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Correlations

BTCOIN with a potential BOTTOM!Hey tradomaniacs, technically we see a breakout and retest scenario in the daily-chart of Bitcoin. If the support-zone holds and the re-test is done we oculd see another strong iompulse to the upside and so a bullish scenario. Some of the pre-conditions are generally a risk-on-mood. Previous sell-offs have shown that Bitcoin is not really considered a safe haven due to the high demand in GOLD while Crypto suffered with equities. One of the reason is that Bitcoin is part of the classic financial market in form of ETFs and so on... so there is a very strong correlation of crypto and equities / indicies. If the risk-off-mood in equities ends and the weekly key-support-zone of SPX500 holds we might see another rally. This is showing confluence in terms of intermarket-correlations and provides a great chance to buy if confirmed. Still we have to be very cautious qas we dont know how the market reacts to further news from Ukraine aswell as the tight monetary policy of the FED.. Higher rates or rate-campaings were mostly causing recessions in the past. Let`s see what happens =)
BITSTAMP:BTCUSDLong
by Trading2ez
1
Here is why the Us-Dollar stands still! Pump should come soon!Hey tradomaniacs, everything I wanna say is mentioned in the chart. Yields are currently falling due to more demand in Bonds (oversold market) which are attractive for investors who want less volatility. When there is demand in Bondy yields are moving down (negative correlation) which is dragging down the momentum for US-Dollar which should actually move up when equities fall. Wait for yields to pump during the sell-off in stocks and US-Dollar will pump.
TVC:US10YLong
by Trading2ez
US-DOLLAR really falling after NFPs? I doubt it.Hey tradomaniacs, chaotic market huh? To be honest... I think the current move of US-DOLLAR doesn`t make any sense. I keep it simple and short, otherwise I`d have to break the mold. The data are mixed but do overall show a slowdown in the economy but at the same time rising inflation. Non-Farm-Payrolls: 199.000 less jobs than expected and the worst result since december 2020. This clearly shows a cool down in the NFP-Sector and is overall bearish for the US-Dollar. Unemployment Rate: 3,9% and a positive development considering that previous rate has been at 4,2%. Overall bullish fort he US-Dollar. Average hourly earnings: 0,6% and way higher compared to the previous month. This is overall bullish for the US-DOLLAR due to higher inflation. Average weekly hours: 34,7 and less than expected. The problem here in my opinion is the fact that earnings per hour soared while less jobs were created. This is a typical sign of inflation and part oft he wage-price-spiral. Considering that FED has to and will fight inflation as its priority number one after their „transitory-fail“ to gain back reputation Jerome Powell & Co could turn from best friends to fiends for the stockmarket as financial injections probably won`t be an option anymore, whether the economy cools down or not. This is clearly negative for the overvalued equity-market but not by all means for the US-Dollar. Simply put: The FEDs in a quandra. Can`t provide more liquidity due to high inflation to push growth and employment and has to hope everything is going to be fine. Rising yields do indicate expectations for higher inflation in the market and would offer an alterantive to stocks in the near future (Bonds). They are also generally good for the bank-sector and obviously not good for tecs due to high costs which are not as easier to finance with higher interest-rates. But here is a catch.. we know how irrational but faithful the market is... if it turns out the market hopes the FED to ignore their plans and "slow it down" in order to boost the economy again if future results are not as good as expected we might see another rally in stocks and so a falling US-Dollar. This would be more like the less likely scenario in my opinion...I mean Bidens is on Powells tail. Risk-Off is generally good for the US-DOLLAR as a safe haven. If FED continues as announced and planned the US-Dollar is likely to move up while this move turns out to be a fake. One of these charts is lying, but I see a higher probabillity of a rising US-Dollar under these circumstances. LEAVE A LIKE AND A COMMENT - I appreciate every support! =) Peace and good trades Irasor Wanna see more? Don`t forget to follow me
TVC:US10YLong
by Trading2ez
3
Bearish Looking 10Y US Notes Can Push USDJPY HigherHello traders! Today we will talk about 10Y US Notes and its negative correlation with USDJPY. 10Y US Treasury yields keeps pointing lower, as we see a bearish triangle formation within wave 4 correction that can send the price even lower for wave 5. If that's the case, then respecting correlations, USDJPY can see more gains for wave 5, as we also see a bullish triangle pattern within wave 4. As you can see, triangle, a continuation pattern can be approaching the end, as we see the final subwave "e" in progress, so ahead of NFP report, be aware of that final 5th wave before we will see reversals. Be humble and trade smart! If you like what we do, then please like and share our idea! Disclosure: Please be informed that information we provide is NOT a trading recommendation or investment advice. All of our work is for educational purposes only.
CBOT:ZNZ2021
by ew-forecast
2
Correlations point to a loonie long Market Correlations and Yields The Canadian dollar is highly sensitive/correlated to oil and natural gas prices, as Canada is a big producer of both. Hence its economy is influenced by fluctuations in their prices. Higher oil and natural gas prices usually help the Canadian dollar and push the USDCAD lower. I have plotted the natural gas, oil and Canada/U.S 2-year bond yield differential on chart. Along with the CADUSD( NOT USDCAD, just to illustrate the positive correlation). Recently, the price of both commodities has been trending higher, recoding new highs. Yet the cad didn’t catch up until the past few weeks, and with a relatively smaller magnitude. This lag in cad price movement might be an opportunity to get long as the price play catchup. The yield differential also support the cad side as the spread rises in favor of Canadian bonds. Supported by solid recent economic data from Canada. Having that said, I see the USDCAD heading lower. My concern now should I buy the CAD against the dollar or euro? or maybe both to mitigate the risk of failure.
Long
by Technician
8
S&P500 bullish flagHi followers, bullish flag on S&P500 is good for Bitcoin The US stock market and Bitcoin are moving in correlations most of the time. Right now we see very bullish formation on the S&P500, bullish daily flag, which suggests higher highs. Meanwhile Bitcoin is rallying and showing strength, those behaviors considered positive for the short-medium term. Don't forget to manage your risk! 👌 Good luck and trade with care 🙏 If you like my content - 👍 Like, 💬 comment, 👆 follow and 👉 share! ❗❗❗ Disclaimer: This information is not a recommendation to BUY or SELL. It is to be used for educational purposes only!
CME_MINI:ES1!Long
by FradkinXBT
BULLISH reversal in play for the US Dollar! Following the 2008 Financial Crisis, the Federal Reserve had to apply loose monetary policy measures in order to stabilize and stimulate the economy. The Fed started lowering the Federal Funds Rate back in late 2007, as a response to the rising unemployment at the time. This is the most traditional monetary policy measure, which aims to stimulate both businesses and individuals to borrow and spend more, which in turn would lead to an increase in economic activity. When rates are low borrowing money to start a business, buy a house or a car looks much more appealing and attractive. When the economy is in a recession such monetary policy actions are helpful and needed, but if interest rates stay very low for way too long after the economy stabilizes, then the higher spending levels caused by the cheap available credit would simply lead to higher inflation. Inflation has been one of the most heavily discussed subjects so far in 2021 and rightfully so. You see, a substantial increase in inflation is a net negative for all of the major markets out there – Bonds, Stocks, USD Bonds Inflation is a bond’s worst enemy as basically a bond is a contractual agreement between a borrower (Seller of the bond) and a lender guaranteeing that the Lender (Buyer of the bond) would be receiving the bond’s Face Value at maturity plus all of the regular and fixed interest payments (coupons) up until that point. Well, considering that both the Face Value and Coupon are fixed US Dollar amounts, a higher inflation would basically erode the real returns of that bond. To put it in simple words if the yield on a 10-year Treasury bill is 2%, that means that the investor is guaranteed to get a 2% annual return on that bond investment. However, if annual inflation is at 5%, then that makes the bond investment much less appealing as an investor would be technically losing 3% per year in such environment. This is the main reason why bond yields constantly adjust to both Inflation and Interest Rate expectations. When Inflation goes up, Interest Rate expectations start shifting towards expecting a rate hike, which leads to lower bond prices and higher bond yields. This dynamic exists and occurs as in an inflationary environment bonds become less attractive and in order for demand to come back to the bond market investors need to see an adjustment in the bond yields (an increase), which will protect them against inflation and would make it worthwhile for investors to lend their money to the US government by buying these bonds instead of putting it in a savings account with the bank. The bond yields rise either when we see a rate hike or when investors expectations of a rate hike increase. This mechanic ends up protecting bond investors in a higher-interest and inflation driven environment and makes bonds more stable and attractive investment vehicles than stocks. Stocks With stocks it is much more straightforward. Stocks trade largely on current as well as discounted future corporate profits, and higher rates tend to cut into profits because they increase the cost of money. Additionally, when rates are higher that means that discounting future cash flows to the present occurs with a higher denominator, which leads to lower profitability. If the underlying reason for higher rates is inflation, rising prices and wages also increase a company's costs, which further erodes profits. As you can see higher inflation and higher rates lead to plenty of problems for stocks. USD Last but not least, inflation is also bad for the US Dollar as it erodes the purchasing power of every dollar in circulation. To put it in simple words, if you have $100,000 in your savings account earning 1% interest annually, but the inflation in the country sits at 3% you would technically lose 2% from the purchasing power of your capital, or in other words $2,000, in just 1 year. Now, after seeing why and how higher rates and higher inflation affect Bonds, Stocks and the US Dollar, you probably understand why all journalists, economists, investors, hedge fund managers, politicians, central bankers etc. are constantly discussing these topics. Inflation and Interest rates expectations are not static but rather very dynamic and are constantly modified and affected by economic reports, central bank commentary, monetary and fiscal stimulus etc. The predominant view in the market at the moment is comprised of the following elements: 1.”The US economy is on fire” – companies continue to deliver better than expected earnings, consumers are sitting on record levels of savings, people are eager to get back to their normal lives eating out, traveling, shopping. 2. “We will see 8-10% GDP growth in the 2nd half of the year” 3. “Inflation will continue to rise as a result of the low interest rate environment and the huge spending driven mostly by the heavy Fiscal Stimulus by the US Government. 4. “The Fed need to raise rates sooner in order to prevent a hyperinflation scenario” 5. “The Fed will most likely end up being behind the curve once they start tapering, which will force them to rise interest rates quicker” Now, while all of the above-listed arguments make sense to a certain extent, we believe that some of the most recent movements in the US Dollar Index (DXY) as well as the price action in the bond market, which sent bond yields lower despite the hawkish Fed in mid-June are giving us very valuable indications that there is more to that equation. We believe that the whole narrative that is circulating at the moment starts from the wrong place. Considering the fact that the US Dollar is the global reserve currency and that it has a direct impact on both US and Global inflation levels and GDP growth, every US economic analysis should start from analyzing the US Dollar performance and its possible future trends. It is true that inflation expectations affect the value of the dollar and that some people might argue that this is a “what’s first the chicken or the egg” argument, but the US Dollar is so much more than the inflation expectations that people throw at it left and right. The USD is the most influential currency in the world and depending on whether it gets stronger or weaker we see whole countries, regions and even continents either struggling or prospering. The US Dollar index (DXY) has been in a clear downtrend throughout the last 15 months, as a result of the unprecedented printing of money that we have witnessed by the Fed in response to the COVID-19 pandemic shock to the economy. The monetary M2 supply in the US increased from $15.5 trillion in February, 2020 to $18.84 trillion in October, 2020 and to $20.1 trillion in April, 2021. This represents a 21.29% increase in 2020 and a 29.7% increase year over year. Technically, such a massive printing of liquidity debases and devalues the underlying currency. As a result of that and the increased inflation speculations and worries among investors we have seen the US Dollar index dropping from $103 down to the $90 level. A lot of negativity has already been priced in the US Dollar as the logic shows that inflation will definitely be picking up, which makes it unattractive to hold significant cash reserves. Thus, everybody has been selling the USD for over a year now. However, what happened in the beginning of the year (January) was that the DXY reached the $90 strong multi-year support and found a lot of buying interest there. After a strong rebound up towards the $94 level back in April, the index came back and re-tested the $90 level and once again found a lot of buying interest, which pushed the price back up to the $92 mark in a matter of few trading sessions. This has created a clear double-bottom pattern with rising relative strength and a clear bullish interest at these levels. We believe that this is something that not many people are paying attention to as they are riding on the bandwagon that the “Dollar is going lower”. However the $90 support has been a crucial level for the DXY going all the way back to 1990s. Back in 2018 that was the exact level where the DXY stopped declining and reversed the 1.5 year long bear market that the USD was trading within since the start of 2017. The reason why we believe that the way the USD moves is so crucial at the moment comes from the fact that the main argument right now for a tighter monetary policy is associated with the “double-digit” GDP growth that everybody expects in the 2nd half of the year and the inflation that this is expected to create in the economy. Well, it seems that most people have forgotten that currency appreciation usually reduces inflation because imports become cheaper and the lower prices lead to lower inflation. It also makes imports more attractive, causing the demand for local products to fall. Local companies usually have to cut costs and increase productivity so they can remain competitive. Furthermore, that means that with the higher price, the number of U.S. goods being exported will likely drop. This eventually leads to a reduction in gross domestic product (GDP), which is definitely not a benefit. That translates to a benefit of lower prices, leading to lower overall inflation. The bond market also signaled that it does not expect the Fed to start tightening any time soon as there was a clear discrepancy between the hawkish Fed and the movement in the 10Y Treasury yields. You see, usually when an Interest Rate hike takes place or when Interest Rate expectations shift towards an increase in the Federal Funds rate, that is considered as bullish for bond yields. The reason for that as we pointed out earlier is associated with the fact that a rising interest rate environment and a potential for higher inflation makes bonds less attractive at the current extremely low yields. Bond yields then go up in order to bring back investors to the Bond market. Well, that has not happened this time around as even though we had a surprisingly hawkish Fed in mid-June, the 10Y Treasury yield has continued to fall. It seems that the 40-year long bull market for bonds has further to go. The Bond market always gives indications as to what is actually happening in the economy but very few people know how to read the correlations and information properly. The most recent price action in the 10Y Treasury yield shows that the real probability of the Fed tightening sooner than expected is much lower than what the equity markets and all other market participants are currently pricing in. Bond investors tend to have more macro-oriented view, which allows them to see the big picture better. So what does that mean? Well, with the US Dollar threatening to reverse its 1-2 year downtrend and break above the critical resistance sitting at 92-93 and Bond yields falling, the economy and inflation growth will be tamed organically by the higher dollar. We believe that this would lead to the Federal Reserve also pushing back its tightening program, which in turn will reignite risk-appetite in the market. Thus, we expect to see Growth outperforming Value in the coming months.
TVC:DXYLong
by DowExperts
JPY could move UP!Hey tradomaniacs, with the retest of the previous breakout we could see another impulse upwards as UR YIELDS are currently falling, which is basically good for JPY. Interesting to watch would be AUD/JPY, NZD/JPY, EUR/JPY aswell as GBP/JPY since all these curencies against the major USD were very weak today as expected. JPY-Strenght could cause JPY-PAIRS to "catch up" with the moves of the day. LEAVE A LIKE AND A COMMENT - I APPRECIATE EVERY SUPPORT! Wanna see more? Don`t forget to follow me!
JLong
by Trading2ez
1
General Motors (GM) will be pushing higher in the coming weeks!By looking at the daily chart, we can see the strong bullish rally that has occurred in the last 12 months taking the price from the March 18th lows of 2020 around $14 to the $63 all-time highs in the beginning of April, 2021. This represented an astonishing 350% gain for the stock in a year. However, the road to the above-mentioned all-time highs was not easy as it was filled with many different hurdles that the bulls had to overcome in order to keep pushing the price higher. There were few massive 15-20% corrective movements that took place during this strong uptrend, but the uptrend remained intact on all occasions. The stock has continued to attract a lot of investors’ attention as it remains the leader in the auto maker space. The way that General Motors has managed to evolve from an old fashioned auto manufacturer into an innovative, disruptive and forward looking designer, manufacturer and seller of all-around automobiles and auto systems globally has turned the stock into a go-to choice for both small retail and large institutional investors looking to add some auto and EV exposure to their portfolios. The stock is currently sitting at $57 per share, which is roughly 10% below its all-time highs of $63 per share. We saw that the stock found a lot of buying interest around the $55 level on three separate occasions in the last 2 months – once at the end of March, then again at the end of April and the most recent one on May 4th. The confluence of both the horizontal and diagonal support lines at that mark has brought a lot of buyers back to the market. Investors saw the opportunity to buy into one of the leaders in the auto and EV space at a 10% discount and at a relatively low P/E and PEG valuation and didn’t think twice about it. The recent failure of the price to break below the $55 support back in early May and the subsequent sharp price appreciation could be taken as a signal for the presence of a strong bullish interest. This in turn confirms that the long-term uptrend has resumed and that the current bullish run will most likely take the price to new all-time highs in the coming weeks. Furthermore, we believe that the new $1.9 trillion stimulus package accepted in the US, will inject a lot of liquidity into the market, which will be a great short-term positive for the equity market. We expect most of the big tech names as well as other market favorites to restore their favorable image among traders and investors in the coming weeks, thus we anticipate that the XLY will be one of the best performing sector ETFs in May. We believe that the stock market in the US currently holds a lot of intrinsic risks - COVID-19, the newly formed office in DC, the economic recovery, the post-Brexit economic reality for the UK and EU etc. - and that we could be in for a sideways and choppy price action in the coming months. However, our analysis shows that the winners would most likely continue to win in the stock market. General Motors has definitely been one of the biggest winners in terms of stock price appreciation throughout the last 12 months, thus we are strongly bullish on GM’s stock in both the short and long term. Additionally, we are seeing GM as a great reopening play in the post COVID world. The most recent price corrections should be treated as a great opportunity to buy this strong performing stock at a remarkable discount, which would in turn give every investor a chance to maximize his profits to the upside. Moreover, some of the technical indicators that we are monitoring closely on a daily basis (50 DMA, 100 DMA, Bollinger Bands, RSI etc.) have already retraced from their overbought conditions and are signaling that the uptrend might be returning pretty soon. In addition to that, it is important to note the fact that the XLY and the Consumer Discretionary sector as a whole would continue to attract a lot of the investors’ attention moving forward, as consumers are sitting on record levels of savings and are eager to spend. This makes us optimistic for the future performance of GM as a meaningful part of the ETFs structure. Our analysis shows that as a result of the great leadership performance by the senior management of the company and the phenomenal fundamental positioning of GM through its newly updated portfolio of products, the stock will be able to hold its ground better than some of the other stocks out there in the event of a correction, and it would also significantly outperform the broader market once the uptrend resumes. Acknowledging the fact that we are in a position to buy the stock at a 10% discount from the all-time high levels, we would like to point out that buying at these levels would be suitable for both risk-oriented and risk-averse investors. Thus, we are currently looking at the $55-57 range as a great accumulation zone for the stock. Our take profit levels in the coming months are going to be $65 and $75 respectively. Follow us for more high-probability trading set ups!
NYSE:GMLong
by DowExperts
IS ETHEREUM POISED TO BECOME KING OF CRYPTO LAND!!!I've been noticing an interesting trend recently. If you put ETH and BTC on the same chart, Ethereum seems to be outperforming BTC, especially recently. Will ETH, at the very least, gain its independence from BTC? OR... like an overcontrolling, helicopter mom, will BTC take back the reigns from her unruly stepchild. Let me know in the comments what you think. Ethereum says "mommy, mommy, why am I running around in circles?" Bitcoin says "Shutup, you little brat, or I'll nail the other foot to the floor!"
by Ifyouonlyknew
1
BTC is the MASTER of THE UNIVERSE at least the crypto universeLike evil Skeletor... BTC has its crypto MINIONS, binance, cardano, polkadot, ripple, uniswap, theta, and litecoin..... When there is stress in the crypto market, there is an incredible amount of correlation in the charts!! REMEMBER THIS, you have to look at the flagship, to see what colors the rest of the armada will wave. LOOK AT THE LIGHT GREEN BOX!. You always here everyone whining about correlation... but it is made very obvious here. You can use this link for analysis of correlation. charts.coinmetrics.io Quote: (in case you wondered why there are so many stupid leaders!) "Success in almost any field depends more on energy and drive than it does on intelligence. This explains why we have so many stupid leaders." - Sloan Wilson
by Ifyouonlyknew
1
NZD/CHF BUY SIGNALHey tradomaniacs, welcome to another free trading-setup. NZD/CHF: Swingtrade-Execution Notice: Risky ahead FOMC-meetings tomorrow as market is really choppy! Rather stay out if you don`t like trading with a higher risk. Market-Buy-Order: 0.65870 Stop-Loss: 0.65475 Point of Risk-Reduction: 0.66245 Take-Profit: 0.67100 Stop-Loss: 40 pips Risk: 0,5% -1% Risk-Reward: 3,0 LEAVE A LIKE AND A COMMENT - I appreciate every support! =) Peace and good trades Irasor Wanna see more? Don`t forget to follow me
Long
by Trading2ez
2
I think this is the beginning of a beautiful friendshipIf you remove the first two hours of trading on Coinbase, the performance of the share price looks a lot like the performance of Bitcoin. It is never going to be 1-for-1 and nor should it, but there is a visible pattern there. Will there be a spread/arb/reversion trade there? Maybe one day, but a reasonable correlation will allow those that can only invest in shares, such as many fund managers and retirement funds, to have risk exposure to the coin market. Same reason certain EFTs exist. A senior analyst at Swissquote, Ipek Ozkardeskaya worte: "As such, a successful addition to Nasdaq should act as endorsement of cryptocurrencies by traditional investors." It’s a new stock so still finding it’s ground, but interesting to watch a relationship develop, like the end of Casablanca.
NASDAQ:COIN
by TheTradarien
2
Three ways to follow market relationships on TradingView. All trading requires an understanding of how markets are related. Understanding these relationships will put you ahead of others that don’t get it. Mean reversion and spread trades require a deeper understanding of how markets move together and how these relationships change. Like the weather, the degree of correlations, lag, convergence/divergence change all the time. It is that change that can bring about opportunity. On TradingView, there are three really easy ways to measure relationships. 1 Use the ‘Compare’ Function. Click Compare. Select Market. This creates an overlay, showing relative performance in percentage terms. The starting point is the visual start of the chart. Tip#1: Choose starting points that are significant, like just before a big announcement or at a chart high or low. Tip#2: Play around with time frames to look for patterns. - 2 Use Relative Strength (not RSI). This is not the RSI most of us know. This ‘Relative Strength’ shows the performance of one market versus another based on momentum and change. Select indicator and search ‘relative strength’. Look for an indicator that compares to a 2nd market. Example: ‘relative strength to SPX’. For this particular one, the default setting is to compare to SPX (obviously). In settings, change this to your chosen market. In the above chart, we use BTC. A falling index shows market#1 underperforming. This can be used to show overbought/sold conditions, relatively speaking. - 3 Watch your Correlations. The Correlation Coefficient measures the degree of statistical relationship between two markets. Tip: Look for extreme levels/changes in the number. It can tell of a change in trend or breakout. - Try all three and see what works for you and your markets. Look for patterns. -
Editors' picks
BINANCE:DOTUSDEducation
by TheTradarien
52