The S&P 500 has had a horrific week, showing extreme volume to the downside. By reaching all the way down to at least the 2900 level during the week, the market looks as if it is starting to change its tune in general. That makes quite a bit of sense as coronavirus is starting to spread, and there’s no way to price and what kind of damage a global epidemic could cause. At the very least, you will be looking at economies slowing down, if not grinding to a standstill.
S&P 500 Video 02.03.20
I believe at this point it’s very likely that the market participants will continue to see value hunters eventually, but we need to see some type of headway made when it comes to the coronavirus and its spread. There might be central bank coordinated efforts over the weekend, but quite frankly that will only be a temporary solution to this very major problem. At this point, rallies are to be sold into, and certainly can’t be trusted, at least not until some type of major change comes along. This has been absolutely brutal week, and typically weeks like this down end up being a “one-off event.” With this, I remain bearish but recognize that a relief rally probably comes relatively soon. That relief rally will simply be an opportunity to get short yet again or perhaps short covering done by others. It’s not assigned to start jumping into the market without some type of actual fundamental change in what’s going on.
Silver markets initially rally during the week, but then got absolutely slaughtered as risk appetite around the world continues to crater due to the coronavirus. The silver markets selling off on a sign of lowered industrial demand, and quite frankly probably some forced liquidation as traders need to raise capital to cover margin in other markets. There have been horrific losses in other assets so sometimes traders need to shift funds around, and this is especially true in situations like we have right now.
SILVER Video 02.03.20
To the downside, the $16.00 level underneath offers a lot of support, so I think that might be where the market goes looking to find buyers. The candlestick closing as low as it has during the week shows just how much negativity there is, as the bloodshed on the world’s exchanges hasn’t ended. I fully anticipate that we will continue to go lower, and any rally at this point will probably be sold into on signs of exhaustion.
However, if central banks around the world start cutting rates, and I suspect that could happen over the weekend, that might have the opposite effect in this market in sending precious metals higher. It is a bit of a guess at this point, but that certainly would be the type of wildcard that could change things. This weekend is going to be crucial as to where we go next, and the world’s central banks are most certainly on notice at this point. Ultimately, there are probably more losses but eventually silver will offer a bit of value, which again I suspect is closer to the $16.00 level underneath. At that point in time it might be a longer-term “buy-and-hold” scenario.
The WTI Crude Oil market broke down rather significantly during the trading week, slicing down through the $45 level. Ultimately, this is a market that looks as if it is going to try to make its way down to the $40 level, where there should be a significant amount of support. The crude oil markets continue to suffer at the hands of the coronavirus, and therefore there is no real way to measure risk, and that’s one of the biggest problems with this market right now. When you look at the candlestick, it’s clearly negative and there is no real attempt to rally. Ultimately, I think that the $40 level will offer a significant about the support, but it’s almost going to have to be something OPEC does as far as production cuts on an emergency meeting. Otherwise, any bounce that we get could be somewhat technical but slicing through the $40 level would be a horrific turn of events. For what it’s worth, looking at the daily chart, it looks as if we had formed a very flat, and that does measure for a move to $35 albeit being a bit optimistic for the sellers. Rallies are to be sold.
WTI Oil Video 02.03.20
Brent markets also have broken down a bit during the week as well, slicing through the $50 level. Ultimately, the market then goes looking towards the $42.50 level. At this point in time I think that rallies are to be sold into, unless something structurally changes. Demand for crude oil is falling through the floor, and quite frankly there is far too much in the way of supply to think that we have a real chance of recovering for any length of time.
Natural gas markets have broken down significantly during the week, slicing through the $1.80 level. That’s an area that has been supportive in the past, and at this point the fact that the market has broken down suggests that we are going to go lower. The oversupply of natural gas continues to be a major problem with this market, as fracking continues to produce way too much. Furthermore, the warmer temperatures coming does not help the situation, and beyond that we have received a very bearish inventory report this past week, so at this point it’s likely that we will see plenty of sellers. The question now is whether or not we can break down below the $1.60 level, and if we do that would be quite remarkable.
NATGAS Video 02.03.20
To the upside, the market could very well try to reach towards the $1.80 level before selling off again, or perhaps even the $2.00 level. I have no interest in buying this market, because quite frankly this is a market that has been far too oversold for far too long to believe that it is suddenly going to change its tune. With warmer temperatures, and oversupply of natural gas, and quite frankly now the worry about the coronavirus killing off demand, it’s very unlikely that this market will be able to recover anytime soon. It is going to take several bankruptcies in the United States when it comes to natural gas suppliers and drillers in order to bring down the commodity supply. At this point, market participants continue to sell rallies.
Gold markets initially shot higher during the week, reaching towards the $1700 level. That is an area that of course offers a lot of resistance, as it is a large, round, psychologically significant figure. By turning around the way it has, it looks extraordinarily negative as we sliced through the $1600 level. By breaking through there, it shows quite a bit of negativity and a real lack of follow-through. At this point, it’s likely that the market continues to go a little bit lower, or perhaps kills time by going sideways. A simple bounce back is a bit much to ask, at least without some type of stabilization.
Gold Price Predictions Video 02.03.20
The market is still in an uptrend, but this is clearly a “shot across the bow” for those who would be bullish of gold. Longer-term, it’s probably very likely that we do continue to the upside in a bit of a safe haven bit, but a lot of forced liquidation has been going on this week, as margin calls are being fired off in other markets. Large funds will have to sell profitable positions to keep afloat, and that may be what’s going on with the gold market currently. It certainly isn’t US dollar strength, because quite frankly there is none. At this point, it’s likely that the market continues to be very jittery and nervous, so if you are looking to go long, waiting for some type of supportive daily candlestick is probably the best way to go. That, or perhaps a recapturing of the $1600 level.
The S&P 500 broke down significantly again during the trading session on Friday, showing signs of stability midday. Having said that, the market is extraordinarily oversold, and we have just seen one of the worst selloffs ever. At this point, the market is likely to see a hard bounce, but that bounce may or may not be sustainable. Quite frankly, I don’t think it’s likely to happen. The 200 day EMA above will more than likely offer resistance, and it’s not until we clear that level on a daily close then I think the market can truly bounce.
S&P 500 Video 02.03.20
The weekend can bring anything, not the least of which would be central banks deciding to cut rates or do something to help markets. That being said though, it can only help so much and at this point I think that the markets are probably resigned to sell rallies in the short term, at least until the coronavirus disappears or at least gets under control before the market can truly gain for a longer-term move. To the downside, if we were to break down below the lows of the Friday session this could really start to unwind things in cause a lot of problems. At this point, I don’t see an argument to start buying, at least not without some type of major help from outside. Overall, this is a market that if you try to bite here you might be “catching a falling knife.” Any bounce later in the day could be simple short covering than anything else. At this point, the sellers are still very much in control.
Silver markets broke down significantly during the trading session on Friday, breaking through the 200 day EMA which of course is a very negative sign. Silver is going to be a bit interesting considering that the market participants are likely to go looking at the $16.50 level. That’s an area that I think continues to attract a lot of attention as it was previous support but quite frankly it’s probably only a matter of time before we break down a bit. Precious metals of course are a bit of a safe haven when it comes to markets, but silver has an industrial component as well, and that of course is part of what’s getting punished.
SILVER Video 02.03.20
Furthermore, the markets may have witnessed a bit of forced liquidation of silver as a lot of traders would have been in profit. By taking profits here they can pay for losses elsewhere. That’s simply the market looking for liquidity where it can find it. At this point, silver is more than likely going to find a bottom, but I think we may have a little bit more pain to go. Over the weekend we may get some central bank interest-rate cuts, so that could help silver, but there are far too many question marks out there right now to simply put money to work. This is a very dangerous market and essentially a “50-50 proposition” that we are dealing with. At that point, it’s no longer trading but it then becomes gambling. That of course is not very advisable. Expect extreme volatility on Monday regardless of what happens over the weekend.
The West Texas Intermediate Crude Oil market has broken down significantly during the trading session on Friday to slice down below the $45 level. It is possible that we get a bit of a bounce from here, but any bounce should be sold into, especially if we get closer to the $50 level. OPEC needs to cut production to have any hope of a bounce for a longer-term move, and quite frankly even then I don’t think that will be enough as people are worried about global demand and the longer-term oversupply that we already have. With that being the case, I am a seller. However, if we break down below the lows again, we could go looking towards the $40 level.
Crude Oil Video 02.03.20
Brent markets have also broken down, to slice down below the $50 level. It’s very likely that the market may go looking towards the $45 level given enough time, but in the short term a little bit of a recovery may be possible. That recovery should continue to be sold into as there are far too many reasons to think that this market is going to fall apart again. Granted, we can’t go in one direction forever but clearly buying is all but impossible less something drastically changes. We would need to see the coronavirus situation suddenly disappear, something that’s not going to happen. Ultimately, this is a market that seems as if it is going to go lower given enough time but with all things, you don’t chase the trade.
Natural gas markets have broken down a bit during the trading session on Friday again, as the market continues to show signs of weakness. Quite frankly, the oversupply of natural gas doesn’t seem to be going the way anytime soon, and therefore I think that rallies will continue to be sold. We are starting to see a little bit of a bounce late in the day but that’s probably just people taking profits into the weekend.
NATGAS Video 02.03.20
The inventory figure this week was miserable, showing that there is not enough demand still. The lack of demand by the markets for natural gas continues to hamper any type of price appreciation, but quite frankly we have much bigger issues than that now. The oversupply simply is going nowhere until there are bankruptcies in the United States. We are about to see massive credit issues for a lot of the companies that have been supplying the market was so much natural gas, and that will force bankruptcies. That in turn will eventually disrupt supply, something the market desperately needs. Until then, it’s all but impossible to buy this market, because quite frankly there are too many things working against it.
Furthermore, the weather in the United States continues to be warming up, and that will drive down demand as well. At this point in time, there’s nothing good about this market in fading the rallies continues to be a major issue. The $1.80 level would be the first place at be looking to sell on signs of weakness, followed by the $2.00 level after that. In fact, I see the $0.20 region as an entire barrier that will be broken.
Gold markets fell hard during the session on Friday, as we have sliced through the $1600 level. By doing so, the market shows signs of extreme weakness as we have not only broken through a big figure, but we have also touched the 50 day EMA. Looking at this candlestick, it is extraordinarily negative, but at this point if we break down below the 50 day EMA it could unwind this market even further. The $1550 level will be the next target, and then eventually the $1500 level. At this point, any rally needs to clear the $1600 level on a daily close to begin buying. If we do that before the weekend, then it might be a bit of speculation that the server banks around the world looking to cut interest rates, but quite frankly that is still a gas.
Gold Price Predictions Video 02.03.20
If the market gets news over the weekend, this could be an extraordinarily volatile place to be. Quite frankly, pay attention to the $1600 level to determine which direction you should be trading, but you won’t be able to have that information until the markets open up. This weekend could be extraordinarily important for gold, so to suggest that we know what’s going to happen before all of the news gets out of the way would quite frankly be ineffectual. The world is certainly teetering on the edge of panic, and eventually that should help gold but we don’t know where the bottom is quite yet.
The US dollar has broken down significantly against the Japanese yen during the week as the stock markets in New York have been crushed in ways that we haven’t seen since the financial crisis. At this point, we are testing the ¥108 region, which should be supportive. If the market breaks down below there it’s likely to go towards the ¥105 level over the longer term. That being said, we could get a bit of a bounce and go looking towards the ¥110 level above. That is essentially “fair value” for the overall consolidation.
USD/JPY Video 02.03.20
The overall consolidation runs from ¥115 to the upside down to the ¥105 level on the downside. Based upon this candlestick, I do think it’s more likely that we go looking towards the downside but don’t be surprised at all if we see some type of short-term bounce in the process. If we were to break down below the ¥105 level, it would be crucial at that point and we would probably see this market drop down to the ¥100 level, an area that has traditionally caught the attention of the Bank of Japan. To the upside, if the market was to take out the highs of the week, that would obviously be a very bullish sign, but I give that about a 5% chance of happening anytime soon. This is a market that you should be looking for opportunities to sell after bounces, but you may have to do so from shorter-term timeframe such as the daily or the four hour charts.
The British pound initially tried to rally during the week, reaching towards the 200 week EMA before rolling over. That shows signs of weakness, and perhaps more than likely going to show that the British pound is clearly susceptible to the global “risk off” situation that we find ourselves in. That being the case, it’s likely that we will continue to see a lot of back and forth and although the British pound is going to suffer at the hands of risk appetite falling, the reality is that there is significant support just below so if you are looking to buy the US dollar, although the trade may work in this pair, you may find better momentum in some of the other pairs, specifically the Euro.
GBP/USD Video 02.03.20
At this point, I believe that short-term traders will continue to try to fade rallies, but if we were to break down below the red 50 week EMA on the chart, that probably sends this market much lower, perhaps even as low as the 1.25 handle. At this point in time though it’s obvious that the markets are very jittery and it’s going to take very little to knock them over. As far as rallies are concerned, I would not believe them in this pair until we break above the 200 week EMA which is painted in black on the chart. At that point, we could go as high as the 1.35 handle over the longer term. Expect a lot of volatility but in the end, I believe that the US dollar will strengthen against most currencies.
The British pound broke down significantly during the week, slicing through the ¥140 level. At this point, the market is likely to test the ¥139 level, and if it breaks down below there it’s likely that we will continue to see exacerbated losses. At this point, it’s only a matter of time before that happens from what I see, and when that does kick off, we could drop rather precipitously. The market is clearly failing in general, as the Japanese yen is being used as a safety currency.
GBP/JPY Video 02.03.20
The size of this candlestick is of course rather impressive, and it has wiped out quite a bit of constructive action as of late. The coronavirus continues to cause a lot of headline risk out there, and clearly the Japanese yen being used as a safety currency isn’t that big of a surprise. At this point, rallies are to be looked at with suspicion, and as a result it’s very likely that the short-term rallies will end up being selling opportunities, and as a result it’s likely that the pair does eventually break down, but it could be very noisy along the way. Once this pair does break down, it’s likely that it could be looking at a move down to the ¥135 much quicker than anticipated. However, one has to wonder how much more fear there is out there when it comes to the markets in the short term, so a slight bounce really isn’t out of the question at this point in time.
The Euro has broken to the upside during the trading week to break above the 1.10 level. That of course is an area that should attract a lot of attention from a psychological standpoint, and it should be noted that the Friday session is forming a somewhat exhaustive looking candle. The weekly candle looks much more bullish though, so at this point it’s likely that we will have a bit of a fight in this general vicinity.
EUR/USD Video 02.03.20
At this point in time, most of the selloff of the US dollar has more to do with the stock market and people repatriating money back to their home countries as the US stock market got absolutely crushed for the week. Ultimately, this is a market that has been in a downtrend for some time, so quite frankly I don’t feel the need to try to buy this market, and the fact that the market is giving up quite a bit heading into the weekend suggests that the downtrend will continue to show itself. Ultimately, this is a market that I do think tests the lows again, but if we were to break above the red 50 week EMA then we have to somewhat reconsider the situation.
The European Union is very likely that in a recession, and the ECB is much looser than the Federal Reserve. Coronavirus cases are breaking out all over Europe, and as a result it’s much more palatable to short this market than trying to buy it. Fading rallies on short-term charts should lead to longer term decline still.
The Australian dollar initially gapped lower to show signs of weakness, turned around to fill that gap, and then broke down to reach towards the 0.65 level during the Friday session. That of course is a large, round, psychologically significant figure, and therefore it’s likely that the market will react there. We are starting to see a slight bounce during the Friday session, but if we were to break down through that area it opens up the door down to the 0.63 handle which is the bottom of the financial crisis area.
AUD/USD Video 02.03.20
At this point, the market looks as if it could bounce, but bouncing from here could be a nice selling opportunity at signs of exhaustion, and the 0.67 level above will probably offer a bit of a “ceiling” in the market. If we were to break above that level it would change a lot of things but right now, I just don’t see that happening. At this point, the market is likely to bounce a bit, but I look at that bounce as an opportunity to pick up the US dollar “on the cheap.” Ultimately, if we were to break down below the 0.63 level underneath, that would be a disaster for the Aussie. The US dollar should continue to attract quite a bit of inflow due to safety concerns, and of course the fact that the Australians are so highly levered to China itself. With this, keep in mind that we are in a downtrend for a multitude of reasons to begin with, so buying is extraordinarily dangerous.
The US dollar has broken down rather significantly during the training session on Friday, as we continue to see a run to safety and the financial markets. The Japanese yen is reasserting itself as a safety currency, as we have seen in spades over the last several sessions. The US markets have been selling off, and therefore money is flying out of New York as more concerned about coronavirus hit the headlines. As I record this, the Dow Jones Industrial Average is down 900 points, and looking very much like it’s going to reach 1000 lost yet again.
USD/JPY Video 02.03.20
The USD/JPY pair is getting close to the 200 day EMA, an area that will of course attract a lot of attention. At this point, I think that the 200 day EMA could cause a little bit of a bounce, but if we do break down below there then the longer-term trend suddenly becomes negative again. The ¥110 level is essentially “fair value” in the longer-term consolidation area and we have just gotten smoked by a false break out. Because of this, it’s likely that we may return to ¥110 again, as market memory dictates. However, the market is literally moving by the most recent headline, and to be honest the correlation between the S&P 500 in the USD/JPY pair has returned to the norm again, so pay attention to this correlation, as we are getting oversold, and it’s a matter of time before we get some type of nasty bounce. In other words, you can’t short the market quite right now, as you would be “chasing the trade.” That being said, it will be interesting to see what happens next but I would advise keeping a very small position regardless of what you choose to do.
The British pound initially tried to rally during the trading session on Friday, just as it did on Thursday. However, just as we had seen on Thursday, the sellers overwhelmed the pair, and the British pound cannot hang on to gains. It looks at this point that the market is going fully into a “risk off” type of situation. I believe also that the British pound is suffering not only due to the fact that the global markets are complete mess, but the fact that the never-ending source of tension between the UK and the EU continues. Ultimately, I do think that the greenback is a bit oversold against most currencies, but the British pound will probably continue to be a little bit more insulated.
GBP/USD Video 02.03.20
If we break down below the 1.28 handle, it very well could open up the door to at least the 200 day EMA. At this point, it’s likely that the market would have a serious fight on his hand to determine the direction of the trend overall pair the market turning around and recapturing the 1.30 level though would be rather bullish and showed just how strong the British pound is in general. At that point, I would anticipate that the basing pattern would be somewhat completed, and we should go looking towards 1.35 handle. However, as things are starting to develop on the coronavirus front and the massive amount of money going into the US bond markets, that’s looking less likely by the day.
The British pound has broken down significantly during the trading session on Friday, as we continue to see a major breakdown and risk appetite. The Japanese yen is acting as a safety currency again, so having said that it’s likely that the markets will continue to drive toward the yen until the overall attitude of traders around the world stabilizes. Having said that though, it’s difficult to imagine a scenario where we will see some type of major turnaround right away. On the other side of that equation is the fact that the market is getting oversold, so a bounce is probably very likely. Even if that’s the case though, it’s very difficult to simply just jump in and buy this market because it is “cheap.”
GBP/JPY Video 02.03.20
If we break down below the ¥139 level, then the bottom will fall out of this pair and we will continue to go much lower. It should be noted that the British pound has held up a little bit better against the Japanese yen over the last several months, so this pair may have further to fall than other ones. When compared to other pairs such as the AUD/JPY and the NZD/JPY, there’s much more real estate to the downside if we do get a complete breakdown and collapse in confidence. Rallies at this point will probably be sold into unless of course something changes drastically, so we will probably have to look towards the weekly chart in order to make a bigger decision. If that’s the case, pay attention to how it breaks and of course my analysis here on longer time frames. This clearly looks very bearish at the moment though.
The Euro rallied initially during the trading session on Friday again, but as time wore on, the market participants started selling it in order to form a rather bearish looking candlestick. Ultimately, the 1.10 level is a major area and it makes sense that resistance would show up in this area. At this point, the market looks very likely to go looking towards the lows again, because quite frankly we are in a large downtrend and quite frankly the European Union is starting to see an explosion in coronavirus cases. I do believe that the market is starting to look at the fact that the European Union is almost into a recession, and certainly looks as if it is going to head in that direction.
EUR/USD Video 02.03.20
To the upside, the market does break above the top of the candlestick for the day, then we could see a bit of a melt up, but I don’t think that’s going to be the case. Quite frankly as we go to the weekend a lot of people will have wanted to close the long position that they may have had in the Euro, as the US dollar continues to offer safety over the longer term. Granted, there was a repricing of the US dollar due to concerns about the coronavirus expanding in the United States, but at the end of the day we are in a downtrend and nothing has changed in the European Union, and therefore we should continue to see plenty of weakness.
The Australian dollar has been hammered during the trading session on Friday, but at this point it’s likely that the market will have to bounce a bit due to the fact that it is oversold. Granted, the Australian dollar is highly sensitive to the Chinese economy and what’s going on there, which of course is getting crushed by the coronavirus situation. A lack of demand for copper and other raw materials out of Australia will probably continue to suffer, so at this point I think it’s likely that the market will sell the Australian dollar is a bit of a proxy. Furthermore, the US dollar is picking up quite a bit of momentum due to the fact that the markets are completely freaking out around the world, as the coronavirus has seemingly accelerated.
AUD/USD Video 02.03.20
The market participants will more than likely sell into any rally that we get at this point, so looking for signs of exhaustion will be the way to go. I believe at this point, it’s a matter of time before you get some type of opportunity to sell this pair. Quite frankly, if we do break down below the lows of the Friday session, it is of course a selling signal, but I much prefer selling rallies Sibley because we are a bit overextended. I still believe that this pair is probably going to go looking towards the 0.63 handle, which was the bottom of the financial crisis back over a decade ago. To the upside, I believe that the 0.66 level could offer more selling, and most certainly the 0.67 level will. All things being equal it’s likely that the market could see a bit of a bounce late in the Friday session just due to short covering.