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Week Ahead “16th – 22nd of May 2022”

Welcome to the Week Ahead, a free weekly newsletter that gives a reader macro technical insight about the most important financial markets such as Index futures, commodities, currencies and crypto.

In this weekly outlook, I will provide you will significant weekly and daily levels across different markets; on some occasions, I will get biased towards possible scenarios, but I will do my best to keep things neutral.

Markets constantly change, so you must implement your strategy and trade execution around these levels. Nothing I say should be used directly as financial advice or traded blindly.

This newsletter is free and will stay free; if you want to support my work, you can sign-up on Bybit (for crypto) or IC Markets (for Forex and CFDs).

Those who seek a deeper understanding of trade execution and want to be part of a private community can consider joining Tradingriot Bootcamp.

For any questions, don’t hesitate to contact me at tradingriot@gmail.com.

 

No video version this week

 

Fundamental outlook

 

forexfactory.com/calendar

 

From the macroeconomic data, we are not looking at much important coming into the new week except Tuesday when we have Retail Sales and Powell’s speech.

When it comes to crypto I would be cautious about any unexpected news following the Luna fiasco that played towards the end of the last week and will surely have aftermath in the upcoming days and weeks.

E-mini S&P500

 

Until Friday there was sign of buyers in the S&P500, but as price filled the larger low volume node into the strong level of possible support from both price action and volume perspective we closed Friday green with the little rally.

Daily Chart

 

This does not mean that the bear market is over, but I feel like this market is in a solid spot for a little relief rally.

If there is anything to be taken away from the recent strong downtrends in risk-off assets it would be that one positive day is often not enough to sign the trend reversal.

 

More importantly, we lost a lot of levels on the way down so even if you attempt any longs coming into new weeks you should not overstay your welcome.

Personally, I would look at price action confirmation marked in the chart above targeting a may VWAP and the weak highs above.

Bitcoin

Bitcoin had quite a bad week as it finally left the year it was stuck in since the start of the year and sold all the way to $25,000.

Obviously now everyone is questioning if this is the bottom or not.

We finally had a pick up in volume almost equal to the low we made a year ago in May.

The climatic volumes are very often a great indicator of ending moves, on top of that weekly bar is most likely to close with the swing failure nature which has been a relatively strong reversal signal on Bitcoin in these last two years.

When it comes to higher timeframes one of the things people often do is jump into trades without an understanding of the fact that it can take days/weeks for higher timeframe biases to the playoff.

After the selloff in May 2021, the market spend 2 months in range before it rallied.

Another thing to consider is the whole Luna situation and if you add the classic world problems such as huge inflation to the mix, it is quite questionable if there is currently much of a risk appetite in the markets.

Personally, I would like to see one more leg down towards 20,000 not only because that would quite likely cause larger capitulation into the solid level of prior ATH, 2020 one standard deviation from VWAP and fill of low volume node, but also from risk to reward perspective long position is not really here.

As we sold off from multi-month consolidation there has been a large volume build-up that won’t be so easy to get through.

The point of control in correlation with this year’s VWAP will be especially solid resistance around 40,000.

If you are looking into longs, there is a very similar setup to be found as with S&P500.

In conclusion, both BTC and ES are at solid levels for a relief rally coming into the upcoming week as markets push high this does not mean the downtrend is over.

Personally, I don’t see much of a reason for risk appetite in the markets so my personal exposure when it comes to crypto stays in stables that I hope will be stable in the future.

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