Weekend is the time for traders like me to recount, reflect & plan ahead for the next week. That’s why I am starting a weekly blog to share some thoughts, news & analysis on the financial markets that I am thoroughly involved in. Although I do share stuff during the week on the social media platforms. It’s always good to get a summarized recap in one place rather than sifting through tons of data. So let’s get started!
The Crazy Cryptoverse
One market that never sleeps & which is in a constant state of flux. The cryptos have been hard hit this year with the talk of government regulations, ICO Scams & hacker heists with the the most recent & famous one happening with a Japanese cryptocurrency exchange Coincheck where $530 million worth of NEM was stolen. And the craziness continues…
Although the cryptos have recovered somewhat from the lows hit a week ago they are still very much in the bearish territory. Your guess is as good as mine on what the current fallout will be from the accelerating downturn in financial markets. Either people will flock to the safe heaven financial instruments like bonds & cause further downturn in crypto prices or would they rather invest in alt. coins in trying to make for the losses in stock markets — time will tell.
Just to show the kind of selling pressure that the cryptos are under take a look at Ripple’s (3rd most valuable currency by marketcap) chart:
The current downturn has however been good for the crypto kingpin Bitcoin as far as the market dominance is concerned which has jumped from around 35% to 44.3% at the time of writing. It seems Bitcoin suffers when the crypto market is bullish since people shift to alt. coins. The total market cap of the cryptos has recovered slightly from last week’s $315 billion to $344 billion — For the most recent statistics about the cryptos visit Coinmarketcap
Now let’s take a look at some of the major headlines in the #Cryptoverse last week:
FX Markets — Fiat Currencies
The second most volatile markets after Cryptos & personally my favorite. With the unwinding of current risk-off sentiment in the financial markets Greenback seems all set to make come back being the reserve currency of the world apart from being the safe heaven in paper money along with Japanese Yen & Swiss France — all 3 of which benefit in a risk-off environment.
The most interesting move this week came from Loonie (USDCAD — Canadian Dollar) which earlier in the week spiked & overtook the psychological barrier of 1.3000 hitting as high as 1.3125 before retreating impulsively to as low as 1.2825 after Canada was given an exemption from the US tariffs. However with the sell off in the equity markets late Friday the pair had again rebounded to 1.2893 — next move will of course will be dictated by the financial markets next week. Personally I believe the volatility in the pair is going to continue with the Geo-political risks affecting the pair apart from the financial woes around the world (#NAFTA).
Taking a look at the Dollar index the chart shows the Greenback is still in bearish consolidation but that should change with the general market conditions. Outlook for the Dollar Majors follow.
EURUSD (Euro) — Bullish MT, Neutral ST
GBPUSD (Pound, Cable) — Bullish MT, Neutral ST
USDJPY (Japanese Yen) — Bearish MT, Bearish ST
USDCAD (Loonie, Canadian dollar) — Bullish MT, Bearish ST
AUDUSD (Aussie, Australian dollar) — Bearish MT, Bearish ST
USDCHF (Swissie, Swiss Franc) — Neutral MT, Bearish ST
NZDUSD (Kiwi, New Zealand dollar) — Neutral MT, Bearish ST
The equity markets around the world usually dictate the health of the global financial system & the biggest stock market (U.S)determines the direction. The US stock market started on a positive note last week, but things changed very quickly when the markets got plagued by the news of the Facebook data breach scandal which saw the social media giant lose no less than $60 billion in market cap. The stock had begun to drag down the tech heavy COMPQ index — as if this was not enough news of a trade war between US & China on the horizon further complicated matters.
With America slapping about $50 billion worth of import tariffs on China for the intellectual property theft. China was quick to respond with its own tariffs on US imports worth $3 billion — although the response from China has been somewhat muted nevertheless the fear of a full blown trade war has escalated significantly thus putting the equity markets in a tailspin on the last two days of the week.
The following chart of SPX shows US market quickly approaching support level created from the last sell off in February. Will be interesting to see whether will get a bounce this time or whether the market will enter the major correction territory breaking the 2575 region convincingly. The bearish crossover of the EMAs doesn’t paint a pretty picture though.
The second chart here presents another ominous sign — UST10Y (US Treasury 10 year bond) seems to be carving out a long term base here & seems all set to trend higher. You know what that means… bond yields going up means people are fearful of the equity markets & take their capital to safe heavens. Either way more volatility is on the way for financial markets. My advice as always — follow a trading plan, employ proper risk management & keep emotions away!
Originally published at medium.com on March 24, 2018.