Enhance Your Trading Strategy with MACD and RSI ConvergenceIntroduction:
Welcome, fellow traders! Today, I'm excited to present a step-by-step tutorial on how to enhance your trading strategy using a combination of two powerful technical indicators: Moving Average Convergence Divergence (MACD) and Relative Strength Index (RSI) .
Section 1: Understanding MACD and RSI - Exploring the Components
MACD:
The MACD consists of three components:
MACD line : Represents the difference between two moving averages, typically the 12-day and 26-day exponential moving averages.
Signal line : A 9-day exponential moving average of the MACD line.
Histogram : Displays the difference between the MACD line and the signal line, providing visual cues about the momentum of the price movement.
RSI:
The RSI is an oscillator that measures the strength and speed of price movements on a scale from 0 to 100.
Readings above 70 indicate overbought conditions, suggesting a potential price reversal.
Readings below 30 indicate oversold conditions, suggesting a potential price bounce.
Divergence between price and RSI can be a signal of a trend reversal.
Section 2: The Idea Behind the Strategy - Combining MACD and RSI
By aligning the signals of MACD and RSI , we aim to increase the reliability of our trading decisions.
When both indicators provide signals in the same direction, it enhances the probability of a successful trade.
The convergence of MACD and RSI helps filter out false signals and focus on high-probability trade setups.
Section 3: Implementing the Strategy - Identifying Bullish and Bearish Signals
Look for a bullish crossover:
MACD line crossing above the signal line , indicating upward momentum.
Confirm the bullish signal: Ensure the RSI reading is above a specific threshold, such as 50, indicating strength in the upward move.
Consider additional confirming indicators, such as positive divergence or breakouts from key resistance levels.
Identifying Bearish Signals:
Identify a bearish crossover:
MACD line crossing below the signal line , indicating downward momentum.
Confirm the bearish signal: Ensure the RSI reading is below a specific threshold, such as 50, indicating weakness in the downward move.
Consider additional confirming indicators, such as negative divergence or breakdowns from key support levels.
Section 4: Backtesting and Refinement - Improving Performance and Accuracy
The Importance of Backtesting:
Gather historical price data for the desired trading instrument and timeframe.
Apply the MACD and RSI convergence strategy to the historical data.
Analyze the performance of the strategy, considering factors such as win rate, average gain/loss, and maximum drawdown.
Adjust the threshold levels, timeframe, or other parameters to improve the strategy's performance.
Refining the Strategy:
Consider incorporating additional technical indicators, such as trend lines, Fibonacci levels, or volume analysis, to further confirm trade signals.
Evaluate the strategy's performance across different timeframes and trading instruments to identify its strengths and weaknesses.
Continuously monitor and adapt the strategy to changing market conditions and refine it based on your trading style and preferences.
Section 5: Risk Management and Trade Execution
Effective Risk Management:
Determine appropriate position sizes based on your risk tolerance and account balance.
Set stop-loss orders to limit potential losses if the trade goes against you.
Establish profit targets to secure gains and exit the trade when the desired level is reached.
Regularly review and adjust risk management parameters as needed.
Conclusion:
Congratulations! You've completed the tutorial on leveraging MACD and RSI convergence to enhance your trading strategy. By combining these powerful indicators, you now have a valuable tool in your trading arsenal. Remember to practice in a demo environment (aka. Paper Trading) before applying the strategy with real funds, and always adapt it to the evolving market conditions.
Feel free to share your progress, ask questions, and discuss your experiences in the comments section. Let's learn from each other and continue refining this strategy together. Best of luck on your trading journey!
Note: Trading involves risks, and this tutorial is for educational purposes only. Always conduct your own research, seek professional advice, and practice responsible risk management.
Marketanalysis
GBPUSDOverall Trend on 4 Hour chart= Bearish(Price is below the 200 EMA)
Overall momentum= Bearish
Wait for a retest of 1.23540 or 1.23687 price level before going short!!!
Going Bullish On USDJPYWait for Choch at the 1H POI and also pay attention to the LQ at the left.
Looking to take my Tps from those zones marked out in the chart.
However, it will be a trade to watch for a confirmation entry.
NASDAQ Futures NQM: Bullish Rally Encounters Potential ReversalToday's market action on NASDAQ Futures (NQM) provided quite a spectacle, as we witnessed an impressive pump that led to a new Higher High at 13683. With limited levels of resistance left in the upper echelons at 13817 and 13995, it appears we're running out of targets on the upside. Additionally, the VIX index is down, pointing to a relatively calm market environment.
However, it's crucial to note the emergence of several potential reversal signals. While the market has been propelling upwards, the MACD recently crossed below the signal line, displaying a bearish divergence as it forms a downtrend. This bearish divergence could potentially be signaling a weakening of the bullish momentum.
Moreover, the STOCHRSI reached a high of 97 before starting to turn around earlier today (5/18/23) at 7:30 and continuing downwards at the market open. This, too, could be signaling a possible cooling down of the overheated bullish trend.
In the scenario of a downturn, the key support levels to watch are 13610, 14554, 13505, and 13475.
Given these observations, today's trading strategy should be approached with caution. Although the bullish trend remains dominant, the emerging bearish signals suggest potential for a reversal. Therefore, vigilant monitoring of these critical technical indicators and support levels will be crucial.
In conclusion, although the NASDAQ Futures NQM continues to push higher, we are now observing significant signs of potential bearish divergence. This calls for heightened attention and careful navigation of trading strategies. As always, keep a close watch on market trends and adjust your strategy as necessary.
This analysis was also posted to my Blog!
-The Latin Trader
Market Reversal Fueled by Biden's Positive Remarks on US - NQM In today's trading scenario, we witnessed a fascinating turn of events. The market initially opened with a downward wick, touching the previous day's closing level and the London session's support. However, the tide swiftly turned, largely attributed to President Biden expressing positive sentiments about the avoidance of the US debt ceiling. This optimism sparked a notable shift in market sentiment.
The levels I outlined at the open were as follows:
Downside: 13505, 13483, 13460, 13430
Upside: 13540, 13575, 13600, potentially reaching as high as 13660.
These levels served as significant benchmarks for today's trading. The upside, though, ventures into somewhat uncharted territory as we have not tested these areas since the highs of August 2022. As we tread these waters, it's crucial to remain vigilant and adaptable to the market's responses to macroeconomic news and global sentiment.
Stay tuned as we continue to track the market's reaction to these crucial levels, and navigate our trading strategies accordingly.
BTC setting buyers territoryBTCUSD could be setting itself up for a buyers territory below with matching fib level. A recent higher high allows buyers to target previous resistance that could turn to support if rejected.
- Higher high - Lower low pending
- Previous resistance turned support if rejected
- Matching fib level at the 50% mark with potential
- With positive outcomes for BTC in the economic data could send higher
PLAN
- Hold for buy zone around 24-25k price
- Look for double bottom higher high lower low
NQM Technical Analysis: Treading into Uncharted TerritoryToday's premarket moves for NQM have presented an intriguing scenario. News induced volatility sent us for a wild ride, with a sharp drop back to yesterday's support near 13430. Expecting a bounce and a wick fill, the surprising strength of the subsequent upward push—smashing through the main resistance—has taken us into relatively unexplored territory.
With the only historical data point being a peak from August 2022, we're stepping into the unknown, but there are a few key levels I'm keeping a keen eye on:
Given the overall 4h trend, I think long plays will be going with the main trend.
Long / Resistance Levels:
13470, 13500, 13550, and potentially 13575 if the bulls take the reins.
Short / Support Levels:
13445, 13425, 13400, and potentially as low as 13360 if the bears seize control, a fall that far would disrupt the structural pattern we've been monitoring.
In such uncharted terrain, it's crucial to remain adaptable and responsive to changing market conditions. Let's see how NQM navigates this new ground. Stay tuned for updates."
As always, remember to trade responsibly and manage your risk effectively.
-The Latin Trader
20.5k or Mothers Day Rally for BTCLooked like the bull wanted to step in. But this level of resistance between 27 and 30 is no letting up. IMO the bears look a little stronger. Im waiting to see what this week will bring. Id like to see price bounce off this lower triangle. If price fails to do so then we could see another drop to 20k. We need a Mothers Day Rally
Alert🚨H&S, Double Tops + BTC Resistance & What It Means For youMy insights on the current crypto market, highlighting potential double tops and BTC's struggle at a historic resistance level. Understand how to manoeuvre through uncertainty, set a stop loss, and be prepared for other possible outcomes like falling wedges and continuation patterns. Don't miss this essential guidance for trend followers during this bull run! 📚💪🌟
Check out my new indicator and tell me what you guys think!
Do Todays Participants & Pundits Understand Todays Stock Market?I’ll get right to the point. NO
Now granted, as the reader, you’re immediately drawing your own conclusions about that opening statement. You're probably thinking... The author of this post is obviously bearish and therefore has an agenda. Ok, that’s fair.
Then indulge me as I explain, in detail , why I believe todays market participants and financial news pundits do not understand Todays Stock Market. My only request of you, the reader, is to continue reading with an open mind till the end and then judge for yourself.
I practice a form of technical analysis called Elliott Wave Theory.
Whether one would consider it theoretical after 90 years since it’s introduction, or not, is a discussion for another time. This post is not some diatribe debating, nor defending the Principles of Elliott Wave. However, I’ll sum up Elliott Wave for the uninitiated in a simple explanation for sole purpose of understanding this post.
Elliott Wave Brief Explanation:
Elliott Wave means to forecast crowd behavior specifically as it pertains to price action within a given market. As a long-time practitioner of this form of analysis I am still amazed to this day, to see price follow through on my forecasts with a high degree of both accuracy, and reliability. I’m never bored. But in truth, this form of analysis has little merit in markets in which there are no LARGE CROWDS. Price action in thinly traded penny stocks, fly by night crypto currencies, and so forth. You simply cannot forecast what the crowd will do, in the absence of a true crowd. However, in LARGE CROWDS, the basic premise of Elliott Wave is prices tend to move in 5 distinct “Waves” within a given trend. During the course of that 5-wave trend, price will correct, consolidate or digest gains or losses in 3 distinct “waves” prior to that trend completing. To examine those waves within a trend, an analyst should be able to drill down into smaller and smaller time frames and see the same principles playing out as these price action patterns are fractal in nature. They are self-similar. Ok, that is an overly simplified explanation of Elliott Wave. Nonetheless, its one in which I think is enough where I can guide you through my broader reasoning. Let me start out with my long-term SPX analysis.
Elliott Wave Analysis on the SP500:
In the above chart you'll find the 4-hour fractal of the below larger monthly fractal. I have posted these charts many times before, so long-term followers of my work will recognize them. But I start this broader explanation with the below monthly chart. Displayed in the chart below you see a series of labels in green ( I ), ( II ), and ( III ). Those green labels are what Elliott Wave deems a super-cycle price action analysis…or count. Its referred to as a “count”, because practitioners of Elliott Wave Theory are simply counting waves.
So if Elliott Wave is based on a series of 5-wave trend patterns, and 3-wave counter trend patterns that are FRACTAL in nature (my earlier over-simplified explanation), then after completing a wave ( III ), we obviously need a wave ( IV ). Now in all fairness to you the reader, has the monthly price action confirmed we’re in a super-cycle wave ( IV ) and wave ( III ) has in fact completed?
NO.
What confirms the price action is in a super-cycle wave ( IV ) event is a breach of the 2020 Covid-19 low of ES Futures 2174. That price (2174) is the litmus test for continuation to higher highs in the SPX or a long slog in equities that could last decades and decimate global wealth.
Now I have long told my members that... although I do not know what the catalysts are that ultimately validate the forecasted price action, those catalysts always tend to show up on time . I think in my trading room, my members would whole heartedly agree with that statement.
So, as I analyze price action from the day to day to the 1-minute chart and justify my primary long-term analysis today I am in no shortage of potential catalysts that are brewing. You know them all (Debt Ceiling, Regional Banking Crisis, The Fed, Inflation, Geo-Political…etc.) I choose not to speculate on the potential event, but on history. Is there a precedent? Yes, History.
There is…. somewhat. Here it is.
The last time we had our wave ( II ), super cycle counter trend price action, was the stock market crash of 1929. That is easy to see on the above chart, but what were the clues, or the potential catalysts leading up to that event almost 100 years ago?
Clue #1: The Panic of 1907
The Panic of 1907 was…wait for it…” A Financial Crisis”. During this time, the irresponsibility of bankers caused Bank Runs, and ultimately that translated into a 50% decline in the NYSE. That’s half…50%. This dried up any liquidity for loans. In other words, a credit crunch. Sound Familiar? Sidenote: You starting to get the sense that bankers always seem to be present at the scene of the crime so to speak? It’s perplexing. Who are these nefarious characters? Banking, in general, is terrible business model. But I digress…back to the point.
Clue #2: The Spanish Flu
The Spanish Flu of 1918 was a global influenza pandemic (H1N1) that decimated a third of the population on planet Earth. The Spanish Flu became a global pandemic because exiting World War 1, the war effort censors were accustomed to censoring bad news. Therefore, most of the population was ill-informed regarding the dangers of (H1N1) and disproportionately this effected the young and old members on the population. This was also a time of climate change and population migration patterns and this exacerbated the spread and effects of the flu.
This starting to sound like you’ve seen this movie before?
Clue #3: Massive economic bounce back
The jobs market was in high deficiency mode as early as 1922 having had so many of potential workers having died in the previous pandemic prematurely. This caused a massive supply-demand dislocation of (1) human nature to get out from under the atmosphere of The Spanish Flu and (2) live and consume…and the work force to meet those needs on a global scale. This resulted in a large economic expansion that lasted almost 10 years. In the United States, we refer to this era as, “The Roaring Twenties”. These three clues culminated in the stock market crash of 1929...hence our super-cycle wave ( II ).
As an analyst, as an intellectual, and as a student of history, I cannot ignore these flashing confluence of events in my time.
The Irish statesman, Edmund Burke has been attributed to having said… ” Those who don’t know history are destined to repeat it.”
The Spanish philosopher George Santayana is credited with the aphorism, “Those who cannot remember the past are condemned to repeat it.”
War Time British Prime Minister Winston Churchill wrote, “Those that fail to learn from history are doomed to repeat it.”
In summary, how does this all shake out?
Well, first and foremost I’ll say that this is not your father’s stock market, it’s not even your grandfather’s market. It’s more than likely your Great Grandfathers market. That market was terrible. That market had seismic effect on both society and asset appreciation. Keep in mind, this market has had it’s bull and bear markets. However, for the last almost 100 years, we’ve been in a secular bull market. During the last 100 years, we have experienced 3 impactful cyclical bear markets within a 93 year secular bull market since our super cycle wave ( II ) event in 1929.
During the last 93 years, the stock market has essentially appreciated in a solid, predictable 45-degree angle higher. Buy and hold, buying the dip, has been both the statistical and practical successful trading thesis. If this is a wave ( IV ) super-cycle event, trader sentiment must change. This takes time. Traders must now go through re-conditioning. A mourning, if you will, of the past 93 years of a secular bull market. Unfortunately, this only occurs with the loss of money, and over time. Cavemen continued to touch fire as it is visually magical. However, after a while, I’m sure they drew the conclusion this is NOT ADVISED . I keep CNBC on in the back ground of my small trading office. The incredibly smart contributors, and titans of money they feature quote metrics like typical bear market durations, what typically happens after the Fed has paused rate increases 6 months afterwards…and I’ll be the first to announce to you, the reader, THAT NO LONGER APPLIES.
We are no longer in that 93 year long 45-degree angle up. Those metrics… worthless . Those typical expectations… miss-guided .
THIS IS NOT YOURS, NOR IS IT YOUR FATHERS MARKET.
Now granted, this is somewhat of a thought speculation on my part (as of today). However, I do wonder…if traders, market participants and financial news pundits have objectively considered if they understand TODAYS STOCK MARKET.
FOOD FOR THOUGHT.
CHRIS
Analyzing the Impact of FOMC Meetings on Stock PricesAs a stock trader, it's important to pay attention to major events that can impact the market, such as the Federal Open Market Committee (FOMC) meetings. These meetings can have a significant impact on stock prices, and understanding their historical trends can help you make informed trading decisions.
In preparation for the upcoming FOMC meeting on May 3, 2023, we've analyzed the highs from each FOMC meeting since 2021. We've compiled this data into a timeline that shows the market's reaction to these meetings, with vertical lines indicating market open and close.
As you can see from the image below, the majority of market movers occur in the after-hours trading following the FOMC meeting. This can be attributed to the fact that traders are reacting to the decisions made by the committee and adjusting their positions accordingly.
We've also calculated the percentage change from the original opening line to the high point for each meeting, with the highest mover being 6.14% and the lowest being 4.25%. These results were found at market close on Thursday following the FOMC meeting.
It's worth noting that past performance is not necessarily indicative of future results, and the market can be unpredictable. However, analyzing historical trends can be a useful tool for stock traders who want to be prepared for potential market movements.
In conclusion, the FOMC meeting on May 3, 2023, is likely to have an impact on the stock market. By understanding historical trends and analyzing market data, traders can be better equipped to make informed trading decisions. We hope that this analysis has provided some useful insights and helps you navigate the market with confidence.
I hope that this analysis of previous FOMC meetings and their impact on the stock market will be helpful to anyone who is curious or considering trading tomorrow. However, we want to emphasize the importance of doing your own due diligence and research before making any trading decisions. The FOMC meetings can be highly unpredictable, and it's essential to trade smart and cautiously.
As our analysis shows, the majority of market movement following the FOMC meetings tends to occur in the after-hours trading, making it even more crucial to be cautious. Therefore, it's crucial to stay informed, keep an eye on market trends, and use historical trends as a guide while making informed trading decisions.
In conclusion, I hope this analysis provides helpful insights for traders and investors, but remember to exer cise caution and always be mindful of the risks involved in trading. Happy trading!
Weekly FOREX Forecast: April 24 - 28th (Part 1)Welcome to another Forex Daily Forecast!
We will be preparing for the trading week ahead:
- Analysis of the individual currency Futures, to identify the strong and the weak
- Analysis of the FX pairs (EURUSD, EURCAD, ...)
- Analysis of Gold, Silver, and OIl too!
- Plot and plan for the best setups.
I'm taking my time with this analysis with the viewer in mind. I want you to see the markets through my eyes, so the analysis is fresh, done live, for you to learn how to do this yourself. I want to raise independent traders, capable of reading the markets and planning their own trades. I'm hoping we can end up raising each other's level, in an "iron sharpens iron" kind of way, coming together and sharing trade ideas in our community of traders.
Always remember, just because they aren't setting up now, doesn't mean it won't set up later! So stay tuned for updates!
We are going to look in depth at the forex market, using top down analysis. If you have a question on any of the content, please leave a message in the comments section. For beginners, this is how you analyze forex markets, identify supply and demand zones, key levels of support and resistance, and look for swing trade setups.
Smash a LIKE and tell me what you think in the comments section! These things help to grow this channel! I appreciate your support and feedback, my people! It encourages me to continue to provide free content to the public, in hopes to grow a community of sharp traders.
OP/USDT 0.786 Retracement Target 4.1 Based on my analysis, it appears that there is a breakout of OP Optimism, which has seen it shoot up and retrace 0.786. This particular retracement level is known to be a significant area for altcoin retracements. I have observed that OP has managed to hold above turning resistance, thereby transforming it into support. While there may be some resistance at 2.9 and 3.1, I believe that it will ultimately break out cleanly, leading to a surge towards 4.1.
To conduct this analysis, I have used a range of technical indicators including Fibonacci retracement levels, fixed area volume, anchored Vvap, and horizontal supports. With a leverage of 5X, my position was opened at 2.1 and closed at 2.8 before being reopened at 2.6, which corresponds to the 0.786 retracement level.
Based on my analysis, I have identified three take-profit levels, with the first target set at 3.1, followed by 3.5 and 4.2 respectively. I will continue to monitor the market closely, and once OP reaches the 4.1 level, I will conduct further analysis to determine the best course of action.
Leverage 5 X
Position open 2.1
Closed 2.8
reopened at 2.6 (0.786)
TP 1 3.1
TP 2 3.5
TP 4.2
XAUUSD Technical Analysis 13.04.2023 1h chart– Previous Daily candle closed Bullish at 2014.900 respecting recent Daily Support formed on Tuesday and closing below recent Resistance formed on Thursday 6th April 2023.
– Buys on close above 2017.500 targeting 4h Resistance at 2022.500, Leaving Runners to the Daily Wick Fill at 2028.600.
– Sells on close below 2011.400 targeting 1h Support at 2005.800, Leaving Runners to the 4h / 1h Support formed at 1998.400.
– High Impact News ahead for the US Dollar over the New York session starting with Core PPI m/m, PPI m/m, then Unemployment Claims and 30-y Bond Auction, High Volatility expected at the New York session.
GBPJPY Technical Analysis 13.04.2023 1h chart– Previous Daily candle closed weak Bullish at 166.120 within the Rejection wick formed on Tuesday 4th April 2023.
– Buys on close above 166.350 targeting 1h Resistance at 166.600, Leaving Runners to the 4h Resistance formed on 20th December 2022 at 166.840.
– Sells on close below 165.860 targeting 4h Support at 165.560, Leaving Runners to the 1h Support formed at 165.280.
– High Impact News ahead of the Pre London session for GDP m/m forecasting 0.1% / Previous : 0.3%.
Buying opportunity for MDX? Sharing my insightsMDX, despite having a small market value in the crypto world, is catching the attention of investors with its sharp price movements. My technical analysis indicates that MDX's trend break is close and its price is expected to experience a significant increase. My short-term target is to reach $0.40.
However, MDX's small market value means that its price can experience large fluctuations. Therefore, it's important to understand the risks before investing.
MDX has become a project that is on investors' radar, and its sharp price movements have increased its popularity. However, being careful before investing is always important. MDX's small market value can increase the fluctuations in its price. Therefore, I recommend closely monitoring MDX and understanding the risks before investing.
Weekly Market Update: Triangle Pattern Conclusion UnderwayAs of right now I would say the triangle pattern certainly is the prevailing pattern thesis. A triangle pattern is one that neither gives bulls nor bears much hope or despair as it tugs at both camps because its range bound. For this trader, I would classify myself as bearish on the overall market, however that does not preclude me from getting long for profit. As of my writing, I am currently short the ES and plan on closing out those positions down in my target box.
As we begin our descent into my target box, I should have enough price action to dial in my position closing area more so. From today’s price of 4130 down into the area of approximately (The Sweet Spot) 3950, I plan to access the pattern for a potential long. If price has declined in a corrective manner (3-Wave Pattern) into my target box, then a long into the 4300-4500 makes sense.
I wanted to keep this post simple, concise and to the point.
We have enough noise to contend with between this regional banking crisis, inflation, the Fed, Jobs and the overall economy.
Based on the pattern I have as of today, the above are my expectations…and as of today, I have no additional information that would cause me to change that analysis.
Best to all,
Chris
GBP/USD Breakout: Aiming for 1.30000 - Long OpportunityToday, we have observed a significant breakout in the GBP/USD market. The currency pair has managed to move beyond the resistance level, as illustrated on the chart. The daily candle is about to close, solidifying this breakout.
Our focus now shifts to the descending trendline visible on the 3-month chart. This trendline represents the next critical target, with a potential meeting point around 1.30000.
For traders considering a long position, a potential entry point could materialise following a successful retest of the recently broken resistance level, which now serves as support (in the range of 1.24000 - 1.24500).
Trading Plan:
Watch for a successful retest of the 1.24000 - 1.24500 zone as support.
Enter a long position upon confirmation of support.
Set a stop loss below the support zone to minimise risk.
Target the 1.30000 level, where the descending trendline could intersect with the price.
Always trade with proper risk management and remember to carry out your own analysis before taking any positions. Stay tuned for more updates, and happy trading!
XAUUSD : Gold Breakout Trading StrategyOANDA:XAUUSD
Hi , Trader's as you can see market is trading in ascending triangle
Ascending triangle is a bullish pattern , Price after breakout can reach next resistance level at 1986 area from there it can fall to 1974
It can retest 1974 area which now become it's support line
After completion of retest it will continue it's trend
❤️ Please, support my work with follow ,share and like, thank you! ❤️
Weekly Market Update - March 24 2023What Happened This Week? Bitcoin $BTC and ether $ETH hit 2023 highs this week, as the Fed raised interest rates but signaled a coming pause given continued banking woes.
Takeaways: Banking woes continued as UBS bought rival Swiss bank Credit Suisse to stem a brewing crisis. In a coordinated action, the Federal Reserve and other central banks increased liquidity in the U.S. dollar funding markets, resulting in a boost for bitcoin (BTC) and ether (ETH) prices, which both hit 2023 highs. The Federal Reserve announced a rate increase of 25 basis points (bps), but signaled a coming pause.
UBS Buys Credit Suisse in Bid to Avoid Further Bank Contagion: Following the collapse of Silvergate, Silicon Valley Bank (SVB), and Signature, this week brought further banking turmoil as Swiss bank UBS stepped in to rescue its rival Credit Suisse for $3.25 billion USD in a bid to avoid further panic in global financial markets. The Swiss central bank is also set to provide support for the deal with a loan of 100 billion Swiss francs backed by a federal default guarantee to help support the deal.
Central Banks Join Forces to Increase U.S. Dollar Liquidity, Giving Crypto a Boost: The Fed, along with five other central banks, announced on Sunday, March 19, 2023, coordinated action to boost liquidity in U.S. dollar funding markets. This marked an important shift in market conditions and signaled a possible end to the quantitative tightening which has been a major headwind throughout the past year.
The news helped to push bitcoin (BTC) and ether (ETH) higher at the start of the week, both reaching new YTD highs of ~$28.9k USD and ~$1,846 USD respectively. Prices then consolidated in the build up to Wednesday’s highly-anticipated Federal Open Market Committee (FOMC) meeting, with interest rate expectations changing dramatically over the past few weeks.
Fed Raises Rates Again, But Signals a Potential Pause: Despite the recent bank failures and growing concerns around the banking sector, the Federal Reserve announced a 25 bps rate increase at the latest FOMC meeting on Wednesday, as they push ahead in their fight to tame inflation. The FOMC, however, signaled that rate increases may be coming to an end, depending largely on incoming data. The latest Fed dot plot , which outlines interest rate expectations from Fed officials, suggests only one more 25 bps hike is likely this year.
Federal Reserve Chair Jerome Powell highlighted during a Wednesday news conference that the Fed had considered a pause in rates due to the recent banking crisis, but unanimously chose to raise rates given inflation data and the strength of the labor market. At the news conference, Powell stated “ if we need to raise rates higher, we will ,” which markets received as more hawkish than expected in light of the recent stress across the banking sector. This led to all the major U.S. indices sliding lower into the close, and crypto prices pushing lower too.
Bitcoin Takes Mild Dip Following Rate Increase, But Remains Strong: Bitcoin (BTC) faced strong resistance throughout the week at the ~$28.4k USD level, before briefly touching below $27k USD following the Fed's latest policy decision. However, Bitcoin remains the main focus among crypto with Bitcoin Dominance reaching another year-high of 47.8%.
XRP Has Strong Week, and Arbitrum Airdrops Token: In altcoin news, XRP was among the biggest gainers this week, with its price increasing by over 20% at one point as investors grew more confident that a ruling in the long-running court case between the SEC and Ripple would resolve in their favor, following a supplemental notice submitted by Ripple on Monday. The outcome of the case is being closely watched by many, as a positive result for Ripple could set a crucial precedent for crypto.
Arbitrum, one of the largest Ethereum Layer 2s, with nearly $2 billion USD in total value locked (TVL), launched a token airdrop on Thursday , with 11.5% of the total supply going to eligible Arbitrum users and 1.1% to DAOs that operate on the Arbitrum ecosystem. The token will be used for governance relating to Arbitrum One and Arbitrum Nova.
Read more about this and our topic of the week, interest rates.
See you next week.
Onward and Upward!
Team Gemini
*This material is for informational purposes only and is not (i) an offer, or solicitation of an offer, to invest in, or to buy or sell, any interests or shares, or to participate in any investment or trading strategy, (ii) intended to provide accounting, legal, or tax advice, or investment recommendations, or (iii) an official statement of Gemini. Gemini, its affiliates and its employees do not make any representation or warranty, expressed or implied, as to accuracy or completeness of the information or any other information transmitted or made available. Buying, selling, and trading cryptocurrency involves risks, including the risk of losing all of the invested amount. Recipients should consult their advisors before making any investment decision. Any use, review, retransmission, distribution, or reproduction of these materials, in whole or in part, is strictly prohibited in any form without the express written approval of Gemini.
End of Week Wrap! SPX, ES & Leading DiagonalAs the trading week comes to a close, market participants have witnessed a slow yet steady rise in SPX futures. I'm going to dive into the advantages of trading futures, analyze the recent price action in ES futures and the SPX index, and discuss the leading diagonal pattern that played out in the market. I will also provide insights into what to expect for the week ahead and share some advice on trading cautiously.
The Advantages of Trading Futures
Futures trading offers several benefits to traders, one of which is the absence of theta decay. Theta decay refers to the decline in the value of an option as time passes, which can erode profits in options trading. With futures, traders can benefit from even slight movements in their favor, making it easier to secure profits. Be careful for futures rollover dates, which TradingView conveniently places on the chart for your reference.
Recent Price Action in ES Futures and SPX Index
The ES futures experienced an upward movement, reaching the 4000 mark and hitting the resistance level at 4010. On the other hand, the SPX index did not quite make it to 4000. However, it is possible that it could reach that level next week, potentially after a lower open on Sunday evening. As the market conditions evolve, I will be closely monitoring ES for a move up to 4020.
The Leading Diagonal Pattern in Action
As anticipated, the leading diagonal pattern played out, and after breaking out, the price action briefly retested the trendline before moving up to 4000. This pattern indicates that the market is poised for a significant trend reversal.
Expectations for the Week Ahead
For the upcoming week, I anticipate that the market may open slightly lower, though not significantly. Shorting the market at this stage should be approached with caution and considered only for short-term day trades. After a potential pullback, I expect the market to make a move up towards the 4020 level later in the week before encountering another rejection. That is where I will consider adding short exposure. However, predicting such a scenario far into the future comes with inherent uncertainties, so it is wise to revisit my hypothesis next week and adjust as necessary.
Trade Carefully and Stay Informed
As we venture into the new trading week, it is crucial to trade carefully and stay abreast of market developments. By understanding the advantages of futures trading, closely monitoring price action in ES futures and the SPX index, and analyzing patterns such as the leading diagonal that unfolded over the last 2 days, you can better navigate the financial markets and make informed decisions.
As market conditions evolve, it is essential to continually reassess your strategies and adapt accordingly. By trading cautiously and staying informed, you can minimize risk and maximize your chances of success in this ever-changing landscape.
NIFTY 50 | working on our analysisNIFTY50 LEvels
Its Resistance of 17200
& it has a good SUPPORT on 17050
good oportunity to go for SHORT after breaking 17050 level
17050 is an important level mark it / keep an eye
EURAUDAs a student of SMC, there might be a reversal probably by next week.
Divergence happening
market structure formed
major down trend
let's see how the price will react next week. If you have any idea or suggestions, drop a comment down below.
