The British pound has rallied significantly during the trading session again on Thursday as we continue to see the Pound recover. The 1.40 handle is of course a big figure that a lot of people will pay close attention to, as it will cause a lot of headlines. Furthermore, the market will more than likely continue to favor the idea of the US dollar softening unless of course we get some type of “risk off” scenario. After all, the US dollar is considered to be a massive safety asset, so it will be interesting to see how things play out over the next several days. That being said, if we can break above the 1.40 handle, it is likely that the market goes much higher, perhaps testing the 1.42 level again.
GBP/USD Video 30.07.21
To the downside, if the market was to show signs of exhaustion, we could drop down towards the 1.37 level underneath, which of course has attracted attention previously. The 200 day EMA is sitting in that same general vicinity, and therefore there could be a significant amount of support in that region. With that being said, it would not surprise me at all to see a little bit of a pullback simply because we are a bit overextended during the last two weeks or so.
All things been equal, this is a market that I think is trying to figure out where it wants to go longer term, but I would be a bit surprised if we simply slice through the 1.40 handle, because of the overextension. Ultimately, I do not think it would take much to have people push to the downside.
The British pound has continued to go higher, reaching towards the ¥153 level. At this point in time, the market is likely to continue seeing buyers on pullbacks, and it certainly looks at this point in time as if we are going to try to get towards the ¥155 level. This is an area that has been a significant amount of resistance in the past, therefore it is likely that we will continue to see that area matter yet again. If we can break above there, then we are more than likely going to see this market go looking even higher, perhaps towards the ¥157.50 level.
GBP/JPY Video 30.07.21
To the downside, the ¥152.50 level would be the initial support level, but if we break down below there then it is likely that we could go looking towards the ¥150 level. All things been equal, this is a market that continues to be very noisy, but also it is very sensitive to the overall risk appetite around the world, and therefore it rallies when people are feeling good about the trading environment, and then falls when they are a bit concerned.
All things been equal, does look like we are trying to pick up the uptrend again, but we still have not necessarily made a “higher high” quite yet as I record this. With this, I think we will continue to see a lot of noisy behavior, so you should be cautious about putting too much money to work right away. The pair does tend to get while the times, but one thing that I would look at is the fact that we have seen multiple green days in a row so we might be getting close to pulling back a bit.
The Euro rallied a bit during the course of the trading session on Thursday, breaking above the 1.1850 level. That is an area that of course has been important more than once, and at this point in time blowing through it of course is a good sign. However, the 50 day EMA is trying to cross below the 200 day EMA, near the 1.1925 level. At this point, a lot of traders will be paying close attention to this, as it is a longer-term negative sign. Furthermore, the 200 day EMA does tend to attract a lot of attention, so signs of exhaustion would more than likely be sold into.
EUR/USD Video 30.07.21
While the US dollar continues to soften, the reality is that it might be a little bit overdone considering that the interest rate differential still favors the United States, so all things been equal that will continue to put a little bit of downward pressure on the Euro itself. Having said that, if we were to break above the “death cross”, that opens up the possibility of a move towards the 1.20 handle. If we were to break above there, then it opens up the possibility of a move towards the 1.2150 level, that being said, the market is more likely than not to find sellers sooner or later.
I do not like the Euro in general, as it is very choppy to say the least, but ultimately this is a market that I think continues to see a bit of a reaction to the Jerome Powell statement. Given enough time though, I do think that we might have a nice selling opportunity, all it would take is a little bit of a “risk off move” in the markets overall.
The Australian dollar has rallied a bit during the course of the trading session on Thursday, to break above the 0.74 level momentarily. We have given back some of those gains and I would also point out that there are a lot of areas above that could cause some issues. It is because of this that I am waiting for an opportunity to short the Australian dollar higher levels, because quite frankly we are still very much in a downtrend over the last several months.
AUD/USD Video 30.07.21
The 0.75 level above is probably going to be a significant resistance barrier, as it is a large, round, psychologically significant figure and of course an area where the 200 day EMA is getting awfully close to being broken through by the 50 day EMA. This of course would be the so-called “death cross”, while I am not a huge proponent of it, I also recognize that a lot of longer-term traders may come into the picture. Ultimately, I think this is a simple sign of downward pressure that should continue, and I think that given enough time we will probably sell into signs of exhaustion.
If we break above the 0.75 handle, then it is likely that we could go much higher, but I will cross a bridge one we get there. Quite frankly, I do not see that happening very easily, and I think that it is only a matter of time before we get a little bit more clarity, but quite frankly the bounce will more than likely give us an opportunity sooner rather than later, but a little bit of patience may go a long way in the next couple of trading sessions.
PayPal Holdings Inc. (PYPL), one of 2020’s hottest stocks, is trading lower by more than 9% in Thursday’s pre-market after issuing downside profit guidance for the third quarter and full year. The digital payments juggernaut beat Q2 earnings-per share (EPS) estimates by just $0.03, posting a profit of $1.16, while revenue rose 18.6% year-over-year to $6.24 billion, just missing $6.27 billion consensus. Total payment volume during the quarter grew 40%, or 36% on a currency neutral basis.
The company boasts a 55.7 price-to-earnings ratio (P/E), higher than American Express Co. (AXP) but on par with Visa Inc. (V) and MasterCard Inc. (MA). The weak outlook exposes vulnerability to a pandemic ‘hangover’ that many 2020 beneficiaries have reported in their quarterly results. Simply stated, the rapid transition into digital payments, streaming services, and at-home food delivery yielded a one-time cash influx that’s now reverting to historical performance.
The selloff comes just three business days before PayPal raises rates for many merchant accounts. Originally announced in June, the news triggered a strong rally into July but Q3 and full year profit warnings suggest the company miscalculated and now expects to lose customers. It may also have underestimated the growing number of choices in the digital payment space, heralding an era in which it will need to compete more forcefully for market share.
Wall Street and Technical Outlook
Wall Street has been wildly bullish on PayPal for months, holding like glue to a ‘Buy’ rating now based upon 35 ‘Buy’, 5 ‘Overweight’, 6 ‘Hold’, and 1 ‘Sell’ recommendation. Price targets currently range from a low of $250 to a Street-high $375 while the stock is set to open Thursday’s session more than $50 below the median $330 target. A quick uptick into the median price seems unlikely, given weak guidance, because it would require breaking out to a new high.
PayPal posted a phenomenal 219% return in 2020 and continued to book upside into the February 2021 high at 309.14. A decline into March found support in the 220s while the bounce into July mounted the first quarter peak by less than one point ahead of this morning’s selloff. The reversal reinforces resistance above 300 while setting up a test of 50-day moving average support at 285. A breakdown is possible given downside momentum, exposing an unpleasant trip to the March low.
The S&P 500 has initially gapped lower to kick off the trading session in the futures market on Wednesday, but then turned around to show signs of strength again. Ultimately, the S&P 500 should continue to see plenty of buyers, especially as we see more than enough reasons to believe that the liquidity measures should continue. The Federal Reserve is going to have a statement later in the day, which of course will have a major influence on where we go next but let us not be overly dramatic here: the Federal Reserve will not do anything to disrupt Wall Street.
S&P 500 Video 29.07.21
At this point, if we do get a significant pullback, it is likely that it will end up being a buying opportunity. The 50 day EMA and the uptrend line both offer support, and therefore I think that would be the first major support level. If we break down below there, then it is likely that the market could go looking towards the 4200 level. Breaking below that level then opens up the possibility of a move down to the 4000 handle where I see a small gap that could come into play and offer plenty of support. Furthermore, we also have the 200 day EMA coming into the picture, which allows for a longer-term trade.
If we were to break down below that level then it is possible that I would be a buyer of puts, but that is about it as the Federal Reserve will not let the market fall too far, and given enough time would do plenty of things to keep the market afloat.
Silver markets have rallied just a bit during the course of the trading session on Wednesday as the $25 level continues to be a bit of a magnet for price. The previous uptrend line is of course coming into the picture as well, and as a result it will be interesting to see how this plays out. Ultimately, this is a market that I think continues to be very noisy, but we could get a bit of a reprieve late in the trading session on Wednesday in the form of the Federal Reserve statement.
SILVER Video 29.07.21
If we continue to see a lot of industrial demand and the US dollar starts to fall, then it is likely that will provide a bit of “rocket fuel” for silver and other commodities in general. That being said, I do not have any real interest in trying to get too cute with this market, so I would not be a buyer until we clear the 200 day EMA above. With that, I continue to look at this as a scenario where we could get that potential break down as well, so if we break down below the bottom of the candlestick from the previous session, then it is likely that we go much lower. At that point in time, it is likely that the market accelerates to the downside.
On that breakdown, it is very likely that we go looking towards the $24 level, followed by the $20 level longer-term. That being said, the market will be very volatile, which is typical for silver in general. If we do break above the 200 day EMA, then the market goes looking towards the 50 day EMA next.
The West Texas Intermediate Crude Oil market has gone back and forth during the course of the trading session on Wednesday, as we are sitting above the 50 day EMA and perhaps even more importantly the $70 level. The $70 level is of course attached to the 50 day EMA as well. Ultimately, the market will have to make its decision, and it certainly looks as if we are trying to build the momentum to the upside as of lately.
If we can break above the top of the candlestick for the trading session on Wednesday, that might be reason enough to send this market towards the $75 level. The $75 level course is a large, round, psychologically significant figure, and of course an area where we had previously seen selling.
Crude Oil Video 29.07.21
Brent markets have also been relatively quiet during the trading session, but at this point in time we are also sitting just above the 50 day EMA over here as well, which of course is rather bullish. The market breaking above the Monday session could also send this market higher, just as it would in the WTI market. However, it should also be noted that the demand picture is a bit foggy at the moment, so it will be interesting to see how this plays out. The market has been noisy to say the least, as there have been concerns about the Delta variant closing down various economies, and of course some of the PMI numbers around the world have struggled. On the other hand, it does look like there is going to be plenty of possible inflation issues as well.
Natural gas markets fell significantly during the course of the trading session on Wednesday to reach towards the $3.82 level, before turning around and showing signs of strength again. That being the case, the market looks as if it is primed to attack the $4.00 level again, which of course attracts a lot of attention in general. All things being equal, the market is likely to continue to see a lot of choppiness in this general vicinity, but it should note that we test the top of the previous consolidation area to turn around and show signs of life.
NATGAS Video 29.07.21
If we can break above the highs from a couple of days ago to make a fresh, new high, then the market is likely to go much higher to reach towards the $4.40 level, which I have projections of based upon the previous consolidation between the $2.40 level on the bottom and the $3.40 level on the top. That measures for that move, just as the bullish flag that we had broken out of significance as well.
In general, this is a market that I think is a “buy on the dips” type of situation more than anything else, and that of course has been the way this market has run for several months. As we continue to have a major heat wave out west in the United States, that makes quite a bit of sense that demand will continue to pick up for natural gas. Furthermore, should also keep in mind that the commodity markets in general have been booming and that of course has had a bit of a “knock on effect” over here in the natural gas market.
Gold markets have gone back and forth during the course of the trading session on Wednesday as we are testing the bottom of the overall consolidation area. After all, the $1790 level has offered significant support underneath, and as you can see, we have tested it multiple times over the last couple weeks. To the upside, the 200 day EMA sits at the $1808 level, and we also have the 50 day EMA sitting just above there. All things being equal, this is a market that I think will take its cues from the Federal Reserve and it is possible that sooner or later they have to make a decision as to where we go longer term.
Gold Price Predictions Video 29.07.21
At this point, it will come down to what happens with the US dollar. Keep in mind that the US dollar is negatively correlated to the gold market, so that being the case the announcement later in the session will give us a bit of a “heads up” as to where gold may go next. If we break down below the $1790 level, then it is likely that we go looking towards the $1750 level. Breaking below that level then opens up the possibility of a move down to the $1680 level.
To the upside, if we break above the $1830 level, then it is likely that we could go looking towards the $1860 level. That is the top of the gap, and that of course is going to be a bit of resistance and of itself. If we break above there, then the market very likely could go looking towards the $1910 level.
The US dollar has rallied a bit during the course of the trading session on Wednesday to reach towards the ¥110 level yet again. The 50 day EMA is sitting right here as well, so it makes a certain amount of sense that we are hovering in this area. Because of this, I believe that the market is going to continue to chop around, and I think that if you are looking for some type of definitive move, you probably will not get it after the announcement. I think we are going to continue to hang about this area, perhaps in a manner best described as “listless.”
USD/JPY Video 29.07.21
Keep in mind that it is also the dead of summer and therefore we probably have some quiet days ahead of us, and you should also keep in mind that the ¥111 level above is the beginning of significant resistance that extends all the way to the ¥112 level based upon the longer-term chart. Because of this, I think it is going to continue to be difficult to take off to the upside, and therefore I think you have to keep in mind that there might be a little bit of a chance that we break down.
If we break down, I believe that we could go looking towards the 200 day EMA. After that, I think that the market could go to the ¥107.50 level. All things been equal, I am using this chart more or less as a secondary indicator as to what we should be doing with the Japanese yen overall. All things been equal, yen peers do tend to move in the same general direction.
The British pound has initially tried to rally during the trading session on Wednesday, but then pulled back a bit to show signs of hesitation at the 50 day EMA. It should also be noted that there is a significant amount of resistance just above, and it is also likely that the Federal Reserve statement later in the day will have a lot to do with what happens next. Because of this, I would be cautious about putting too much money to work, but I think the statement will have a lot to do with where the US dollar will go, which of course will have its own influence on this market.
GBP/USD Video 29.07.21
The markets have seen quite a nice move in the British pound from the lows, and I think at this point in time it is likely that we will continue to see a lot of choppy behavior, and therefore we will have to make a longer-term decision, which I expect to see a bit of progress in making by the end of the session as Jerome Powell and his statement will have a lot to do with what happens with the greenback. I think at this point, a little bit of a pullback would not necessarily rule out the idea of a move higher, as we have gotten a bit ahead of ourselves. The key is going to be near the 200 day EMA which is also sitting at 1.37 as well. Because of this, I think that the next day or so could be choppy, but if we were to somehow get to the 1.40 handle, that foretells a potential big move.
The British pound has rallied a bit during the course of the trading session on Wednesday to break above the crucial ¥152.50 level, an area that has been important more than once. That being said, I think that the market has a lot of noise just above that could come into the picture, so I would anticipate more choppy behavior, and the occasional pullback makes quite a bit of sense. If we break down below the hammer from the trading session on Tuesday, then it is possible that we roll over and go looking towards the ¥150 level.
GBP/JPY Video 29.07.21
Looking at this chart, you should also keep in mind that it has a lot to do with risk appetite, so keep that in mind. It tends to rise right along with that risk appetite and fall if it struggles. I think the next couple of days could be crucial for risk appetite in general, so that of course will have a huge influence on where we go next. All things been equal, we are essentially in the middle of the larger consolidation area, and that means that we could go either way at this point. Nonetheless, it should be noted that the British pound has recovered quite nicely from the previous selloff, so it will be interesting to see how this plays out.
As we continue to go through the quiet part of the summer, it is likely that we stay within the range of ¥150 underneath and ¥155 above. With that being the case, I think we are looking at a scenario where we just do not really have longer-term directionality right now.
Later in the day, the Federal Reserve will be releasing a statement and therefore a lot of traders will be trying to position ahead of it. As things stand right now, it looks as if the Euro is trying to figure out what it wants to do longer term, and my suggestion is that we will probably eventually go looking towards the 1.16 level underneath. It is also worth noting that we are starting to get the “death cross”, as the 50 day EMA is crossing below the 200 day EMA.
EUR/USD Video 29.07.21
Obviously, traders are going to be parsing very closely whether or not the Federal Reserve is going to be tapering or not. At this point, we should also be getting a lot of noise due to that announcement, and keep in mind that the Euro is considered to be the “anti-dollar”, so therefore this might be one of the noisier pairs late in the day. Nonetheless, I think that the 1.1850 level should offer resistance, and of course that 200 day EMA above there. In other words, I think unless there is some type of major regime change, I anticipate that any rally at this point in time will probably continue to be sold into.
If we break down below the lows, then it is likely that we go looking towards 1.16 level rather quickly, as it does make quite a bit of sense that we would see further follow-through in what has already been a relatively long-term trend. Regardless, I do not have any interest in buying this pair anytime soon.
The Australian dollar initially rallied during the trading session on Tuesday but gave back the gains to show less than extraordinary pressure. That being said, market is simply chopping around, and it is likely that once we get the Federal Reserve out of the way, then we might have a bit more clarity. At this point, I do like the idea of shorting this market on signs of exhaustion, like we had gotten early during the session. That being said, what I would really like to see is some type of massive bounce after the fact, and then go against it.
AUD/USD Video 29.07.21
To the downside, if we can break below the 0.73 level, then it is likely that we go much lower. At that point, it is very likely that we will eventually fulfill the move to the 0.70 level that I have been looking at for some time. Because of this, I believe at this point in time this is a “one-way trade”, especially as we are starting to get the 50 day EMA trying to cross below the 200 day EMA which is known as the “death cross.”
It is not until we break above the 0.75 level that I would be tempted to try to go long the Australian dollar, and that does not look like something that is going to happen anytime soon. That being said, if it was going to happen, then it could very well be a move back towards the highs just waiting to happen. In general, I still believe that negativity abounds as the Australian economy continues to get locked down.
Bitcoin has taken investors on a roller coaster ride of late. As an emerging asset class, cryptocurrencies are inherently volatile. Nonetheless, the bitcoin price has been mired in a downturn, and its recent rally above USD 40K was a psychological boost to investors. That bull run seemed to be short-lived after Amazon denied reports that it was on the verge of supporting bitcoin, but now it appears that the rally may have legs.
The bitcoin price is perched back above USD 40K once again, even without Amazon’s help. And most of the top 10 cryptocurrencies are trading in the green too.
While the signs suggested that Amazon was the reason for the recent market swings, Galaxy Digital Founder Mike Novogratz suggests there is another catalyst for today’s gains — institutions. He told CNBC:
“Crypto has bounced back because institutions are buying…This was partly a big short-covering rally and partly recognition that this is a real market that’s not going anywhere.”
Crypto Is Here to Stay
Novogratz, a former hedge fund trader on Wall Street, pointed to FTX, a cryptocurrency exchange startup that just attracted USD 900 million to its coffers in a Series B round. He also noted the caliber of the investors in the round, which included the likes of SoftBank and Paul Tudor Jones, among others, saying it sent a message to the market that cryptocurrencies are here to stay.
Novogratz Claps Back
Cryptocurrencies may be here to stay, but certain lawmakers are doing everything they can to make it harder to invest. U.S. Senator Elizabeth Warren is behind a letter to Treasury Secretary Janet Yellen urging the former Fed chair to crack down on the cryptocurrency industry. Senator Warren painted retail investors as victims amid crypto market volatility that could lead to financial losses.
Novogratz isn’t having any of it. He went on a tweetstorm calling out legacy finance for things such as bank overdraft fees while defending the cryptocurrency industry and its participants. Novogratz was “riled up” by Senator Warren, saying she does not “seem so progressive” to him.
Banks charged 12 bn in overdraft fees, a fortune in atm fees, a fortune in checking account fees. But you keep going after crypto where saving and money transfer is a fraction of banks. Good job @SenWarren You really don’t seem so progressive to me.
The Galaxy chief did not hold back, suggesting that if banks had the same standards as DeFi when it comes to transparency, the mortgage crisis of the 2008 era would never have occurred. Novogratz added that know-your-customer (KYC) standards are coming to crypto. He would also like to see politicians more educated on the market.
Dow component Boeing Co. (BA) is trading at a two-week high in Wednesday’s pre-market after posting the first profit since the third quarter of 2019. The aerospace giant earned $0.40 per-share in Q2 2021, $1.12 higher than estimates, while $44 billion in revenue matched expectations, marking a 44.0% year-over-year increase. The total backlog at the end of the quarter stood at a respectable $363 billion while the company secured new orders for 234 737 airliners and 31 freighter aircraft.
Airline Industry Crosswinds
The 737 MAX is returning to the friendly skies at a rapid pace, with the delivery of more than 130 new aircraft and more than 190 previously grounded aircraft resuming service, translating into nearly 95,000 revenue flights and more than 218,000 flight hours. The company release said little about the potential impact of the Delta variant on the commercial airline industry but that’s likely to be discussed in the 10:30am Eastern conference call.
However, its isn’t all good news for Boeing, with China still withholding certification of the MAX and 787 production delays needed to address FAA mandated inspections and reworking. In addition, business travel is expected to recover at a much slower pace than leisure travel, with the Delta variant forcing many corporations to put off reintegration plans at the same time that international destinations rethink their customs requirements.
Wall Street and Technical Outlook
Wall Street consensus is mixed despite the return of the MAX 737, with an ‘Overweight’ rating based upon 11 ‘Buy’, 2 ‘Overweight’, 11 ‘Hold’, and 2 ‘Sell’ recommendations. Price targets currently range from a low of $200 to a Street-high $314 while the stock is set to open Wednesday’s session more than $40 below the median $272 target. This placement favors share gains in coming weeks, possibly dampened by continued pandemic headwinds.
Boeing posted an all-time high at 446 in 2019, just before the 737 MAX crashed in Ethiopia. The subsequent decline accelerated in the first quarter of 2020, dropping price to a 7-year low in double-digits, ahead of an uptick that ran into a buzzsaw of resistance above 200. Price action since December has tested the 200-day moving average repeatedly while accumulation has dropped to the lowest low since September 2020, when the stock was trading in the 160s. Given uncertain travel conditions, this sideways action could easily persist into 2022.
Earlier this month, the Consumer Price Index, which the Fed uses as its preferred measure of Inflation, jumped from 5% to 5.4% in June – to its highest level since 2008. Meanwhile, core CPI rose from 3.8% to 4.5%.
The hot reading now positions, the Federal Reserve’s July meeting as a major focal point for the markets.
There’s no doubt that the Fed is in a tough position. On the one hand, higher inflation calls for the tapering of its historic quantitative easing program. However, on the other hand, the potential risks to growth from the highly contagious COVID Delta Variant – does not warrant a change in their monetary policy stance.
The conflicting narratives between higher inflation concerns and worries of slower growth in the second half of the year will make the Fed’s job especially difficult this time around.
If one of two 5 letter words – either DELTA or TAPER make their way into the FOMC statement that will inevitably set the stage for how precious metal prices will trade throughout the rest of this quarter.
Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions: