DOW Drops almost 1000 points! How did BTC fair?Traders,
Let's take a look at the charts after this bloody day in the U.S. markets.
- Stewdam.us
Interestrates
Whats up with Eurodollar futures?Eurodollar futures have declined almost a percent since the start of 2022.
Refer to the product note: www.cmegroup.com
And here is a link explaining this interesting development :https://www.reuters.com/business/finance/eurodollar-futures-market-betting-hawkish-fed-could-ease-rates-slightly-2024-2022-02-18/
Gold Establishes a RangeAs predicted in these reports, gold has stabilized between 1936 and 1956. We have strong support from 1936 confirmed by multiple green triangles on the KRI, and formidible resistance above at 1956, also confirmed by red triangles on the KRI. There is a dense collection of levels above, which should provide prohibitive resistance for now. The Kovach OBV has leveled off and it will take sufficient momentum to drive through these levels.
Bonds Continue the Bear RoutBonds have taken another turn south, after flirting briefly with 119'23. With the Fed maintaining their hawkish stance, there is little to support a breakout, or a significant technical retracement. We have broken through lows at 119'01, and are currently hovering over our next target at 188'04. The Kovach OBV has been abysmally bearish for some time now, but does seem to be gradually leveling off, perhaps indicating a bottom soon. If we see a relief rally, then 119'23 should provide resistance.
Gold Rejects $2000!!Gold broke out and hit our target, only to retrace to support in the 1980's. The Kovach OBV is strong, but has curved over with the retracement. It is reasonable for gold to retrace after hitting such an important target. We are knocking at the door of the 2000 handle which is significant for gold, and it will take significant momentum for it to break through this. We have a dense patch of levels from which to expect support between 1956 and 1982.
USDJPY Extremely Overbought, How to sell?We look at the USD/JPY and its driver the US Interest rate market. We talk about the key Y130 level that may Upset the Bank of Japan and Ministry of Finance.
Japan is historically one of the biggest FX interverners but the first step is always jawbowning (Official comments of concern about the Yen)
We looking for either that or data/comments from FED members to spark US yields to drop back from the boil.
Looking for 100-200 point correction once it begins.
$DXY About to Break Out? I mentioned recently on twitter that I am long USDJPY.
Not much to say about the dollar, other than it looks like it wants to break out to the upside. Additionally, the macroeconomic tailwinds support a bullish dollar thesis in a couple of ways:
1. The Federal Reserve has been very transparent about their intention to continue to raise interest rates through 2022. Increasing interest rates make the dollar more attractive via the risk-free rate of return.
2. The war in Ukraine: as an added measure towards defeating Russia's war machine, raising interest rates in the US makes exporting dollars to Russia that much less attractive. When I say "exporting dollars to Russia", I am describing a situation in which other sovereign countries who might otherwise be willing to engage in trade with Russia, can now look to the risk free rate of return in dollar-denominated asset classes... so, why would you trade with Russia when you can buy US bonds that pay interest and allow you to stabilize your currency and rebalance your trade policy?
3. Oil prices continue to rise. Russia may pretend to be in control of the market for crude, but so far - this is empty dictatorial rhetoric.
4. Bitcoin continues to deteriorate ( I identified the top in October 2021 ). A stronger dollar, resulting from real world economic conditions, will continue to put adverse pressure on Bitcoin and cryptos alike.
last, I am now a little unsure on stocks overall. I am *guessing* stocks will continue to drift sideways for now.
God bless,
-Chief
10 year treasury yieldspotential double top around 3.23% on 10 year treasury rate, coincides with resistance of multi decade down trend (yellow). on a logarithmic price chart.. or do we break out of a multi decade trend and see rates go higher? even if we did break out, could the Fed respond with YCC to stop long end rates going up, which could break the financial system..? thoughts and comments welcome.
Gold Running into ResistanceGold has retraced slightly from highs at 1982. This was the top of a dense patch of levels that began at 1962 or so. We are on the precipice of a vacuum zone to 1999, which is our target if we can break out. However, several red triangles on the KRI have confirmed prohibitive resistance for now. The Kovach OBV is still fairly strong, however, and has not dipped significantly despite the retracement. We should have strong support at current levels, but watch the vacuum zone below 1962 to 1936.
The Bond Rout ContinuesAs anticipated, bonds faced steep resitance from 121'00 and sharply retraced. We have fallen back to 119'23, one level above lows at 119'01. The Kovach OBV ticked up slightly with the rally, but has fallen sharply at the moment. At this point it is clear that any rally is purely technical and the bear rout is still at play.
CAD/JPY Buy Set Up - Interest Rate Differentials The Canadian Dollar continues to strengthen against the Japanese Yen as the Bank of Canada continues to aggressively raise Interest rates to fight off high inflation.
Japan's domestic inflation is in stark contrast as Japan continues to struggle to hit the Bank of Japan's 2.00% target.
I show the historical difference in interest rates on 10Year Government bonds having a big impact on the CAD/JPY exchange rate.
Oil accounts for nearly 20% of Canada's exports and commodities make up a large proportion of export income. With commodities prices rallying around the world, the Canadian dollar continues to strengthen as more money comes flooding into the country, increasing the demand for the currency in exchange rates.
#Forex #Currencies #Investing #CanadianDollar #CAD/JPY #Interestrates #InterestRateDifferentials
Gold is Rallying but Facing ResistanceGold has picked up, continuing the rally but we are running into resistance in the 1970's. We alerted you many times that there is a dense cluster of levels between 1956 and 1982. Unless we catch some serious momentum, we are likely to retrace back to support at 1936 or so. If we do catch more momentum, our next target is 1999.
International Bonds decoupling from DXY since 2014At one point, there will be a mean reversion trade here. Until then, not sure how much more this will go in opposite directions. I still believe if the dollar is strong, buying international bonds cheaper then they've been in a while might see some action. Investors will be able to limit risk and improve returns by focusing only on the countries with the most attractive economic and interest rate cycles.
Can Gold Break Higher??Gold has tested higher levels after being confined between 1917 and 1936 for the past few days. We are still holding the broader range between 1895 and 1973 or so. Gold has taken an upswing, but is facing resistance from a dense patch of levels in this price territory. The Kovach OBV has upticked with the momentum, but it is doubtful that momentum is strong enough to break through these levels. In the event of a retracement, watch for support in the value area between 1917 and 1936. A full retracement could take us back to 1895. Otherwise, the next target is 1999.
US Bonds 10y yield to break eternal trendline ?Will US Bonds yield finally break this trendline ??
Very interesting to follow for fundamental market analysis
NZDUSD: short before the New Zeland central bank speachOn Wednesday, the New Zeland central bank will speak about the next monetary policy about raising the interest rate: it's been estimated that the probability of a rate hike is 90%.
From a technical point of view, NZD/USD seems to be uncertain: it plays around its 200 simple moving average but, lastly, it seems to show strong weakness. If the NZD would cross its support (red line), I expect the price to reach at least 0.66. Target has been found simply from the distance between its high (04/05/2022) and the support line.
US02YUS02YAlarm in the markets: a part of the US interest rate curve is inverted that has not been in 16 years
US five-year bond yields rose as much as 10 basis points to touch 2.64%, outperforming those on 30-year bonds.
Receive a cordial greeting, In Spain on 08/30/2022
Sincerely, L.E.D.
Volatility Narrows in GoldVolatility in gold has fallen substantially. We have been holding the broad range between 1895 and 1956, which narrowed to 1917 to 1936. Currently, we are in the middle of this latter range, stabilizing around 1925. When volatility consolidates, a breakout is near. Volatility has been consolidating for more than a week now, so a breakout should be imminent. If we break out, watch 1956 as a profit target, if we break down, watch 1895, the upper and lower bounds of the broad range, respectively.
🔥 Bitcoin & The Federal Funds Rate: An Easy ExplanationEver since the FED has been talking about interest rates, I see questions popping up on social media where investors ask why the federal funds rate (also known as the FED interest rate) is so important for the stock and crypto markets. With this post I'd like to write an easy understandable explanation on what the FED funds rate is and why it is important.
What is the FED funds rate?
The FED funds rate is the interest rate set by the FOMC (the committee of the FED). This interest rate targets the rate at which commercial banks in the USA can lend and borrow excess money to each other. Higher rates means it's more expensive to borrow money for banks, lower rates make it cheaper.
Why is it so important?
The FOMC changes the rate in order to control inflation. Higher rates reduce the money supply because money is more expensive to get (borrow), whilst lower rates increase the money supply because it encourages spending. The latter has happened during the 2008 Financial crisis and the more recent Corona crisis. Encouraging people to spend money generally helps the economy.
Rule of thumb: if the economy is in good shape, higher interest rates are needed to control inflation. If the economy is in bad shape, lower interest rates will encourage people to spend and can help turn things around.
Should I be afraid of it?
Generally, no. As seen on the BTC chart above, the only time that the FED has increased the rates it did not have a bearish effect on BTC. However, this was done during a period of lower inflation than we currently have. To combat the current inflation rates, the FED needs to increase the rate at a much faster and higher rate than what we have seen in the past 30 years. During the 1980's the interest rate was set to 20% in order to combat strong inflation, I'd argue the FED has to do that as well if they don't raise the raids much faster this year. The imposed rate hikes of 0.25% every meeting are not enough to reduce the 10% year-over-year inflation.
In case the FED decides to raise the rates with big steps (>1% per meeting), this can definitely have a huge impact on the stock- and crypto-markets. It will become much more expensive for banks to borrow (and invest) money since money will become more scarce.
There's no immediate danger for the markets. However, if inflation spirals out of control because the FED decides not to act (keep the rates low), they'd have to increase the rates much higher and quicker than everyone anticipates, which will trigger a big sell-off in the markets. In my view, this will be the start of the next crypto bear-market.
The FED interest rates are most definitely an interesting, but also difficult topic. If you think that I've skipped an important part, please share your knowledge in the comment section. The more people know about it, the better.
U.S Dollar Analysis - USD/JPY & EUR/USD In this video, I breakdown why the U.S Dollar is bullish against the Japanese Yen and maintaining its strength against the Euro, as the central bank, ' The Federal Reserve", is raising interest rates aggressively in 2022 to deal with high domestic inflation.
This is in contrast to the European Central Bank and Bank of Japan, which have pledged to keep interest rates low, due to low inflation expectations over the coming years.
I will show you how Bond yields drive currency markets when rising yields in the U.S pay a premium over Europe and Japan when there is a divergence in monetary policy.
Enjoy!
Trend of BTC & GOLD.Did you guys found that BTC and GOLD have a similar trend while interest rate change since 2018?
Return of BTC is just 10 times leverage of GOLD!
Bitcoin: Supercycle Crap Shoot #2Follow-up chart to my previous post. Seems as if I was correct about the bottom, so if it holds here and breaks above the 53k range, I can easily see it hitting roughly 70k. Granted, other factors including the projected interest rate hikes could alter this forecast.
