Nasdaq - Which Scenario will Jerome Powell pick?Jerome Powell speaking today, market have setup perfectly to react to what he has to say
Jeromepowell
XAUUSD Gold : Launch to space? Or 1890 retest? 22.4 Jerome Powell, chairman of the FED yesterday basically confirmed a May rate hike.
But ask yourself seriously - Is inflation going to go away due to this? Will this save a bleeding economy?
Gold practically called the bluff on FED's comments AND the rising bond yields.
As you can see, post FED meeting we have the Gold keep the support trend-line since the start of the year.
Since breaking above the consolidation breakout , circled on the chart, Gold spiked up by about $70 , it is normal for a technical correction down to take place at such scenario, as we see with the price action now.
If the week closes above 1935-37 , which is the support trend-line since Jan 2022, the bull trend is kept and a new high will be in sight.
**A weekly close today below 1937-35 will confirm potential downside 1890 - Although this scenario is less likely, it is still technically possible.
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Cup and handle forming on GLD! Time again to keep an eye on the price of GLD!
There are many factors that come into play with the price of gold. Our outlook remains bullish here technically and fundamentally. With the Fed having printed TRILLIONS over the last couple of years due to the pandemic they have drastically increased the supply of the dollar. This act has of course contributed to the inflation numbers we have been seeing over the last couple of months.
With the value of the dollar decreasing, we've seen drastic increases of value in multiple commodities such as lumber, nickel, copper, oil, natural gas...etc. As we see the dollar decrease further an inflation to continue higher it is only a matter of time before real money (Gold) starts to become the center of attention.
The headwinds against this in the short term is the Fed's decision to taper the purchase of bond assets so they can increase interest rates to "fight" inflation. The only problem with this is that we don't believe the Federal Reserve will really commit to fighting inflation via rising rates. Consensus for 2022 rate hikes at the moment is sitting around 4. This would likely put rates at around 1% by the end of 2022. If we include 2023 projections, we'll be looking at rates around 2% in 2 years (maybe 3% with more aggressive estimates). This flat out won't be enough to fight the inflation numbers that we're seeing.
Now if the Fed DOES decide to actively fight inflation and increase rates to upwards of 7% to fight this inflation, they will stunt economic growth and send markets spiraling downwards. We simply don't see the current regime at the Fed willing to do this. The only choice we have is to live with the current inflation for years and years to come.
S&P looking sketchyThis market has been pumping non stop for a couple years now, but it's foundations are just debt and printed money. I hope that the economy doesn't collapse because, well, that wouldn't be too fun, but with an RSI as high as this and a 25%+ gain YTD in the middle of a pandemic, I don't think this can go much further. Let's just hope that Jerome Powell stop's flushing the American economy down the drain.
ETHEREUM AT CRUCIAL LEVELWelcome back,
ETH has converged into a crucial zone between the 60 Day (white) and 500 Day (orange) Simple Moving Averages. We have not seen a close below the 500 MA since April 21, 2020, and this may represent a reversal area for the downtrend beginning back in November of 2021. We tested this metric with a false break wick just days ago on 03/07/2022, and we are currently retesting support. If support fails, we may see some incredible buying opportunities. The white lines represent high volume nodes where support may be found. IF support fails, you will want to have the levels at the bottom of the page written down. $1700 is a notable low if we go into a bad recession, however that seems quite unlikely.
Although we are certainly experiencing uncertain times amongst war, supply bottlenecks, inflation, and interest rate hike scares, there may still be hope. NATO is largely united against Putin's delusional desires to reform the former Soviet Union, likely because if Russia finds success in Ukraine, the surrounding former soviet countries may be soon to follow. The Russian economy is suffocating, and the longer the war effort is maintained, the more devastating it will be for Russia. One may worry about China's position, however the CCP is 'China first' before anything else. With economic growth slowing and monetary policy still accommodating, there may be bigger problems at hand if China's growth continues to dwindle.
When he speaks on March 16, Jerome Powell may not want to be the one who possibly forces a global recession with the world economy is in its current fragile state, and the war forces the FED to proceed with extreme caution. With markets previously attempting to price in a 50 point base rate hike with extreme volatility, anything over a 25 point rate hike will likely be received very negatively by the markets. This would be great for the bears. For the bulls however, a clean upwards break of this 60MA-500MA zone will likely signal the next bull market is in. The 180 day (blue) MA may act as resistance on the way up, and will also be an important level to transcend.
Summary
You will need to follow the news on the war, we are in extremely headline sensitive times. On March 16, Jerome Powell will hopefully clarify the FED's plan to tackle inflation. Ideally for the Bulls, he will provide clarity, and much needed confidence which the markets have desperately lacked since the end of 2021 (the period when the FED's original plan 'transitory' estimated inflation would revert back towards normalcy.)
Headline war news may catalyze the markets in either direction.
Resistance Levels:
$3,235
$4,028
$4,375
$4,868
Support Levels:
$2,455
$2,322
$2,133
$1,975
$1,830
$1,700
$1,300
Disclaimer:
I am neither licensed nor certified to provide financial advice, and this is posted for entertainment purposes only. I am not responsible for any losses or damages, you are responsible for doing your own research and making your own decisions. Good luck and thanks for reading!
U.S. Dollar has hit it's target. Time for a market pump?The dollar has hit it's target up. What does this mean for the markets? Where do we go from here? What will JPOW do with interest rates? Will the FED use the conflicts in Ukraine as an excuse NOT to raise rates 3 times?
Let's talk about this.
USDJPY Attempting a BreakoutThe price action of the USDJPY is currently attempting a breakout above the 23.6% Fibonacci retracement level at 115.665. Bullish pressure was bolstered earlier today following Fed Chair Jerome Powell's hint at a very likely rate hike by the end of the month .
If the breakout is successful, the price action will re-test the previous swing peak at 116.300. If not, a minor pullback to the 38.2 per cent Fibonacci at 115.248 may follow next.
The latter is about to converge with the 100-day MA (in blue) and 50-day MA (in green), making it an even stronger support. That is why it is unlikely for a deeper correction to unfold in the near future.
How Will Increased Interest Rates in the USD Affect Crypto? Now that the Federal Reserve seems committed to raising interest rates in response to inflation (something that they denied was a problem during 2021) we're going to see a shift in the way money is talked about in the near future. What does this mean for crypto, and the greater economy, overall?
- The US growth and assets markets have been driven strongly by the availability of cheap loans since 2008, an era that is now coming to a close because the only way to avoid a hyper-inflationary economy in the USD right now is to raise interest rates.
- The historic rate at which the US Treasury printed money -- largely justified through COVID woes -- is extreme and it's TBD whether or not the proposed rates will be enough to offset its after-effects. (Was initially 2%, now proposed to ~3%.) The government is broke and has no other choice.
- Higher interest rates are generally bad for "risk-takers" in the market, but good for people who like to save. The idea of the government and financial sectors actively encouraging people to save, however, has been missing from the mainstream narratives for a while. Whether or not the institutions can adapt fast enough to form a holistic plan in the midst of the turmoil is yet to be seen. The condition has been around long enough that this scenario will be new to even "experienced" financial experts out there.
- This presents a new economic landscape/opportunity for entrepreneurs and investors looking to capitalize on the change. But in this environment, the "slow growth" approach is likely to be more successful than the marketing-driven hype markets that has dominated the scene for the last 10-15 years. (Yes, even in crypto. ex. SHIB, NFT-hype.)
- Generally speaking, countries with higher inflation rates tend to have higher crypto adoption rates as well. Will the same happen to crypto, NFTs, and metaverse -based assets? Time will tell -- but now crypto at least has the title of an "alternative asset" with the potential for high growth, especially since it's not affected by supply chain issues that traditional assets are tied into right now.
- Since 2021 there have been a lot of crypto-based projects that have tied itself into the USD markets through traditional legal arrangements and contracts (as opposed to "pure" crypto investments that aren't concerned with what the traditional markets are doing right now) -- this money is more likely to run in parallel to the outcomes that fiat money will face as the interest rates start to ramp up in 2022.
How Will Increased Interest Rates in the USD Affect Crypto? Now that the Federal Reserve seems committed to raising interest rates in response to inflation (something that they denied was a problem during 2021) we're going to see a shift in the way money is talked about in the near future. What does this mean for crypto, and the greater economy, overall?
- The US growth and assets markets have been driven strongly by the availability of cheap loans since 2008, an era that is now coming to a close because the only way to avoid a hyper-inflationary economy in the USD right now is to raise interest rates.
- The historic rate at which the US Treasury printed money -- largely justified through COVID woes -- is extreme and it's TBD whether or not the proposed rates will be enough to offset its after-effects. (Was initially 2%, now proposed to ~3%.) The government is broke and has no other choice.
- Higher interest rates are generally bad for "risk-takers" in the market, but good for people who like to save. The idea of the government and financial sectors actively encouraging people to save, however, has been missing from the mainstream narratives for a while. Whether or not the institutions can adapt fast enough to form a holistic plan in the midst of the turmoil is yet to be seen. The condition has been around long enough that this scenario will be new to even "experienced" financial experts out there.
- This presents a new economic landscape/opportunity for entrepreneurs and investors looking to capitalize on the change. But in this environment, the "slow growth" approach is likely to be more successful than the marketing-driven hype markets that has dominated the scene for the last 10-15 years. (Yes, even in crypto. ex. SHIB, NFT-hype.)
- Generally speaking, countries with higher inflation rates tend to have higher crypto adoption rates as well. Will the same happen to crypto, NFTs, and metaverse -based assets? Time will tell -- but now crypto at least has the title of an "alternative asset" with the potential for high growth, especially since it's not affected by supply chain issues that traditional assets are tied into right now.
- Since 2021 there have been a lot of crypto-based projects that have tied itself into the USD markets through traditional legal arrangements and contracts (as opposed to "pure" crypto investments that aren't concerned with what the traditional markets are doing right now) -- this money is more likely to run in parallel to the outcomes that fiat money will face as the interest rates start to ramp up in 2022.
Will the Fed's Interest Rate Hikes Be Good or Bad for Crypto?It's probably going to be a tough market in the short term, but the interest rate hikes of 22' is exactly what the economy needs right now. Reducing access to cheap loans should curb the frenzied markets, at least somewhat. (Though given how low the rates are projected to be, probably not enough.)
What does this mean for crypto? Well, that's the big question everyone is asking now. They said that Evergrande and cryptocurrency would go down together, but that didn't turn out to be the case. Will the same happen to USD?
In a way, 22' is going to be a big test for how resilient the USD really is. Politics has been warping the numbers lately but inflation is the lie detector that will reveal the truth about the US economy. American Exceptionalism? Or will it follow the same pattern China did? Time will tell. (If you're a crypto supporter like me, you're hoping for the latter, of course.)
SP500 Possible inverted head and shoulderHello!
SP500 has a possible inverted head and shoulder . If we do break the neckline and close above it . Easiest way to take a trade ( at least for me ) is with break and retest . That's how you can get really good risk/reward ratios , you wont get bull trapped and that also teaches patience. If you are/want to be a swing trader you need to have this quality to succeed.
If we do take a way downwards we can also short after falling below the right shoulder which I marked.
I guess markets liked what Powell had to say and the decreasing quantitative easing was already priced in (for now) .
Take note that 200EMA and 200MA has worked as support previously.. ( red arrows ) If the 200EMA catches up. Shorting in that situation won't be smart cause the 200EMA can work as support (like previously) and the risk/reward is less than 1/3
If you do take trades, always use a stop loss.
Otherwise you will get your ass burned!
-Jebu
Gold Consolidating Around a Significant Support LevelThe price action of gold is currently consolidating around the 61.8 per cent Fibonacci retracement level at 1780.92. A potential breakdown below it could lead to a test of the previous swing low at 1758.65, whereas a rebound from it could be followed by another attempt at penetrating above the 200-day MA (in red), currently underpinning the resistance level at 1808.00.
The price action did not react markedly to FED Chair Powell's testimony from yesterday, which underpins the indecisiveness of the market. Traders should be especially careful if they decide to open any positions when the underlying sentiment is so unpredictable.
Has The USD Avoided The Dreaded Taper Tantrum?With its back up against a wall, the US Federal Reserve has pledged to begin tapering its asset purchase program. Beginning later this month, the Federal Reserve will reduce the number of US Treasury Securities it purchases each month by US $10 billion and the number of Mortgage-Backed Securities by US $5 billion.
How did the USD react to the Federal Reserve announcement?
By all accounts, a dreaded ‘taper tantrum’ has been avoided in the wake of the announcement. At least in relation to the forex market. Federal Reserve chairman Jerome Powell has been extremely careful to prime investors for this moment. For one, all hawkish commentary from the chairman has been mediated with dovish caveats. Admittedly, less senior Federal Reserve officials have done much of the leg work in hinting and out-right suggesting the need for a reduction in its purchases. Either way, the conversation surrounding tapering has been sustained for months, giving investors time to mull over the implications.
As of writing, the USD index, the DXY has crossed back over the 94.00 mark and comfortable sits 94.33, up 0.53% since the Federal Reserve’s tapering announcement.
Will the Federal Reserve continue to taper?
The Federal Reserve will still be purchasing $105 billion worth of securities, with further reductions dependent on continuing favourable economic outlook. The Federal Reserve has indicated it is considering reducing spending, month over month, moving forward. However, if economic conditions deteriorate, the spending reductions could be nullified or reversed. The Federal Reserve will be keeping an eye on inflation and the number of jobs added to the economy each month.
Inflation remains at a decade high
A significant consideration of the Federal Reserve when determining its reduction in spending is the US inflation rate. While it is at a 13-year high, the Federal Reserve maintains that most of the inflation experienced heretofore is temporary.
Octobers inflation number is released next Wednesday. Trading Economics is forecasting a 0.1% increase in US inflation.
Up next: Non-Farm Payroll
Another significant consideration of the Federal Reserve when determining its tapering is the Non-Farm Payroll (NFP). The NFP indicates how many non-farm jobs were added to the economy in a given month. The data for the October non-farm payroll will be released tonight to great anticipation. Trading Economics is forecasting 400K jobs, while the market consensus is a little more optimistic and is forecasting 450K jobs.
The NFP has disappointed for the past two months, with actual job figures falling far short of the numbers predicted. Even so, the Federal Reserve has seen fit to begin tapering as job growth seemingly slows. Treasury Security Janet Yellen noted the US economy is still short 5 million jobs compared to pre-pandemic times, which will take the US years to recover at the current rate of job growth.
US 10 YEAR TREASURY - Outlook over next 8 monthsLots of volatility for the next eight months on the US 10 year treasury. Overall rates are moving up, but a couple dip opportunities to lock in your borrowers rates, not a financial advisor, just my thoughts.
Has the DXY correction ended? Good afternoon traders,
The DXY has seen a pick up over the past couple of months due to rising interest rates on US bond yields.
The US economy appears to be recovering from the Covid019 pandemic, however, the FED has suggested they will maintain record-low interest rates for the foreseeable future.
The Joe Biden administration, Jannet Yellen the Treasury Sec and FED Chair Jerome Powell are all set to continue the helicopter money which will result in currency devaluation.
Elliott wave theory suggests the market can move in an impulsive structure or corrective structure.
An impulsive structure is made up of 5 waves that are in the direction of the trend.
Corrective structures move against the overall trend but are only corrections.
The questions here is, is the current structure just a wave 4 on the larger degree? Meaning we are yet to see a final 5 wave decline to complete the trend (before an even larger correction higher).
The current formations look corrective in nature, made up of 3 waves rather than an impulsive 5 wave structure. This tells me we are potentially heading lower on the USD.
Let us know your thoughts below!
Jackson Hole and Eur-UsdIt is only a day away from the start of the central bankers' symposium on Thursday in Jackson Hole, Wyoming. Jerome Powell has already been making it clear to the markets for several days that the Federal Reserve's stimulus plan is coming to an end. Stop with the ultra-accommodating policy, zero-cost money and massive purchases of government bonds (120 billion a month): it is time for tapering.
The markets did not react positively. However, as the days passed (two days, in fact), investors realised that the Fed will not allow a stock market crash, creating chaos. So yesterday, the S&P500 index has once again touched its all-time high.
What is on the horizon is a split between the Fed and the ECB. After years of walking arm in arm in the name of growth and the fight against inflation, the Federal Reserve and the European Central Bank are about to part ways. With GDP at 6.5%, a steadily improving labour market and, above all, inflation already above 5%, the Fed is preparing to reduce stimulus.
On an economic level, monetary tightening means that access to credit will become a little more expensive and thus less money will be available for families to consume and businesses to invest. As far as the currency market is concerned, all this translates into a strengthening of the dollar.
There is some concern, especially because of Covid-19, which is far from being averted also because of its variants. Treasury Secretary Janet Yellen expressed her fears in a letter to Congress, in which she warned that the Delta variant of the virus could damage the economy.
On the other side of the Atlantic, the ECB has no intention of changing its stimulus plan and rates will remain at zero for a long time to come, as Christine Lagarde confirmed when answering journalists' questions at the ECB's latest meeting, “there is still a long way to go before the damage to the economy caused by the pandemic is offset” and again, “none of us would want to tighten prematurely.”
The only thing that remains to be seen is the timing of the Fed's tapering, most likely before the end of the year.
Now, quickly a look at Eur-Usd to try to understand what could be the future scenario of the currency pair. Above, you can see the chart with the most important levels highlighted.
If what is written above is confirmed and the US will set a date for the start of tapering, then for Eur-Usd the doors of decline will open wide. In this case, I don't think the rebound will continue any further. If there will be hesitations, second thoughts, and only hypotheses and ideas understudy, then I think that Eur-Usd can continue to rise with first targets 1.17800, 1.18200 and 1.18750/1.19250 area.
So, from tomorrow, eyes on the symposium in Jackson Hole.
SPX: The Jerome & Powell 500 Channel As the markets pullback this week, keep in mind we're still in what I call the J&P 500 Channel.
The chart is the daily SPX adjusted for Inflation. The bottom channel is a 10 year regression trend channel that has contained the SPX until the march 2020 crash.
The upward trending channel is what I call the Jerome & Powell 500 Channel which is a modified schiff pitchfork that represents the QE / Stimulus the Fed has been pumping into the economy since March.
If the key level (median line in red) holds over the next few days I plan to buy the dip.
If we close below the key level before tapering and the decline of stimulus (rising interest rates, end of moratorium, end of asset purchases) I would worry about a full on correction.
EURUSD Continues to Strengthen Following the FED Meeting The recent breakout of the EURUSD above the descending channel was bolstered yesterday following the July policy meeting of the Federal Reserve.
Jerome Powell and his colleagues from the FOMC did not bring anything new to the table, which weakened the greenback in the short term.
The price action is currently probing the 200-day MA (in purple). The next closest resistance can be found at the 23.6 per cent Fibonacci retracement level at 1.18892.
EURUSD: BUY signal (2/3)while Jerome was telling tales, the dollar shows weakness not only in USDX)))
against the backdrop of verbal interventions from the US, the EURUSD price returned above 1.1900 and remained there. Clear Step Up + Head and Shoulders Pattern
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1.1940 - BUY signal
1.2000 - target 1
1.2100 - target 2
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All Jerome Powell's 2021 speeches effects on BTCUSDJanuary 14th. 2021
The possibility of inflation staying higher than the 2% goal increased the fear among investors. After the speech, BTC's price dropped around 26% on the following days.
February 10th, 2021
The unemployment rate way higher than expected, 6,9%, demanded more intervention from the US government. BTC price rose close to 30% after the speech in the following couple of weeks
March 4th, 2021
The announcement of the additional $120 billion monthly bond purchases gave some clarity on the market recovery. BTC rose around 28% on the following week
March 18th, 2021
FED assures near-zero rates until 2023. BTC price dropped 6% before the following speech
March 22nd, 2021
Powell refers to BTC as “not really useful as a store of value.” The BTC price plunges another 6% in the following days but recovers and resumes the bull run.
April 8th. 2021
The same week of the speech, Biden proposal of 2.3 trillion infrastructure package to help lower the unemployment rate. BTC price roses more than 10%, hitting an all-time high of $65.000, then see a sharp drop in the following weeks
May 3rd, 2021
Despite the more apparent signs of the market recovery, the same is slower for low-income workers. BTC dropped another 6% in a single day, recovering in the next. In the same week, it local tops again, then start to go downward in the most significant drop in BTC history, more than 50%
June 4th, 2021
The fear of inflations ended up being correct after the rates were presented higher than expected and last more than usual. BTC price tanks again with a 15% drop, followed by a slight recovery to $40k in the next week
USDCHF to Bottom Out Soon
The dollar depreciated yesterday and is currently headed towards the 100-day MA (in blue). Notice that the latter is threading near the 23.6% Fibonacci retracement level at 0.90347, which is where the downswing is likely to bottom out.
The bearish correction is likely to take the form of an ABC structure given that it emerged from the preceding 1-5 impulse wave pattern, as postulated by the Elliott Wave theory. This is further substantiated by the fact that the correction appeared from the 61.8 per cent Fibonacci retracement at 0.94670.
Expect the USDCHF to consolidate in a range between the 23.6 per cent Fibonacci and the 38.2 per cent Fibonacci retracement at 0.92000 in the medium turn, taking the form of said ABC correction. The significance of this consolidation range is further exemplified by the fact that it is currently encompassed by the 100-day MA and the 50-day MA (in green).
The current trending sentiment is elucidated by the ADX indicator, which has been threading above the 25-point benchmark since the 26th of February. Accordingly, the bullish upswing is likely to be restarted after the price tests the 23.6 per cent Fibonacci for a second time - point C.
Head And Shoulders Pattern on the EURUSD The EURUSD appears to be developing a major H&S pattern, which is typically taken to indicate emerging bearish reversals, ahead of FED's April policy meeting. The expected upsurge in volatility later today and tomorrow (advance U.S. GDP data scheduled for release) would demonstrate whether such an H&S pattern is really in the making.
Notice that the Neckline is positioned at the massively important psychological support level at 1.20000, which serves the role of a prominent turning point. That is why a potentially decisive breakdown below the H&S's Neckline would confirm the beginning of a new downtrend.
The 23.6% Fibonacci retracement level serves as the first major target for such a downtrend.
BEARISH COUNT - Is there a top in place?Hello traders,
this is a possible wave count on the EURUSD, providing a bearish scenario.
US bond yields are rising rapidly providing strength into the USD. the DXY is currently trading under a key trend line resistance (see the comment section below).
FED Chair Jerome Powell has attempted to calm inflation fears this week during his testimony, however the market appears to be ignoring his comments.
Initially, we thought wave 5 had not completed, however, if there is a break back below the neckline of the inverted head and shoulders formation, then we can assume a top is in place and we are set for a deeper correction.
If anyone has any other wave counts please share below in the comment section!
