Bitcoin bulls are being converted into bears at an increasing rate. The cryptocurrency is down over 20% while negative news and rumours are weighing on the price. Rumours on Biden introducing a high tax on winnings the cryptos puts pressure on the prices. This is also weighing on the US stocks and all the major US index futures traded lower yesterday. The basic materials sector lost the most (1.69%) while the technology sector and energy lost both 1.17%. The highly traded tech stocks Tesla, Facebook, Microsoft and Apple lost all between 1.17% and 3.28%. By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.
USOIL rallied from our support zone (as expected). The USD index is consolidating above 91.00 with the weekly claims coming in better than predicted by the analyst consensus (547K, 607K expected). The ECB provided no surprises as they kept the rate at 0.00%. Today’s action is provided by the major economies releasing their PMI numbers. For exact times and for more details, see our economic calendar here.
The crypto space, in general, is down as it tends to follow bitcoin (down over 20% in 10 days) which explains why Litecoin has also dropped significantly. The coin is now trading at 229.39, or in excess of 30% lower than the highest prices paid for the coin. Highly correlated Ethereum has also suffered lately but its losses are more contained. At the time of writing this, Ethereum is trading 15.8% lower than its ATH print. You can trade these alternative assets with the TIOmarkets MT4 platform. Go to TIOmarkets.com/contact to get more details.
The reason for the volatility in these alternative assets is the fact that they don’t have intrinsic value. Therefore they are only pure momentum plays where investors are betting on someone else paying a higher price than they have. If this expectation is removed upside momentum can turn into downside momentum very fast.
USOIL is rallying from our support zone just as we expected. The price of oil dropped due to coronavirus related concerns (the crisis in India) and increasing stockpiles in the US but is now recovering. There are still significant worries internationally though. Canada and UAE are banning passenger flights from India and Pakistan for a period of 30 days. We said yesterday that USOIL has consolidated at our support zone (60.45 – 61.30) and if it continues we could start to focus on the long side again. At the time of writing this, USOIL has rallied almost 2% from yesterday’s low of 60.59.
The nearest support zone is obviously the one the price is now rallying from. There we have the 20-day SMA, two recent S&R levels and the price channel low nearby. The next significant resistance level is at 64.34. If the channel low is violated then the next important support area can be found near the 61.8% retracement level.
Recent macroeconomic data releases
- UK CPI 0.7%, 0.8% expected
- Canadian CPI 0.5%, 0.6% expected
- Canadian Overnight Rate 0.25%, 0.25% expected
- US Crude Oil Inventories 0.6M, -3.7M expected
- ECB Main Refinancing Rate 0.00%, 0.00% expected
- US Unemployment Claims 547K, 607K expected
Important macroeconomic data releases today
UK Retail Sales 1.5% expected
- French Services PMI 46.6 expected
- French Flash Manufacturing PMI 59.0 expected
- German Flash Manufacturing PMI 65.8 expected
- German Flash Services PMI 51.1 expected
- EU Flash Manufacturing PMI 62 expected
- EU Flash Services PMI 49.1 expected
- UK Flash Services PMI 59.0 expected
- UK Flash Manufacturing PMI 58.9 expected
- US Manufacturing PMI 60.9 expected
For more details, see our economic calendar here.
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Chief Market Analyst
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All the prices in this report are CFD prices based on price charts provided by TIOmarkets unless otherwise stated.
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