The GBP/USD has rallied a bit during the trading week to show signs of life but has given bank gains yet again. Ultimately, this is a market that continues to be very noisy, so keep that in mind. However, the one thing that I continue to see in this market is that every time we rally, sellers get involved and start pushing lower. Whether or not we can break down remains to be seen, but right now it remains a “fade the rally” market.
The EUR/USD also rally during the week, but it looks as if we are going to continue to see a little bit of hesitation. The 1.06 level continues to be a bit of a magnet for price; therefore, I think it will continue to see a lot of noise. If we break down below the bottom of the weekly campsite, then it opens up the possibility of a move down to 1.03, followed by parity. This certainly looks like a market that is struggling to find enough momentum to go higher, but right now I just don’t see how we break out to the upside. The market continues to be noisy, and it is worth noting that when we rallied, we peaked at the 50% Fibonacci level.
Gold markets have rallied during the course of the week, bouncing from the 50-Week EMA. The market looks likely to continue going higher after having a significant pullback. That being said, we may be heading back to the market situation where both the US dollar and gold rallies at the same time. I also recognize that the $1900 level is a major resistance barrier based upon the daily chart, as we formed several inverted hammers in a row there. If we can smash you that, we could go back towards the highs. On a pullback, I expect the 50-Week EMA to offer a bit of support underneath.
The USD/JPY pulled back slightly against the Japanese yen during the trading week, as we have finally run out of momentum. It’s worth noting the previously we had bounced from the 50% of the Nazi retracement level, and even formed a double bottom on the daily chart. At this point, the market is going to continue to see the ¥136 level above as a barrier. If we were to break above there, then the market could go looking to the ¥140 level, possibly even back to the highs given enough time. Remember that the Bank of Japan continues to fight interest rates rising, as the 10-year yield has a cap of 50 basis points, therefore the BoJ will continue to print yen, flooding the currency market with that asset.
The AUD/USD has rallied a bit against the US dollar over the past week, and the market continues to see the 0.67 level as a major support level, just as we did at the end of last year. If we break down below the 0.67 level, then it’s likely that the Aussie continues to fall. That being said, I look at rallies as short-term selling opportunities, with the 50-Week EMA sitting closer to the 0.69 level offering resistance as well.
The NZD/USD has rallied during the course of the week but gave back some the gains on Friday. At this point, it looks as if we are going to have to pay close attention to the 0.61 level, as it offered significant support. If we were to break down below there, then the market probably goes looking to the 0.60 level, possibly even down to the 0.58 level. I have no interest in buying this pair anytime soon, as it looks like the US dollar will continue to show signs of resiliency. Keep in mind that the New Zealand dollar is highly sensitive to risk appetite around the world, so you need to pay close attention to that as well.
The S&P 500 had a bullish week, after initially pulling back to test the previous trendline. At this point in time, this is a market that continues to see a lot of noise, and of course the 4000 level is an area that we will have to pay close attention to as well. Rallies at this point in time will have to deal with a couple of shooting stars that sit right around the 4200 level, so I think that’s an area that is probably going to be a bit of the ceiling in this market. If we break down below the bottom of the weekly candlestick that we just printed, then we could go down to the 3900 level.
Silver markets have fallen a bit during the trading week to test the 61.8% Fibonacci level from the move higher. At this point, it looks like we are trying to recover, and we did close the week at absolute highs. With that being the case, I think we have a bit of follow-through, and it’s very likely that we could target the $22 level sometime this coming week. I don’t have any interest in shorting, but if we were to break down below the candlestick, then I think we would challenge the $20 level.