S&P 500 traders have been bullish for quite some time, and even though this week has been a bit quiet, it should be noted that we did pierce the 4400 level, which of course is a relatively bullish sign. The same standard playbook applies to this market, simply that we should be buying dips as the Federal Reserve will continue to keep monetary policy very loose for the foreseeable future, the same thing they have been doing over the last 13 years since the Great Financial Crisis.
S&P 500 Video 02.08.21
There is a nice uptrend line underneath, and of course the 4200 level should offer support. After that, I see the 4000 level as the “floor the market” as there will be a lot of options barriers there, and of course is large, round, psychologically important figures tend to attract a lot of attention. Furthermore, we also have the 50 week EMA racing towards that area and of memory serves me correct, the 200 day EMA is currently sitting right around the same area as well.
To the upside, I think the 4500 level will offer a little bit of hesitation, as it is a big figure, but ultimately this pair does tend to move in 200 point increments, thereby having me target the 4600 level over the next several weeks. Keep in mind that August does tend to be very quiet so do not be surprised at all to see this more of a grind than anything else or even the possibility of a bit of sideways trading. Once September hits, traders come back to work and the momentum start picking up yet again.
The West Texas Intermediate Crude Oil market has initially pulled back during the week but found the $70 level to be supportive enough to turn things around and show signs of life again. By the end of the week, we have turned around completely to threaten the $74 level. After forming that massive hammer during last week, it is obvious that the buyers are stepping into pick this market up and as selling is all but impossible. (In fact, I would not be a seller until we break down through that hammer.) Because of this, I think it is only a matter of time before we break above the recent highs and go looking towards the $80 level as demand will continue to outstrip supply in the foreseeable future.
WTI Oil Video 02.08.21
Brent markets of course are going to be the same story and are much clearer to breaking out to the upside than the WTI grade is. In fact, I look at Brent as a bit of a leading indicator as it typically has a little bit of a premium attached to it anyway. If we can break out higher from a couple of weeks ago, as almost a certainty that we will go looking towards the $80 level and try to break above it. As for the downside, the $70 level looks to be massive support, followed by the $65 level as evident by the massive hammer that we had formed during the previous week. Nonetheless, pay close attention to the US dollar as it also has its say as to where we go quite often.
The S&P 500 has pulled back a little bit to kick off the trading session on Friday but turned around to show signs of life again. Because of this, the market looks as if it is ready to go much higher given enough time. I think there is plenty of support underneath at the uptrend line, which of course is followed right along by the 50 day EMA. With this being the case, it is difficult to imagine area where I would be short at, because quite frankly between here and there I anticipate there will be plenty of value hunters.
S&P 500 Video 02.08.21
If we did break down, the 4200 level and of course the 4000 level both offer enticing areas to pick up value, especially the 4000 level as it would be a 10% correction. It should be noted that the 4400 level has caused a bit of noise, but if we can break above there then the 4500 level is my next target but ultimately, I would anticipate seeing markets go much higher than that. My year-end target at the moment is 4600, but quite frankly this market continues to outperform expectations I do not see why it would be any different now.
The Federal Reserve has stated this week that it was not going to get close to tapering anytime soon, so that continues to drive the market higher. We are in the midst of earnings season which of course was very strong, but I think that was already expected considering what we had seen over the last year.
The West Texas Intermediate Crude Oil market initially pulled back during the day on Friday only to turn around and show signs of strength. By doing so, the market looks as if it is threatening the $74 level, opening up the possibility of a move towards the $75 level. Pullbacks at this point in time will still have plenty of support underneath, especially near the $70 level as it is a large, round, psychologically significant figure and an area where the 50 day EMA has just crossed. After the type of recovery that we have seen over the last couple of weeks, it should be obvious that this is still a “buy on the dips” type of market.
Crude Oil Video 02.08.21
Brent markets also rallied a bit during the trading session on Friday as we have broken above the $75 level in this market. Brent tends to be the leader in these two markets as there is a bit of a premium attached to it, and therefore I think it should not be surprising to see this market break to a fresh new high before the WTI market does. At that point, then I anticipate that the market goes looking towards the $80 level. Underneath, the 50 day EMA sits at the $72.50 level, and should offer a bit of a “soft floor” for the market, and that of course the $70 level will be much more crucial as far as support is concerned. I think this remains a “buy on the dips” type of situation as it has been four months.
Silver markets have pulled back a bit during the course of the week, but as you can see have turned around to form a bit of a hammer. The hammer sits right on top of the bottom of the overall uptrend line of the ascending triangle, so therefore I think it is only a matter of time before we rally. If the market can break above the top of the weekly candlestick, then it is likely that we break out to the upside, perhaps going towards the $28 level. On the other hand, if we break down below the candlestick, then it is likely that the market could break towards the $24 level, maybe even the $20 level on some type of selloff.
SILVER Video 02.08.21
Keep in mind that silver has a huge correlation to the industrial demand, but with Jerome Powell and the Federal Reserve suggesting that they are nowhere near tightening monetary policy, that could weaken the US dollar just enough to make the silver market go higher. Gold has really taken off, and perhaps will continue to drag silver along with it. Nonetheless, this is a market that is very difficult to risk manage, mainly because the cost involved per text.
Because of this, I would be very cautious about the position size, and only add to the position as the trade works out. Either way, it looks like we are probably going to get a significant move relatively soon. That being said, the market is likely to continue to see noisy behavior, but eventually I fully anticipate seeing some type of impulsive candlestick that we can follow right along with.
Natural gas markets initially rally during the course of the week, breaking out well above the $4.00 level, only to sell off and breakdown. All things being equal, this is a market that I think will continue to see a lot of upward pressure over the longer term, but we are starting to see temperatures cool off a little bit in the United States, so that could drive down demand. Longer-term though, we still have the heat wave coming back and therefore I think buyers will return. This little bit of a pullback might be a nice opportunity to get involved at a better price, and that is how I plan on playing this market.
NATGAS Video 02.08.21
If we can break above the top of the candlestick from the week, then it allows the market to go much higher. At that point, the market is likely to go looking towards the $4.40 level. That is the measured move from the previous consolidation area and the bullish flag that shows up on the daily chart. With that being the case, I think it all the points to higher levels, but this little bit of a pullback should be a nice buying opportunity based upon value as it returns. It is not until we break down below the $3.40 level that I would be a seller of this market and at that point in time I would probably become rather aggressive. In general, this is a market that I believe continues to see upward momentum but given back some of the most recent impulsive move would not be a huge surprise.
Gold markets rallied a bit during the course of the week, but initially looked very soft as we were hanging about the $1790 level, an area that is significant support based upon action that we have seen over the last month or so. We then turned around as Jerome Powell and the Federal Reserve announced that they were nowhere near tapering, so therefore gold got a bit of a boost as the US dollar got smoked. Having said that, we did not break out quite yet, and simply test at the top of the range before pulling back on Friday. It will be interesting to see whether or not we can continue to go higher, but we have a very clear area that will be crucial.
Gold Price Predictions Video 02.08.21
If we can clear the $1830 level, then it is likely the gold continues to go much higher, perhaps trying to take that huge red wipeout candle out and go looking towards the $1910 level. On the other hand, if we turn around a break down below the $1790 level, that almost certainly will open up a move down to the $1750 level, followed very closely by the double bottom down at the $1680 level. With that being the case, it is very likely that it would come along with massive US dollar strength and a lot of fear-based trading.
Even though the gold market sometimes get a little bit of a boost when people are concerned, the reality is that the gold markets play second fiddle to the US dollar sometimes, and that will be especially true if we continue to see the yield in the United States drop as people will rush towards bond.
Silver markets have gone back and forth during the course of the trading session on Friday after initially gapping lower, and now it looks as if we are trying to digest the gains and figure out where to go next. This not a huge surprise, considering just how explosive silver was during the previous session. That being said, the market is likely to be very choppy in the short term, but that is not overly surprising considering that silver tends to be very erratic.
SILVER Video 02.08.21
There is an argument between whether or not we are going to follow the US dollar, as it has such a huge negative correlation, or are we going to follow the industrial demand going forward? Looking at this chart, you can see that there is a lot of noise just above, especially near the $26.50 level. We also have the 50 day EMA sitting in that general vicinity, which of course is an indicator that a lot of technical traders will pay close attention to. If we break above there, then the $27 level will be targeted, followed by the $28 level as it would fill a gap that had formed back in June. At that point, I think there is a significant amount of resistance it could come into the picture in and cause problems.
To the downside, it is very likely that the market could go looking towards the previous uptrend line, assuming that it can even break down below the $25 level. All things been equal, this is a market that is going to be very noisy and choppy, but looking at this chart, it is obvious that we are trying to form a little bit of a base.
Natural gas markets continue to consolidate around the $4.00 level, as we have pulled back from there, but you can see that the market has been in a little bit of a consolidation range between $3.80 and $4.20. At this point, the $4.00 level is essentially the “fair value” of the market right now. I would also point out that just below at the $3.80 level it is the top of the bullish flag, which measures for a move to the $4.40 level.
NATGAS Video 02.08.21
You should also take a look at the massive consolidation area that we broke out of previously with the $2.40 level underneath has offered massive support, and the $3.40 level has been massive resistance. That measures for a $1.00 move from the breakout price of $3.40, so it all kind of comes together at the same time. That being said, it should be noted that the natural gas markets have been seeing a bit of a boost due to the idea of more demand coming out due to the heatwave. As long as that he wave is still around, that is going to drive up pricing over the longer term.
All that being said, it is not a huge surprise to see a little bit of a pullback from the round figure, because after all a lot of technical traders and options barriers tend to gravitate towards these areas. Ultimately, this is a market that I think is going to offer a little bit of value underneath, thereby offering the opportunity of value hunters to get back into the marketplace.
Gold markets continued to show signs of exhaustion near the $1830 level on Friday, after surging there during the day on Thursday. At this point, we are going to have to pay close attention to the US dollar, because if it starts to melt down, that might be the catalyst that gold needs to continue to go higher. If we can break out above the top of the candlestick from the Thursday session, then we could go looking towards the $1860 level. That is the top of the gap that we have seen in this market, and it should offer a certain amount of resistance. If we can break above there, then it is obvious that the market could go much higher.
Gold Price Predictions Video 02.08.21
On the other hand, if we were to pull back just a bit, then we could go looking towards the $1810 level, which is where the 200 day EMA currently sits. Underneath there, the market is likely to go looking towards the $1790 level as well, which is the bottom of the overall range. Breaking down below that level then opens up the possibility of a move towards the $1750 level underneath, where we had bounced from earlier this summer.
If we were to turn around a break down below that level, it is very likely that we would go towards the double bottom underneath at the $1680 level. That is an area that is massive support and breaking down below that level opens up a massive flood of selling from what I can see. Keep in mind the negative correlation to the greenback, that is going to be the most important thing to pay attention to.
The US dollar has fallen hard against the Japanese yen during the course of the week to break down below the ¥110 level. Ultimately, this is a market that I think is essentially “stuck” in this general area, and therefore it is not a huge surprise that we are dancing around yet again. At this point, I do not necessarily think that we are going to make a big move in the short term, because we are heading into the month of August when things are typically very quiet. Most large traders will be thinking more about beaches than they will trading charts.
USD/JPY Video 02.08.21
At this point, there is a massive amount of resistance above where the ¥112 level has pushed this market back down every time, we have tried to approach that level over the last several years. Ultimately, this is a market that I think will continue to see a lot of noise in that area so therefore I think we break out. To the downside, I see the ¥108 level as a support level, and a potential target if we break down.
I anticipate that the next several candlesticks will be back and forth, and therefore it is probably more likely than not to be a scenario where we will be looking towards shorter time frames than anything else, as the range is relatively tight, and is going to be difficult to trade the range with these higher time frames. That being said, it does make for a nice well defined area that you can trade on either the daily or the four hour charts.
The British pound has rallied significantly during the course of the trading session to show signs of life again, as the market is more than likely going to try to move against the US dollar in one fell swoop. That being said, the 1.40 handle is an area that has been significant resistance in the past, so I would not be surprised at all to see a little bit of a pullback. If and when we can break above that 1.40 level though, then it is likely we go looking towards 1.42 handle, which is where we have seen a massive amount of resistance in the past. Ultimately, this is a market that I think will continue to see choppy behavior, and as we head into August, I think we will see a little less in the way of momentum.
GBP/USD Video 02.08.21
When you look at the 1.42 handle, it is an area that has been like a brick wall for several years, and I think breaking above there would make this market a longer-term “buy-and-hold” type of situation. I do not necessarily see that happening easily, and I do not necessarily see that happening in the next week or two. I think this is more or less going to be a bit of a grind higher, especially as we head into what is traditionally one of the quietest times of the year.
That being said, if we pull back it is likely that we will go looking towards the 1.37 handle underneath, where we launched from earlier this week. Ultimately, this is a market that needs to make up its mind for a bigger move.
The US dollar has rallied a bit during the course of the trading session on Friday as we continue to see a lot of choppy noise in this market. The ¥110 level has been a bit of a magnet for price and is nothing on this chart that suggests it is not going to continue to be so. The 50 day EMA sits just below the ¥110 level, so it is not a huge surprise to see that the market would go looking towards that area. If we can break above the ¥110 level, then the ¥110.75 level is also resistance, and then we have the ¥111.50 level. Keep in mind that once we get towards the highs again, we need to pay close attention to the longer-term charts, because we have so much in the way of resistance going back several months.
USD/JPY Video 02.08.21
The USD/JPY pair has a strong correlation to risk appetite, and therefore you should pay close attention to that as well. The NASDAQ 100 melted down late in the day on Thursday, and that caused a little bit of pressure over here. Nonetheless, I think given enough time we are simply going to grind back and forth as we try to figure out the next move longer term. Breaking down below the ¥109 level could open up further selling, but you should also keep in mind that the 200 day EMA is just under there as well, so it could also offer a little bit of psychological and structural support.
The British pound has initially pulled back a bit during the course of the week but then turned around a break above the ¥153 level. That being the case, it looks as if the market is going to try to continue to grind higher, but keep in mind that this pair is highly sensitive to the risk appetite of markets around the world, so pay close attention to how stock markets behave, as well as other things along the lines of commodities. That being said, the British pound of course is considered to be a currency that people buying good times, while the Japanese yen is considered to be a massive safety currency.
GBP/JPY Video 02.08.21
If we can break above the top of this weekly candlestick, then it is likely we go looking towards the ¥155 level, which was the most recent high. It is also an area where we see a significant amount of resistance at over the months and years pass. On the other hand, if we pull back from here we could go looking towards the ¥150 level, which I think would be massive support and thereby breaking down below the candlestick from the previous week which was the hammer would open up massive selling, perhaps reaching down to the ¥145 level, maybe even as low as the ¥140 level, as I believe that a break down below the hammer from the previous week would of course represent some type of shock to the system and therefore I think the reaction could be rather nasty as it would be a safety trade all across-the-board in my estimation.
The Euro has rallied rather significantly during the course of the week, as we have seen the market recapture the 1.1850 level, and even threatening the 1.19 level late during the week. When you look at this chart, it is obvious that there are a lot of choppy little areas around where we are, and the fact that the Friday candlestick is starting to look like a shooting star does suggest that maybe we get a little bit of a pullback. That being said, it looks as if the Euro is trying to find its footing, so while I anticipate that we are going to go sideways more than anything else in the short term, it is likely that we will make a significant move rather soon.
EUR/USD Video 02.08.21
Looking at this chart, you can see that if we were to break down below the weekly candlestick, we could go looking towards the 1.16 level underneath which is where the 200 week EMA comes into the picture. That is an area where we see significant support coming into the market that extends down to the 1.15 handle. As far as going long is concerned, you need to see this market clear the 1.20 handle in order to have this market really take off to the upside. At that point, then we are looking towards the 1.22 handle.
That is an area that of course is massive resistance as well, so please be advised that it is worth paying close attention to. Keep in mind that a lot of what is going on in this pair in both the US dollar more than anything else, so I do not believe that you can ignore the 10 year note either.
The Australian dollar has gone back and forth during the course of the week to show a little bit of hesitation with the negativity. If we can break down below the hammer from the previous week, then it is very likely that we go towards the 0.70 level, an area that I do think is a very real possibility as Australia continues to lock down its economy. This could send Australia into a “double dip recession”, which of course will cause major issues for the currency and of course the overall economic health of Australia.
AUD/USD Video 02.08.21
Furthermore, we are starting to see issues with the Chinese economy and therefore the Australians may suffer at the hands of that as well. The economic numbers in China have been less than impressive lately, so ultimately this is a market that I think will suffer. If we bounce from here, then it is likely that the 0.75 level above is going to be a significant resistance barrier based upon the previous action that we had seen and of course the fact that it is a large, round, psychologically significant figure.
One thing is for sure, this is a market that will continue to be very choppy and difficult to say the least, so with that being the case it is possible that the market is one that you are going to have to be very patient with, but it should eventually give us one of the signals to get short. On the other hand, if we were to take out the 0.76 level, then it is likely that the market would go looking towards the 0.78 handle.
The British pound has initially rallied during the course of the trading session on Friday, but then pulled back to show signs of exhaustion at the 1.40 handle. That being the case, the market is likely to see a lot of pressure in this area as it is a large, round, psychologically significant figure, and of course the market will be paying attention to it. Quite frankly, if we can break above the 1.40 handle, that would be a very bullish sign for the British pound and could send this market much higher. On the other hand, if we were to break down below the 50 day EMA, that could cause some issues.
GBP/USD Video 02.08.21
Breaking down below the 50 day EMA then opens up the possibility of a move back down to the 1.37 handle, which is where I would also expect to see the 200 day EMA sits at. With that being the case, I think this is a market that will try to break down significantly, perhaps reaching to the 1.35 handle if we do get down there. That being said, the most recent move has been as bullish as it has ever been, so I think it would take something rather ugly to make this a reality.
With this situation, I would be much more likely to buy a pullback on signs of support if we get it than to be short of this market, at least as things stand at the moment. Whether or not we can break above the 1.42 handle above is a completely different question that we may have to ask in the next few weeks. That is an area that has been crucial more than once.
The British pound has rallied a bit during the course of the trading session on Friday, as we continue to try to get towards the top of the shooting star from Thursday. The shooting star from Thursday of course shows a lot of resistance, and at this point in time we need to break above it in order for the buyers takeover. Keep in mind that the markets are highly sensitive to risk appetite in general, so keep in mind that the Japanese yen is still thought of as a “safety currency.”
GBP/JPY Video 02.08.21
If we break down below the ¥152.50 level, it is likely that we could reach a little bit lower, perhaps heading towards the ¥150 level over the longer term. If we get down there, then obviously it will be a major negative move and probably would follow right along with other risky assets so it should be a move that a lot of people will notice right away. On the other hand, if we do continue to see more upward pressure, then it is likely that we will see a lot of risk being taken in multiple markets, especially in places like indices, as well as some of the highflying currency pairs.
Pay attention to the British pound against the US dollar, because it can give you an idea as to where the British pound goes against almost everything, including the Japanese yen. All things being equal, we are facing a significant barrier above, so breaking through it of course opens up a pretty big move.
The Euro has rallied a bit during the course of the trading session on Friday, but then gave back the gains to show a little less than desirable momentum. That being said, if we do close out like this, then it is very likely that the market could go lower, perhaps reaching towards the 1.1850 level underneath. If we were to break down below the 1.1850 level, then it is likely that the market could go looking towards the 1.1750 level. Breaking down below that level then opens up a flood of selling that could send this market down to the 1.16 level.
EUR/USD Video 02.08.21
If we turn around a break above the top of the shooting star and clear the 200 day EMA, then it is possible that the market could go looking towards the 1.20 handle. The 1.20 handle is of course an area that will attract a lot of headlines, and thereby cause the markets show signs of hesitation in that general vicinity. Ultimately, this is a market that I think continues to see a lot of choppy behavior but that is nothing new for this pair.
Pay close attention to the 10 year yields in America, because they do offer quite a bit more than Germany, so if the German bond market goes even more negative, it is possible that we may see the Euro get punished as a result. Furthermore, the PCE numbers came out less than expected during the trading session, so there is also the possibility that a bit of a “fear trade” could come back into this market.
The Australian dollar has initially tried to rally during the trading session on Friday but then pulled back just a bit to slip back into the previous consolidation. This is an area that the markets have been bouncing around in for well over a week, as the Australian dollar is sitting on the precipice of a bigger move. One thing to keep in mind is that a lot of traders are paying close attention to the fact that Australia is trying to destroy its own economy. After all, you get what you ask for if you ask for it long enough. Locking down the economy is not good for the currency or anything else, so having said that it is not a huge surprise that the Aussie has struggled the way it has.
AUD/USD Video 02.08.21
To the upside, the market will more than likely struggle at the 0.75 level. The 0.75 level is a large, round, psychologically significant figure, and as a result it is very likely that we will see people react to it. Furthermore, we also have the 200 day EMA sitting just above there, with the 50 day EMA trying to break down through it and forming a bit of a barrier in and of itself.
If we break down below the 0.73 level, then it is likely that market would go looking towards the 0.70 level underneath which is a huge figure on the longer-term charts. If there is more of a “risk off move” in the world’s economy, then it makes quite a bit of sense that we would see that move play out in this pair as well as other commodity currencies.