Bitcoin
Bitcoin will continue to do very little, as there’s almost no reason for it to rally. After all, the risk appetite is horrible right now, and bitcoin is about as far out on the spectrum as you can get. With that being the case, pay close attention to the $18,000 level, because we finally break down below there, then we can open up a move down to the $15,000 level. Rallies at this point will continue to be sold into as there’s just no reason to think that bitcoin or anything else crypto-related will see massive inflows.
Gold
Gold markets have gone back and forth during the course the week as we continue to hang around in a $60 level. At this point, the $1680 level has offered resistance on a bounce, which makes sense as there should be a certain amount of “market memory” attached to it. On the other hand, if we were to turn around and break down below the $1620 level, then we drove down to the $1500 level rather quickly.
As long as the Federal Reserve continues to keep its monetary policy tight, it’s difficult to imagine a scenario where the gold market truly takes off. The US dollar will continue to be a major headwind for gold markets going forward.
EUR/USD
The Euro has rallied significantly during the week, but at this point were still so far depressed that is difficult to get bullish anytime soon. The parity level will almost certainly cause a bit of resistance, so, therefore, think you will be paying close attention to that level for an eye shorting opportunity. The Euro has no real argument for going higher, although there have been headlines about an energy-saving plan in the EU. Prepare to be disappointed.
GBP/USD
The British pound went back and forth during the course of the trading week as we continue to bounce around in a 500 point range. The 1.15 level continues to be massive resistance, while the 1.10 level will be supported. At this point, I think we are more likely than not going to be a sideways market as we try to figure out what the next move is. That being said, the US dollar will continue to be much more viable than the British pound, so I prefer to fade signs of exhaustion for short-term moves.
USD/JPY
The US dollar initially shot higher during the week, but on Friday we saw the Bank of Japan step in and intervene yet again. That being said, it’s difficult to get overly excited about trying to short this pair, because the Bank of Japan is still trapped. The ¥150 level will be the next target again, but I would anticipate a little bit of a pullback in order to offer value yet again. I have absolutely no interest in trying to short this pair as long as the bank of Japan continues to try to suppress interest rates.
WTI Crude Oil
The West Texas Intermediate Crude Oil market has been rather volatile during the week, but we are essentially hanging around $85 level. There is a huge push between whether or not there is going to be enough demand, as the global economy is almost certainly heading into recession. On the other hand, we have the recent 2 million barrels per day cut from OPEC. Because of this, I think you are looking at a push/pull type of market and therefore you need to be looking at short-term range-bound trading systems.
S&P 500
The S&P 500 rallied for the week, as we have seen a lot of noise right around the 3600 level. That being said, the 3800 level above offers resistance, so I think at this point in time it’s like we continue to bounce around in a 200-point range. I do think at this point we are sitting on a major consolidation area from mid-2021 that could cause a little bit of support, but as we are in the midst of earnings season, this still remains more likely than not going to be a “fade the rally” market.
DAX
The German index had a positive week, but we are still in the midst of forming a rising wedge, and quite frankly there’s a lot out there that could cause problems for the European Union. On Friday, there was a headline that the German energy minister said there was a framework for figuring out an energy price cap for the European Union. This almost never works out, so at this point, I think it’s only a matter of time before exhaustion comes in that will be shorting again. That being said, pay close attention to the €12,500 level, if the market were to break down below there, it’s likely that we drop further.
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