psychologically important $2.00 level. All things being equal though, between the hurricanes in the threats to supply disruption, we have had a nice little rise higher and what typically would be the case anyway. I believe buying dips should continue to work.