Overall a good week for the Stocks & Cryptocurrencies with the mighty US Dollar receding from the recent highs on account of the risk-on sentiment prevalent in the financial markets. Cryptos finally managed to break out of the recent range with the charge led by the Crypto kingpin Bitcoin, which is trading above $4K at the time of writing. After a minimal correction of one week, the U.S stocks rebounded smartly to make new highs & looking for further clues to take the recent bull run to all-time highs. Greenback’s reversal against the Majors gathered pace as evident from the Dollar Index. Details a little later, but first a look at weekly numbers.
The Crypto market sparked the Tether controversy back to life with the website update from the biggest stable coin project saying that every Tether (USDT) is backed by traditional currency & “cash equivalents” from other assets like receivables from loans made by Tether to third parties. This of course is in direct contrast to their earlier claim of all Tether reserves being backed by currency equivalents. The update has also rekindled the debate of Tether being used to manipulate the Bitcoin price. Also, the repeated reluctance of the company to conduct independent audits adds fuel to the fire. This has no doubt opened a Pandora’s box yet again, and it remains to be seen what effect will this have on the price of Bitcoin specifically & the general cryptos generally.
There was another blow to the futures traders as The Chicago Board Options Exchange (CBOE) announced that it wouldn’t be adding a BTC futures contract in March as it reassesses its approach towards the trading of digital assets. Some analysts believe this decision was taken as a precaution towards another expected sell-off in the BTC. On the upside, OKEx, one of the biggest Crypto exchanges by market volume, claimed that its derivatives trading platform broke a 24-hour trading volume record hitting $2.4 billion. Conflicting signs… which will way the Crypto market go? Let’s see what the Bitcoin hourly chart is telling us.
After a sideways consolidation for more than a week, BTC finally broke to the upside much to the relief of the Crypto bulls. The bias is clearly bullish for now with the immediate support @ $4025, above which crypto kingpin looks constructive. A fall below this level would signal another round of consolidation. However, as long as the secondary support around the $3925 region holds steady, we should see the constructive move to continue. Only a drop below this support level would mean the return of a bearish bias. Most of the other Alt.coins are imitating the pioneer coin’s move. Bitcoin Cash (BCH) is outstripping others in gains recording a new high at the time of writing, up more than 7%. The total market cap for the digital assets has climbed to $138 billion with the BTC dominance falling to 50.7% when this is being published.
The U.S stocks climbed again this week anticipating a resolved trade dispute between U.S & China. All three major U.S indices closed up – the trade deal between the two largest economies has become a sticking point for markets. This was a significant move in U.S equities considering the massive sell-off seen in the Dow heavy weight of Boeing on account of its plane crashes & grounding of its fleet worldwide. Meanwhile, China’s economy continues to see headwinds as the country’s industrial output grew 5.3% in the first two months of 2019, the slowest pace of expansion in 17 years.
The benchmark S&P 500 index is finally signally a confirmation of the V-shaped recovery that we had talked about a few weeks ago – as the index broke through the all-important resistance level in the 2810 region. Closing above that level marks a turnaround in the MT sentiment. Having said that, a follow-through in the coming week might wrap up the game for the bears. A correction might not be far-fetched, but as long as the support around 2600 holds, the price action dictates for further gains.
Forex markets saw some profit-taking from the Dollar Bulls. DXY (Dollar Index) lost ground in 5 out of the previous 6 days of trading. The impulsive fall from the recent high gives credence to the case of a temporary top in place. The index still looks well placed in a bullish channel, but only just. Further losses would signal the move back to the consolidation phase for the index – only a drop below the 96.00 level support would signal the end to the current bullish trend. Next week will be key as traders await the all-important FOMC rate decision on Wednesday.
Individual pairs saw some interesting moves with the EURUSD pair shaping a solid rebound from the sharp fall the week before on a dovish ECB. The pair has recovered the losses from the fall, but needs to penetrate the resistance @ 1.1340 convincingly to signal the end of the ST bearishness. GBPUSD continues its wild ride, tracking one Brexit vote after the other as the economic saga continues. With the British Parliament voting in favor of requesting an extension from EU to negotiate a deal saw the pair gain significantly moving back up above 1.3300 level – the pair looks poised for more gains with the support @ 1.3225. Other Majors gained significant ground against the Greenback as well.
Next week sees Euro ZEW economic sentiment, New Zealand GDP, British-Candian & Japan’s CPI, FOMC rate decision, Australian Job Numbers & Swiss Bank rate decision. Signing off with the comic depiction of China’s worried on the slowing economic conditions.