Ultimately, the only thing you can count on is volatility.
Furthermore, the area that we had just tested features not only a downtrend line, but it also features the psychologically important 1.15 level, and the 50-Day EMA. We have been in a downtrend for ages, so there’s no reason to think that anything was going to change right away. In fact, the market continues to see plenty of concern out there that should continue to weigh on risk-taking, so therefore it’s likely that I think the market could go down to the 1.10 level relatively soon. If the CPI numbers are very hot in the United States, does make a certain amount of sense that the US dollar would rally. After all, we have a huge interest in what happens with the Federal Reserve next, as the entirety of Wall Street seems to be looking at the Federal Reserve for some type of help. If they continue to tighten monetary policy, it’s difficult to imagine a scenario where stocks or any other type of risk appetite asset will rise.
The market would have to break above the downtrend line on a daily close to get things going. That being said, the market is more likely than not going to continue to be very volatile, and volatility typically works against the idea of markets going higher. If we do break out to the upside, though 200-Day EMA would almost certainly be of interest, that could be thought of as a short-term ceiling. If we break above there, then obviously you have a situation where the entire trend has changed. I don’t see that happening, but you always need to keep the alternative scenario in the back of your mind just in case it pops up. Ultimately, the only thing you can count on is volatility.
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