The S&P 500 had tried to rally early during the Monday session in the futures market but has run into a little bit of a brick wall as we continue to see a lot of noisy behavior. Because of this, the market is more likely than not going to continue to see a hesitation, and perhaps a pullback. After all, we are very much in a downtrend, despite the fact that the Friday session was so explosive. You could probably make a little bit of an argument for portfolio rebalancing being the culprit on Friday, or quite frankly just short-covering heading into the weekend.
Regardless, the 50 Day EMA is racing toward the 4000 level, so I think it has something to say as well. I have been looking for an opportunity to short this market on signs of exhaustion, and I may be getting it right now. I have no interest in buying the S&P 500, at least not until we break above the 4200 level. In the meantime, it’s about being patient and picking your spots. I will start with a small position, and then add if it starts to move in my direction. Short selling is a little bit of an art form, and not something that is easily quantified all of the time. It’s about sentiment, it’s about fear, and it’s about risk management.
It should be noted that anytime I short a stock or an index, I always do it with about half the risk that I would be buying it. The reason being is that they are not designed to fall for long periods of time.
Silver markets have had a push higher to kick off the week on Monday but have also turned around and gained back most of the gains as we continue to see silver underperform any other assets. After all, the interest rate situation in the United States continues to climb, suggesting that people are becoming more concerned about a recession. If that’s going to be the case, people then have to worry about whether or not there is going to be enough industrial demand for silver going forward.
It currently looks as if the $22 level above is a major resistance barrier, so therefore it does make a certain amount of sense that we will continue to look at it as a “ceiling.” A break above there does open up the possibility of a move to the $22.50 level, where I expect even more resistance. The 50 Day EMA is at the $22.29 level and dropping, suggesting that perhaps there is much more in the way of downward pressure coming.
The market recently had formed a bit of a “double bottom,” but whether or not that hold is a completely different question altogether. After all, the market has been very negative for a while, so breaking through that area certainly would make sense. After all, the market is going to focus on the longer-term fundamentals, which right now do not look very good. With this, I continue to “fade the rallies” as they occur, because quite frankly I do not expect to see much of a change in attitude any time soon. We would have to break above the $22.50 level to take a rally seriously.
The West Texas Intermediate Crude Oil market has pulled back a bit during the trading session on Monday, as we continue to see a lot of volatility in general. However, the crude oil market has rallied again to threaten the 50 Day EMA. With that being the case, the market is likely to see a push above the 50 Day EMA, and then possibly a move to reach the $120 level over the longer term. That being said, the market is likely to see a lot of volatility, so you will have to be cautious about jumping in with a huge position. However, the trend is still very much upside, especially as the trend line has held so nicely.
If we were to break down below the uptrend line, then I would be paying close attention to the $100 level. If we were to break down below there, then it’s possible that we could begin something a little bit more devastating, but that does not look to be the case at the moment.
Crude Oil Prices Forecast Video for 28.06.22
Brent Crude Oil Technical Analysis
Brent markets also have a nice trendline that has helped keep it alive, and it now looks as if it is going to threaten the 50 Day EMA over here as well. If we can break above there, then Brent could go to the $120 level next, possibly even the $125 level. Again, I don’t think that this is a straight shot, rather I think it is going to continue to be a situation where it is very volatile and choppy, but upward trajectory still looks to be the most likely of outcomes.
Natural gas markets initially fell on Monday but did recover to reach the top of the Friday range. That being said, the $6.50 level should now be resistance based upon “market memory, and at the first signs of exhaustion, I will be shorting this market. Yes, the 200 Day EMA sits below but that doesn’t necessarily mean anything. The natural gas demand will be decimated by the fact that Germany and several other European countries are now switching to coal.
The end of the massive bullish run coincided with the Freeport terminal announcing that it would not be repaired as soon as once thought, meaning that LNG exports out of the United States would be hampered. This forces the Europeans to either start buying Russian gas, or switch to coal. So far, it looks like they are more than willing to switch to burning coal, and therefore the European demand situation is not as big of a factor in the Henry Hub contract. After all, this is a contract that is typically more or less focused on US domestic demand, so that is why we have seen such a massive unwind.
Rallies at this point I would treat with suspicion, and even if we did break above the $6.50 level, then I would look at the $7.00 level for a shorting opportunity, followed by the 50 Day EMA which is currently at the $7.44 level and dropping. Historically speaking, these prices for natural gas are ridiculous, especially as natural gas is not exactly hard to find in the United States. Eventually, I anticipate that we go back toward the $4.00 level.
Gold markets have gapped higher to kick off the trading session on Monday, as G7 members announced that they are banning the import of Russian gold. That being said, we have given back all of those gains, and it looks as if it has ultimately had very little effect on the market. We are still very much in range-bound trade, with the $1800 level underneath being the bottom. We need to pay close attention to that level because if it does get violated, it could lead to further selling.
The US dollar has been the currency du jour for most of the last several months, and I think it will continue to be so. As long as that’s going to be the case, gold will have a difficult time rallying for anything more than a short-term bounce. However, if we were to take out the $1880 level above, then you could see further buying, perhaps sending this market as high as $2000. I do think that eventually happens, but it’s not happening in the short term and it looks like rallies continue to run into a buzzsaw of selling pressure.
The 200 Day EMA is completely flat, and the 50 Day EMA is just above it and flattening out as well. This suggests that we have nowhere to be, and that may be somewhat expected as it is the summertime, and this can be a very quiet time of year. I have a range of $80 clearly marked out on the chart, and until we violate one side or the other, I have to assume that it holds.
The US dollar initially fell during trading on Monday but then turned around to show signs of life again. The ¥135 level continues to be crucial, so it is worth paying close attention to. The overall uptrend looks as if it is going to continue as one would anticipate. After all, the Bank of Japan has reiterated its desire to do anything it takes to keep interest rates low, meaning that they are still in a quantitative easing mode.
At this juncture, it’s likely that every time we pull back, there will be buyers willing to get involved but it’s also worth noting that the market has gotten a little bit overextended, so having said that I think it’s probably a buying opportunity on dips more than anything else. The recent high just above the ¥136 level could be a little bit of a barrier, but if we can break above there, then the “buy-and-hold” momentum continues.
The ¥132.50 level underneath is an area that I think will be supportive as well, especially with the 50 Day EMA racing towards that area. Underneath there, the ¥130 level is also an area that I would have to pay close attention to as it was previous resistance and it is a large, round, psychologically significant figure. At this point, the Federal Reserve looks as if we are ready to continue to see quantitative Titan, so this becomes more or less a “one-way bet.” In fact, it’s not until one of these central banks changes their attitude that this market has any real shot at breaking down. In general, I believe we go much higher over the longer term.
The British pound has pushed higher to kick off trading on Monday but has since seen the US dollar strengthen again. Ultimately, this is a market that I think will try to find lower pricing, but we had seen a couple of hammers previously, suggesting that we are in an area of tight consolidation. Eventually, the market is going to have to decide which way it wants to go, but longer-term it looks like the downtrend is still very much intact.
When I look at the start, I suspect that we will test the bottom again, which is at the 1.20 region. This is an area that is a large, round, psychologically significant figure, and an area where a lot of people will be fighting at. If a breakdown below there, then it’s likely that the British pound goes much lower, perhaps reaching the 1.18 level, and in the 1.16 level. A lot of this comes down to the Federal Reserve, and what it is going to do, as it remains extraordinarily tight. On the other side of the Atlantic, you have the Bank of England not looking nearly as aggressive as the Fed.
On the upside, the 1.25 level should be a significant resistance barrier, so if we were to break above there it would be interesting, but I would not consider it a major break out until we get above the 1.26 level. If that were to happen, then the British pound could find itself all the way up at the 1.30 level, the next major resistance barrier.
The British pound has gone back and forth during the trading session on Monday as we continue to hover above the ¥165 level. The market looks as if it is trying to break through that recent barrier near the ¥168.50 level, but currently is simply building up the pressure more than anything else. It looks like buyers are willing to come back into the market near the ¥165 level, so pay close attention to it.
The Bank of Japan continues to fight rising interest rates through quantitative easing, being one of the very few central banks in the world doing so. Because of this, the Japanese yen will continue to struggle against most other currencies, the British pound included.
If we were to break down below the ¥165 level, then it’s possible that we could drop to the 50 Day EMA, maybe even the ¥162.50 level. I do anticipate that there would be a lot of support there, but the overall trend is defined at the ¥160 level underneath, where we had bounced from so significantly just a couple of weeks ago. Furthermore, it is a large, round, psychologically significant figure, and therefore a lot of people will pay close attention to it anyway.
The one thing that could work against this pair is if we see a lot of panic trading, meaning that people are jumping into the Japanese yen for safety. That trade has gone away a bit though, as the bond yields in Japan or just simply not enough to keep up with inflation. Because of this, the market will continue to see a lot of noisy behavior.
The Euro has rallied to kick off the Monday session but has given back to the early gain to show signs of hesitancy again. By doing so, the market looks as if it is ready to continue the overall malaise that we have seen recently, with the US dollar strengthening against almost everything. The Federal Reserve continues to tighten monetary policy, and of course, the ECB is in no position to start tightening monetary policy anytime soon.
When you look at this chart, you can see that there is a double bottom underneath, near the 1.04 region. The 1.04 level is an area that I think will continue to see a lot of interest, so if we were to break down below there, it would indeed be a very negative turn of events for the Euro. At that point, I would anticipate the market could reach the 1.02 level, and then the parity level. I believe that we had parity sometime this summer, but it needs to be tempered with the idea that almost anything is possible in this type of trading environment. Ultimately, I think the market will continue to see a lot of choppy volatility, and therefore you need to be cautious with your position size and be nimble getting in or out of the market as things are moving so quickly.
Just above, we have the 50 Day EMA sloping toward price, and I think it is probably only a matter of time before it comes into the picture to offer dynamic resistance. I still believe in selling rallies in this pair, until the Federal Reserve changes its attitude, something that it has not done yet.
The Australian dollar has fallen on Monday, to kick off the week on its back foot. Ultimately, the 0.6850 level is an area that I think could offer a significant amount of support, as we have seen action there previously. I think it is going to end up being a 50 PIP support level that extends down to the 0.68 handle, so once we get below that level, I think we have a high likelihood of the Aussie continuing to go lower.
The Australian dollar is highly levered to commodity markets, so pay attention to those as well. There is concern about a global slowdown, as the economy seems to be crumbling. If that’s going to be the case, it’s likely that we would see the Aussie suffer as a result. Furthermore, you need to pay close attention to China, and how is behaving. Keep in mind that the Australian dollar tends to be very sensitive to the Chinese mainland, which is currently in the process of trying to stimulate the economy, so you will have to keep an eye on how things pan out there.
The Federal Reserve continues the tight monetary policy, so that does favor the US dollar in general, especially as it looks like the Federal Reserve is insistent on becoming aggressive. As long as that’s going to be the case, the US dollar will continue to be relatively strong against multiple currencies, not just in the AUD/USD pair. Furthermore, if we continue to see a lot of “risk off behavior”, it’s possible that the US dollar will gain as well.
The S&P 500 spent a majority of the week going higher, as the short-covering rally persisted. That being said, the market is still very negative, but the fact that we held onto the 3700 level the way we did is a relatively good sign. At this point, we could go as high as 4000, but I think at that level you have to start thinking about whether or not sellers are going to jump back into this market. After all, the economic situation has not changed, and I think a lot of this is just simply people trying to take profits or expecting a “bear market bounce” in the stock market because quite frankly things don’t go in one direction forever.
That being said, if we were to break down below the lows of the last two weeks, that opens up the floodgates for more selling, perhaps sending this market down to the 3500 level. Underneath the 3500 level would be ugly indeed. That could happen, but I think it’s much more likely that we see a bit of a rally in the short term, followed by selling pressure yet again.
After all, the Federal Reserve still remains resilient in its desire to tighten monetary policy, and that over the longer term will work against the value of stocks. Yields in the bond market have drifted a bit lower, but that makes sense as well because they got far away from the reality of the speed of interest rate hikes. They got overdone, so therefore a snapback reversion to the mean had to happen sooner or later.
The West Texas Intermediate Crude Oil market has initially fallen during the trading week, only to find support at a major uptrend line. That being the case, the market looks as if it is going to continue finding buyers on dips, due to the fact that there is so much demand out there. Yes, we are starting to see a little bit of a slowdown, but at the end of the day, there are plenty of people out there focusing on the fact that the economy is reopening, and perhaps more importantly, we spent two years not exploring or drilling very much. Because of this, there is an underlying demand for crude oil, and it is worth noting that the $100 level has offered significant support. It looks very likely that we will attempt to get back to the $120 level.
Crude Oil Prices Forecast Video for 27.06.22
Brent Crude Oil Technical Analysis
Brent markets also fell during the week, finding a bit of a trendline. By doing so, we turned around to form a nice hammer, and it suggests that Brent will also find buyers going forward, as the market is very much in an uptrend, and it could even be forming some type of ascending triangle. In this scenario, a break above the $125 level could unleash a lot of buying pressure. As with the WTI market, I believe that if Brent can stay above the $100 level, it’s in good shape and should continue to see buyers coming back into the market.
On a breakdown below the $100 level in either grade of crude oil, then I think you start to shift the narrative. It’s not impossible for that to happen, but right now it certainly looks as if there are people willing to support these markets.
The S&P 500 exploded to the upside during the trading session on Friday, as we are threatening the 3900 level. That being said, the market looks as if it is going to continue to find sellers above, especially if we get anywhere near the 50 Day EMA or the 4000 level. In that general vicinity, I would anticipate seeing a bit of a fight, and although this has been a very strong move, the reality is that we are still very much in a bear market, and even though we have seen a nice bounce, it is more than likely only going to be a short-term move.
If we were to break above the 50 Day EMA, then it’s possible that the market could go to the 4200 level above there. If we could break above the 4200 level, then it’s possible that we could start to change things overall, as the market would go much higher. All things being equal, we had recently sold off so drastically that you would anticipate some type of recovery, as markets cannot go in one direction forever.
Nonetheless, I think it is only a matter of time before I will be shorting this market again, and in the meantime, I will simply stand on the sidelines and wait for an opportunity. This is a market that has been decimated, so sooner or later you would think that people would be looking for a reason to make a profit, or perhaps even try to play some type of “value play.” That being said, the economic situation is still very dire.
The West Texas Intermediate Crude Oil market has rallied significantly during the trading session on Friday, as it looks like there is plenty of support at the previous trendline. That being said, the market is more likely than not going to challenge the 50 Day EMA, and then perhaps even break above there. After all, there is plenty of demand for crude oil globally, but there is a huge divergence between the way that markets have been behaving. We have had a massive selloff, but found support right where we needed to, so if we break out to the upside it’s likely that it will just confirm the longer-term trend.
On the other hand, if we break down below the $100 level, that could be very negative for this market, opening up the possibility of a move down to the 200 Day EMA.
Crude Oil Prices Forecast Video for 27.06.22
Brent Crude Oil Technical Analysis
Brent markets have rallied as well, and for the same reason, a major trendline. Ultimately, the 50 Day EMA sits at $112, and therefore it makes a certain amount of sense that we may test that area. If we were to break above, that would be very bullish for oil and therefore send Brent and by proxy the WTI market to the highs again.
If we were to break down below the uptrend line, we would challenge the $100 level. Just as in the WTI market, a breakdown below the $100 level in the Brent market would be very negative, perhaps changing the overall trend. As we spent two years not drilling for oil, it does make a certain amount of sense that there is still concern about supply in various countries.
Silver markets have been all over the place during the course of the week, as we are now below the $22 level. At this point and looks like the $22 level continues to offer significant resistance, and therefore it is probably worth paying close attention to that level as it has been so important as of late. When you look at the weekly chart, you can see that we are forming a big “H pattern”, and therefore it looks like we may have further downside eventually. However, we are not there quite yet, so I think we continue the range-bound behavior in the short term.
If we were to break down below the low of the week, it’s likely that silver will attempt to get down to the $20.00 level. That is a large, round, psychologically significant figure, and an area that a lot of people will pay close attention to. If we were to give up that area, then it’s possible that we go down to the $18.00 level as well. When you pay close attention to the US Dollar Index and its negative correlation, I can give you a bit of a “heads up” as to where this market may go, as that correlation has been so strong. If the US dollar strengthens, it does a lot of negative things to silver, and vice versa.
If we were to turn around and break above the $22.00 level, it’s likely that silver could try to reach the $23.50 level next. Either way, silver is going to be volatile, especially as it has a major industrial component built into it as well.
Natural gas markets have fallen hard during the week to break down below the $6.50 level, an area that has been imported more than once. The fact that we are below there does suggest that the natural gas market is trying to break back down due to the fact that the Fremont terminal has no capacity to send LNG to the European Union. The European Union has changed its attitude on coal, as places like Germany are having to go back to it due to the lack of natural gas coming out of Russia.
If we break down below the bottom of the weekly candlestick, is likely that we go looking to the $6.00 level. If we break it down below there, I think that accelerates the downside. When you look at the weekly candlestick from the previous week, it shows just how quickly things turned around, and it should be noted that massive candlesticks like that almost never happen in a vacuum, and therefore it does make sense that we have some follow-through.
At this point, I don’t necessarily want to be a buyer, because the market has been so overdone as of late. We are now starting to focus on domestic demand, so therefore it makes a lot of sense that the market would not need to be this high. After all, natural gas is not something that’s hard to find in the United States, and the Henry Hub Natural Gas contract is very domestically focused. I do believe that we go much lower, but will reevaluate if we get some type of massive bounce.
Gold markets have gone back and forth during the course of the week, as we continue to see a lot of noisy behavior in financial markets overall. This is not only true in other markets, but most certainly in the gold market. Looking at this chart, the $1800 level is obvious support and is important, so if we were to break down below that level, then it’s likely that we would see this market drop rather quickly. At that point, I would be looking at it moved to the $1750 level, perhaps even down to the $1700 level.
On the other hand, if we were to turn a breakout above the $1880 level, that allows gold to go much higher, perhaps reaching the $2000 level eventually. Look at this chart, in the short term I think that this market will continue to pay close attention to the rectangle that I have marked on this chart, as it has been so important over the last six weeks.
Ultimately, gold markets will have to pay close attention to the interest rate markets in the United States, and of course risk appetite overall. Also, it does make a certain amount of sense to pay attention to the US dollar itself. All things being equal, this is a market that will be making a bigger decision sooner or later, as we are starting to see a confluence of support and resistance, and markets eventually have to come to terms with where they are going from a bigger standpoint. As things stand, it looks like the market will eventually have to make an impulsive move.
Silver markets have initially fallen during the trading session on Friday to reach near the recent lows but then turned around to show signs of support. The candlestick that is forming is a bit of a hammer, so that does suggest that there is a certain amount of pushback in this area. A break above the top of the candlestick opens up the possibility of a move to the $22.00 level. The $22.00 level has been important more than once, as there is both support and resistance there previously. This is an area that will have a lot of “market memory” in it.
The market breakdown below the bottom of the candlestick for the trading session on Friday would be very negative and open up the possibility of a move down to the $20.00 level. In that scenario, the market is more than likely going to be a scenario where we could go much lower, perhaps down to the $18.00 level.
You need to pay close attention to the US Dollar Index because there is a huge negative correlation between silver and the greenback. Ultimately, this is a market that will continue to be noisy, but there’s a lot of negative pressure and I think that will continue to be important to pay attention to. In fact, it’s not until we break above the $22.50 level that I would assume that the market could be trusted to the upside. Ultimately, this is a market that I think will continue to be very volatile, so you need to be cautious with your position size.
Natural gas markets have gone back and forth during the trading session on Friday as we have finally busted through the $6.50 level. The $6.50 level is an area that has been important previously, so therefore it should now offer dynamic resistance on the way back out. Because of this, I am more than willing to jump in and short this market on rallies, and it does look like based on the candlestick on Friday, we could see a short-term rally happen. However, it’s obvious that natural gas markets have collapsed, which makes quite a bit of sense due to the fact that the Freeport terminal has not been able to pump gas to the EU.
A lot of what we had seen has been due to the idea that the Europeans would be buying as much LNG as possible from the Americans, but now that we are starting to see Germany and others switch to coal, it does make sense that a certain amount of revenue is going to disappear. With this in mind, I think that we are going to start focusing on the domestic market again, which has no business being all the way up here. Rallies are to be shorted on signs of exhaustion until we can break above the $8.00 level.
The 200 Day EMA is sitting at the $5.80 level, but it’s likely to be a situation where we will eventually break through it. I don’t necessarily think it’s going to happen right away, but I do think eventually it comes into play. Ultimately, this market has lost all of its momentum.
Gold markets have gone back and forth during the Friday session, as we continue to see a lot of noisy behavior. The $1830 level has acted as a short-term resistance, but if we were to break above the top of the candlestick for the trading session on Friday, it opened up the possibility of a move to the 200 Day EMA at $1854.
Alternatively, if we were to break down below the bottom of the candlestick for the trading session on Friday, then we could go down to the $1800 level. The $1800 level is a large, round, psychologically significant figure, that coincides quite nicely with the uptrend line. Because of this, think that we will have a major fight on our hands in that general vicinity. If we were to break down below there, then it’s likely that we go much lower, perhaps down to the $1750 level. All things being equal, this is a market that is probably going to continue to be a lot of volatility and choppy behavior.
Ultimately, this is a market in which you’re going to have to be very cautious with your position size as there is a lot of noise just waiting to come in and cause major issues. That being said, if we can ever break above the $1880 level, it’s possible that we could send this market much higher. At that point, the market could go all the way to the $2000 level over the long term. That being said, keep an eye on the US dollar as well, because it can have a major influence on the pricing of gold as well.