The Australian dollar has gone back and forth during the trading session on Wednesday as we continue to look at the 0.70 level like a magnet for price. That being said, it is worth noting that the last couple of candlesticks have been very bullish on the daily chart, so to take a bit of a breather would not be a huge surprise. However, it is worth noting that we are in a major downtrend and of course, the interest rates in the United States continue to rise. Furthermore, the market will continue to look at global risk as a potential problem for commodities, at least some of them. Copper has looked a bit vulnerable as of late, and that can have a bit of a “knock-on effect” on the Australian dollar as well.
Even if we do rise from here, the 0.72 level is the top of the noise just above, and the 50 Day EMA has popped into the picture. And therefore, I would be a seller of signs of exhaustion above here as well. Ultimately, I do not have any interest in trying to buy this pair until we break above the 0.72 level at the very least. Once we get above there, then I will reevaluate the entire situation, but I suspect this is probably more about the US dollar than anything else. The slowdown in China is probably weighing down the Aussie dollar as well, so when you put it all together and add the fact that Jerome Powell has suggested that the Federal Reserve could go “beyond neutral” with interest rates, it could be driving money back into the US dollar.
The S&P 500 has rallied significantly early in the futures market as we continue to see a lot of volatility in equities around the world. The S&P 500 is an area of trading that has been beaten down, so it is not a huge surprise that we try to get some type of relief rally. Ultimately, this is a market that has failed just below the 4100 level, so it does suggest that the area continues to be important on the chart. The 4100 level extends to the 4150 level, as it was a “zone of support” previously. I think that given enough time the market will continue to respect that, and that is exactly what we have seen during the day.
Underneath, we have the 4000 level offering a potential support level, but if we break down below there, which is something that we have already done, then it is possible that we could break down from there. At that moment, the market more likely than not would go looking to reach the 3900 level. We are most certainly in a downtrend, and of course, retail sales were miserable during the day so that also suggests that we are going to continue to see a lot of hawkish behavior coming out of the Federal Reserve as we have to worry about inflation.
Inflation is driving down demand, as retail has found out. All things being equal, this is a market that I think is further to go to the downside. At this point, the 4300 level above would have to be broken for me to change my attitude and this market, or the Federal Reserve change its attitude.
Silver markets have rallied initially during the trading session on Tuesday to reach near the $22 level. The $22 level is an area that had previously been a massive support for the market, so it is not a huge surprise to see that a bit of “market memory” has come back into the picture. Because of this, I think silver is going to continue to struggle, and therefore you need to be very cautious about buying it. In fact, it is very likely that we go looking to the bottom again, but it does not necessarily have to happen right away.
Keep an eye on the US dollar, as it has a major negative correlation to the silver market. Ultimately, this is a market that I think is going to continue to struggle, but if we broke above the $22 level, I would have to pay close attention to that. Nonetheless, I think as long as the Federal Reserve continues to be rather hawkish with its monetary policy and its outlook, it will more likely than not have a negative influence on the demand for commodities, and therefore will have a knock-on effect in the silver market as silver is considered to be a major industrial market.
In general, I think the aspect of the precious metals will be overlooked, and if you are looking to play metals for the inflation trade, you are better off looking to gold. Silver looks extraordinarily vulnerable at this point. Fading rallies continues to work.
The West Texas Intermediate Crude Oil market rallied again during the trading session on Tuesday as we continue to see a lot of upward momentum in the energy markets overall. The crude oil markets have just broken out of a major triangle, and therefore it looks like the sellers are starting to run for the hills. Ultimately, a pullback should continue to see plenty of value hunters coming back into the market as this has been such an obvious breakout. The $110 level could be an area of interest, right along with the previous downtrend line that we broke out of. Ultimately, I believe that the 50 Day EMA is going to be a “dynamic floor in the market.”
Crude Oil Prices Forecast Video 18.05.22
Brent Crude Oil Technical Analysis
Brent markets have threatened the $115 level early during the session on Tuesday, as we continue to see momentum into this market. Ultimately, I believe this is a market that you need to go higher, perhaps reaching the $120 level. Any pullback at this point will offer a possible opportunity to find value, and I believe that the $110 level offers support. Just as in the Brent market, I am using the 50 Day EMA is the “dynamic floor the market.”
You should also keep in mind that oil had been compressing for quite some time, so it does make sense that we could be kicking off a bigger move. That does not necessarily mean that we go straight up in the air, just that you certainly cannot be a seller at this point with all of the massive upward pressure.
I believe this is a situation where you continue to be a “buyer of the dip”, as it offers plenty of opportunities going forward.
Natural gas markets have rallied during the trading session on Tuesday to break cleanly above the $8.00 level. In fact, as I record the video, we are testing the $8.30 level, and this looks to be a situation where we are trying to get to the highs again. Quite frankly, natural gas continues to rise right along with a lot of energy-related issues, as inflation is starting to take hold. Furthermore, we are in an uptrend and as long as we can remain above the $6.50 level, I still have to look at this through the lens of a market that is more likely than not going to continue rallying.
However, if we do break down below that $6.50 level, something that seems almost impossible in the short term, then it is likely that we break down significantly. I do think that day comes eventually, but at this point, we continue to see a lot of money flow into this market based on potential demand coming out of the European Union. Furthermore, speculative momentum picks up every time there is either temperatures in the United States that are cooler than normal, or warmer and therefore driving the usual supply and demand aspect.
Either way, this is a market that has a lot of momentum overall, and it is almost impossible to fight this type of momentum. Yes, I do think that we are extraordinarily overbought, but markets can remain irrational much longer than you expect, as we have seen over the last couple of weeks. This is a market that unless you get a pullback that shows signs of support, there is probably not a whole lot to do.
Gold markets initially gapped higher to kick off the trading session on Tuesday in the futures market but ran into a buzz saw of resistance near the $1835 level. Doing so shows just how vulnerable the market can be at times, and therefore you need to be very cautious with your position size. Ultimately, the position sizing is the only thing you have control over, so you need to be as cautious as possible. The $1800 level underneath should be a significant amount of support, but at this point, it is not a scenario where we are ready to take off to the upside.
Keep in mind that the Federal Reserve has five speakers in the news on Tuesday, so is very likely that we will continue to see a lot of chop and noise. Gold markets are going to pay close attention to the bond markets and the yield coming out the United States as well as the behavior and comments coming out of the Fed. Furthermore, it is worth noting that the Federal Reserve will probably have to remain relatively tight with its monetary policy due to the fact that retail sales are starting to suffer in the United States, a clear sign of inflationary problems.
If we were to break down below the hammer from the Monday session, that could open up a bit of a trapdoor in this market, sending the gold market down to the $1750 level. Breaking that opens up the floodgates. On the upside, if we could take out the 200 Day EMA, it would be a very bullish sign and could send this market much higher.
The US dollar has rallied just a bit after initially dipping on Tuesday, to show a continued uptrend in this market. The ¥130 level seems to be attracting a certain amount of attention, so that is something that you need to be aware of. If we can break above there, then we will probably test the highs, but it is not until we break above there that the market really takes off. I anticipate that more likely than not, we are going to see a market that is more sideways than anything else. With that in mind, it is more likely than not going to be more or less a short-term type of situation.
If we were to break down below the ¥127.50 level, then it is possible that we could drop to the 50 Day EMA, which is currently breaking above the ¥125 level. That is an area that will continue to attract a certain amount of attention due to the psychology and of course the previous resistance that we had seen there. As long as the Bank of Japan continues to fight bond yields, that means they are essentially “printing yen” and therefore it drives down the value of the currency.
At the same time, the US dollar gets a continual lift due to the hawkish behavior of the Federal Reserve. As long as that is going to be the case, it does make quite a bit of sense that we would see this market attract buyers as the Japanese yen will be shunned by most traders.
The British pound has rallied significantly during the course of the trading session on Tuesday to reach the 1.25 level, an area that obviously would cause a certain amount of interest, as it is a large, round, psychologically significant figure. Furthermore, it is worth noting that the market has a lot of noise all the way to the 1.26 handle, and therefore I think it is only a matter of time before the sellers come back in and push this market lower. After all, we are in a massive downtrend, and that should continue to be the case going forward.
When you look at the chart, you can see that the 50 Day EMA is near the 1.2750 level and dropping. The 1.30 level is the top of the overall downtrend from what I can see, so it is really not until we break above there that I would consider buying. Nonetheless, I would anticipate a certain amount of volatility as during the trading session on Tuesday there are five Federal Reserve members speaking. With so many people paying close attention to the Federal Reserve, it is difficult to imagine a scenario where we would not see a lot of noise.
Nonetheless, the market continues to look very shaky, so that typically does not end up being induced above a market that is going to be more “risk on.” In general, this is a market that continues to see more of a “fade the rally” type of attitude, and I think that will continue to be the case.
The British pound has rallied a bit during the trading session against the Japanese yen on Tuesday as we continue to see plenty of strength against the Japanese yen in various currencies. With this being the case, the market is likely to continue seeing a lot of noisy behavior, and therefore it is probably only a matter of time before we get a little bit of a pullback.
However, if we can stay above the ¥160 level, then I would be convinced that this market is trying to rally. Keep in mind that this pair is highly sensitive to risk appetite and of course, risk appetite is all over the place right now, so it is going to continue to be a very difficult situation. The size of the candlestick is rather impressive, and that does tell you that there is a little bit of momentum here. If we can break above the ¥162.50 level, that would be very bullish as well. Nonetheless, it is interesting to see how this has played out, but if we get a turnaround and break down below the ¥160 level, then it is likely that we could go much lower.
It is worth noting that the market bounced from the 200 Day EMA, which of course is an indicator that a lot of people pay attention to. If we break it down below that level, then it is likely that the ¥155 level could be the next support level, and breaking down below there would kick this market into a major downtrend just waiting to happen.
The Euro rallied significantly during the trading session on Tuesday to break above the 1.05 level. By doing so, we have challenged a major resistance barrier, but it looks like we are already starting to see sellers come back in. The 1.06 level is an area above that is also resistive, so we are essentially in a major “zone” that has a lot of pressure. That being said, if we were to break above the 1.06 level, then it allows the market to go chasing the 50 Day EMA. The 50 Day EMA has broken down below the 1.08 level, an area that had previously been supported. I think we need to get above all of that to even consider buying the Euro.
The Federal Reserve continues to tighten and sound hawkish, especially with the inflationary numbers in the United States causing major problems. Beyond that, we have just seen retail sales come in much weaker than anticipated, showing signs that the American consumer is starting to pull back. If that is going to be the case, the Federal Reserve will certainly have to pay attention to this, because inflation has become a major political issue in the United States.
Unless the Federal Reserve suddenly changes its attitude, and there is essentially zero chance that it will, I do not anticipate this market turning around anytime soon. Because of this, I am looking to fade all rallies that show signs of exhaustion. The market is more likely than not going to continue to go lower as we are basically just retesting a bearish flag at this point.
The Australian dollar has rallied during the trading session on Tuesday to break above the 0.70 level, showing signs of life yet again. That being said, the market is going to continue to be a bit noisy, but quite frankly it is difficult to imagine a scenario where the Aussie dollar simply takes off to the upside because quite frankly the US dollar is like a wrecking ball to almost everything at this point. Because of this, I believe that we have a situation where traders are going to come in and jump all over this market as it is most certainly negative. That being said, you also have to keep in mind on risk appetite in general.
If we break down below the 0.70 level, then it is likely that the market goes looking to the 0.6850 level, possibly even lower than that. A breakdown below the 0.68 level would be catastrophic for the Aussie, perhaps sending the market much lower. Rallies at this point in time continue to be looked at with suspicion, and therefore I think it is probably only a matter of time before they get faded. In fact, it is not until we break above the 0.72 level that I would take any rally seriously.
The market continues to be very noisy but still favors the greenback as there are so many concerns around the world currently. I think that continues to be the case, and therefore I still think that the US dollar is king, and will remain so for the foreseeable future. Commodity markets of course are heavily influenced by the Aussie as well, but I look at this as a bit of a relief rally more than anything else.
The S&P 500 has pulled back just a bit during the trading session on Monday as the futures market continues to show significant volatility. By pulling back the way we have, it does make a certain amount of sense that we would continue the overall downtrend. After all, there are still plenty of concerns out there when it comes to inflation, a slowing economy, and of course contagion from other markets. Large funds are having to liquidate other positions in order to cover losses, therefore, it has a bit of a “knock-on effect” in general.
At the 4100 level, I would anticipate seeing a lot of resistance that extends all the way to the 4150. After that, we have a lot of noise all the way to the 4300 level, where the 50 Day EMA is currently trading through. In other words, we have a lot of potential resistance that we have to work through in order to change the overall trend, so quite frankly I just do not have a scenario in which I would be willing to buy this market anytime soon. On the downside, we could go looking to the 3900 level rather quickly, which offered a bit of support previously.
Breaking down through the hammer that sits just below there would open up the floodgates to even lower pricing, and quite frankly at this point not of that would surprise me. It should be noted that the Friday candlestick was rather bullish, but it was with relatively low volume and very likely more or less a “short covering rally” heading into the weekend. Volatility is the only thing you can count on.
Natural gas markets have rallied a bit during the course of the trading session on Monday as we continue to plow higher. We broke above a neutral candlestick for the previous session, which of course is a positive sign. By breaking above the top of the candlestick, a certain amount of short covering had to happen. That being said, the $8.00 level has offered resistance, as the large, round, psychologically significant figure comes into the picture.
That being said, the market is more likely than not going to continue to be very noisy, as we continue to determine whether or not we can go higher. We gave up the gains above the $8.00 level, so if we do fall and break down below the bottom of the candlestick, then we could fall enough to form a bit of a head and shoulders. On the other hand, if we turn around and break above the top of the candlestick for the session, then we could go looking to reach the $9.00 level.
Keep in mind that the market is going to remain very volatile, so you need to be cautious with your position sizing. There are a lot of concerns about Europeans jumping into the US markets and buying up all of the energy, but I also believe at this point the volatility picking up the way it has typically will have people nervous. If we turn around a breakdown below the $6.50 level, it is likely that we break down quite significantly. More than anything else, make sure to keep your money management on point.
Silver markets have found themselves to be a bit volatile during the trading session on Monday, bouncing quite significantly after gapping higher. This makes quite a bit of sense considering that the market has been so oversold, and a bit of a relief rally would be expected given enough time. The $22 level above continues to be an area that we will have to pay close attention to, as it was previous support. “Market memory” could come into the picture at that point so I will be willing to jump all over any type of exhaustion candlestick to start shorting again, taking advantage of what has been an obvious downtrend.
If we break down below the lows, then silver almost certainly unwinds to reach the $20 level, but that remains to be seen. At this juncture, I believe that it is not until we break above the $23 level that you can take any rally seriously. At that point, then we may try to get to the $26 level, but we would also have to fight through the 50 Day EMA as well.
Pay close attention to the US dollar, it is very strong and that does typically work against the value of silver over the longer term. Furthermore, there is a lot of concern when it comes to industrial demand, as it appears that we could be heading toward a global slowdown. If that is going to be the case, then demand for industrial metals will continue to crater, which of course works against part of the argument for silver price is rising.
The West Texas Intermediate Crude Oil market initially pulled back a bit during the trading session on Monday, only to find buyers near the $110 level. By doing so, it looks as if the market is trying to go higher, perhaps getting ready for a bigger breakout as we are just now clearing a massive triangle. With that being said, the market is likely to continue grinding higher, but it is going to be very noisy. If we break down below the bottom of the candlestick for the Monday session, it is possible that we could go looking to the 50 Day EMA. Volatility remains high, but it is more likely than not going to be positive overall.
Crude Oil Prices Forecast Video 17.05.22
Brent Crude Oil Technical Analysis
Brent markets have pulled back initially during the trading session on Monday but have also rallied a bit to show signs of life again. Ultimately, this is a market that I think eventually breaks out, as the WTI market has already broken the top of its triangle. Pullbacks continue to offer buying opportunities and will be looked at as such. I like the idea of finding value whenever it appears, but right now it does not look likely that we are going to have a major breakdown. Because of this, you may have to simply buy the market on a break above the top of the candlestick for the session, expecting a move to the $120 level eventually. It will be noisy, but it certainly looks as if we are going to continue to find buyers every time there is a little bit of a pullback that people can take advantage of.
Gold markets have fallen rather hard during the trading session on Monday to reach the $1800 region, before bouncing a bit and forming a hammer. Ultimately, this market is likely to continue finding value hunters in this area, but if we were to turn around a breakdown below the bottom of the candlestick, then we could continue to see a significant selloff. At this point, if we were to turn around and break above the top of the candlestick, then it is likely that we could go looking to the 200 Day EMA which is at the $1857 level.
Any rally at this point will more likely than not find sellers on signs of exhaustion that they can get into. At this point, it is going to come down to the US dollar, and what we see around the world. The gold markets obviously will be paying close attention to the bond market, as the yields rising will work against the gold market, just as the exact opposite could be true. Ultimately, we have to keep an eye on the correlation between all of these markets in order to trade gold, as it is so volatile most of the time. Ultimately, we are at a decision point so it will be interesting to see what happens next.
Either way, it is likely that we are going to be very volatile and noisy, so it does make quite a bit of sense that you cut down on your position size until we get a bit of clarity. One thing I would say though is that we are definitely in an area where a bounce could happen.
The US dollar initially pulled back a bit during the trading session on Monday but then turned around to show signs of strength again. We have been in a very strong uptrend, and it suggests that we are going to continue to see more of the same. Ultimately, I think that traders are going to look at this as a situation where they will be jumping in to buy dips. The situation in this market is essentially a “one-way trend”, for multiple reasons.
The pair continues to look at every 250 pips as potential support or resistance level, so the ¥127.50 level is an area that should offer support, just as the ¥125 level will underneath. The ¥125 level is currently being overrun by the 50 Day EMA, which is rising. The 50 Day EMA is more likely than not going to be thought of as a dynamic support level, and I believe that a lot of traders will look at it as such.
However, if we were to break it down below the ¥125 level, it could change a lot of the attitude in this market. On the other end of the spectrum, if we make a fresh, new high, then it will just simply be a continuation of the overall uptrend. In the short term, it is very likely that we could grind sideways in order to work off some of the excess froth in this market.
As long as the Bank of Japan continues to fight interest rates rising in that country, it is essentially going to be a situation where the Japanese yen will continue to get hammered against almost all currencies while that is the case, especially with the Federal Reserve on the other side of this trade tightening monetary policy.
The British pound initially tried to rally during the trading session on Monday but gave back early gains as we continue to see a lot of resistance above. The market has a ton of resistance just above, and therefore it is difficult to imagine a scenario where I would be a buyer. At this point, I would anticipate that the British pound is going to trade down to the $1.20 level, but we may get a short-term rally between now and then.
In fact, I believe that the $1.26 level above is a bit of a ceiling in the market, with of course the $1.25 level offering a certain amount of psychology in the market that will have to be paid close attention to. Given enough time, the market will see plenty of sellers jump back into the market as the reserve continues to tighten, and of course, is probably one of the most hawkish central banks in the world right now.
Adding more downward pressure is the fact that there is a lot of “risk-off” behavior out there, which in and of itself will drive money into the US bond markets. With this being the case, it is very likely that we will continue to see trouble going forward, with the trend so firmly ensconced, and of course, the momentum of these markets takes quite a bit of effort to turn things around. The market would have to break above the 50 Day EMA at the very least in order to start to look in the other direction. Ultimately, this is a “fade the rally” situation.
The British pound initially pulled back during the trading session on Monday but then turned around to show signs of life again. Breaking all the way up to the ¥159 level by the time New York got involved. The ¥160 level above continues to offer a bit of resistance if we do get there, as it is a large, round, psychologically significant figure. Furthermore, the area had previously been supported, so therefore it should continue to have a bit of “market memory” attached to it.
If we do break down below the lows of the session on Monday, we would be a clearance of the one ¥57.50 level to the downside, opening up the possibility of a move to the 200 Day EMA. Below there, then we have the ¥150 level. Ultimately, this is a market that continues to be very volatile, but that is typical for this pair as it is so sensitive to risk appetite. Obviously, the risk appetite has been all over the place over the last several weeks, so therefore it does make quite a bit of sense that we have seen this type of action. Currently, I look at this as a market that is trying to bounce around between the 50 Day EMA above and the 200 Day EMA underneath. That typically means that we are going to see a lot of volatility, which is exactly what has happened
Looking at this chart, I will be paying close attention to these moving averages, and of course other markets in the world. If stock markets get sold off, it is very likely that the Japanese yen will continue to pick up a bit of strength. It is also worth noting that we had previously formed a massive head and shoulders pattern that a lot of traders will be paying attention to.
The Euro has rallied ever so slightly during the trading session on Monday as we continue to see the Euro try to regain some footing. That being said, the market continues to favor the US dollar over all other currencies, so it is hard to imagine that the Euro is going to be any different. Because of this, and the fact that the ECB is stuck with a very soft economy, it does make quite a bit of sense that this pair continues to see sellers every time it tries to rally.
Just above, I see the 1.05 level as a logical area of resistance based upon the previous action and of course the psychology of big figures. In fact, the resistance barrier looks likely to extend to the 1.06 handle, so one should look at the entire area as a potential short just waiting to happen. I would short the pair based upon signs of exhaustion and take advantage of any opportunity that I get.
If we were to break above the 1.06 level, then it is possible that we could go higher and reach the 1.08 level. The 50 Day EMA sits right there as well, so technical traders will also have that reason to think about shorting. As long as there are plenty of concerns around the world, the US dollar will continue to attract inflows, especially as the interest rate differential between these bond markets continues to favor the downside anyway. I have no interest in buying the Euro, but would have to reevaluate everything if we broke above the 1.08 level, something that is very unlikely anytime soon.