The USD/CAD initially tried to rally during the course of the week, but pulled back from the 38.2% Fibonacci level, and then broke down below the 1.33 level.
I wrote in my previous piece on 2nd July that the best trade opportunities for the week were likely to be:
- Long of the USD/JPY currency pair following a daily close above ¥145. This did not set up.
- Long of Bitcoin after a daily close above $31k. This set up on Monday, but the price has fallen by 2.85% since then.
- Long of the NASDAQ 100 Index. The price fell by 0.74% over the past week.
Silver has had a slightly positive week, and it looks like we are ready to test the 50-Week EMA above. If we can take that out, then I think silver goes looking to the $24.25 level. On the other hand, if we turn around and break down below the $22 level, then we could see silver really drop significantly from there. All things being equal, I think we continue to see a lot of sideways action with more of an upward tilt at the moment. Furthermore, you should pay attention to the US dollar, as there is such a negative correlation between the two markets.
Gold markets have initially fallen a bit during the course of the trading week, reaching down toward $1900 level before turning around. All things being equal, the market ended up forming a bit of a hammer, and therefore if we break above the 50-Week EMA, then it’s possible the gold could go looking to the $1950 level. The market could go looking to the $2000 level, which of course is a large, round, psychologically significant figure, and an area where I would expect to see a lot of noise. As things stand right now, it looks as if the market is turning around to show signs of support.
The weekly price chart below shows the U.S. Dollar Index printed a bearish engulfing candlestick last week. The price closed right on the low of its range, which suggests strong bearish momentum. However, taking a longer-term view, the Dollar is clearly going nowhere and stands priced in the middle of quite a long-term consolidation. The price is higher than it was 3 months ago but lower than it was 6 months ago, indicating the absence of any long-term trend.
Despite the consolidation pattern, I do see a bearish sign in the US Dollar, in that it is falling even as the 2-year US treasury yield is rising to new and significant highs above 5%.
I think it will make most sense to trade the US Dollar short over the coming week despite the indecisive consolidation pattern.
Last week saw a price fall after a strong period of gains in the NASDAQ 100 Index. I had seen this equity index as bullish after it made a daily close above the resistance level which I had identified at 15156.2, but it is looking as if I should have drawn that level a little higher as we do seem to be getting some resistance here.
Although we have seen a bearish retracement, it is not very deep, so bulls should not be overly alarmed. We still see strong long-term bullish momentum here. However, we may have just seen a failed breakout, which could be a bearish sign.
I will respect the strong long-term bullish momentum and look for a buy if we get a daily close above the recent long-term high at 15297.2.
Bitcoin has again failed to decisively break above the key resistance level which is very confluent with the round number at $31k.
This is starting to look more like a major bearish reversal, but the price action is quite narrow with a small bearish pin bar printed last week. Whatever happens, it does look likely that Bitcoin has arrived at a pivotal point.
Odds in favor of a reversal may be a bit higher, as the earlier rise was partly triggered by the increasing likelihood of regulators approving Bitcoin ETFs in the USA, but the SEC has just expressed some caution about this, which may push the price down.
If Bitcoin ETFs start to look more realistic and regulators soften their stance, and we get a daily close above $31k, I will see Bitcoin as a buy, as the price will have room to rise as high as $33,445 before meeting any key resistance levels.
The price of Cocoa has been advancing strongly for a long time – since October 2022 – with a strong and predictable bullish trend. The price has risen by approximately 50% during this period, which is a large rise.
The Cocoa futures price chart below shows a linear regression analysis study applied to the trend since October, showing the price action is very predictable and has remained within the regression channel. This can be suggestive of a persistent trend.
Despite this, the price fell last week, but not by enough to be of strong bearish significance. However, it may be wise to wait for a consolidation and bullish breakout before entering a new long trade so as not to “catch a falling knife”.
There is strong global demand for cocoa and problems with some crops in Africa which are helping to drive the price higher.
Bottom Line
I see the best trading opportunities this week as:
- Long of the USD/JPY currency pair following a firm bullish bounce at ¥141.22.
- Long of Bitcoin after a daily close above $31k if a major Bitcoin ETF is approved.
- Long of the NASDAQ 100 Index following a daily close above 15297.2.
- Long of the GBP/USD currency pair.
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