TOP FINTWIT TRENDS – NASDAQ ($NDX), BITCOIN ($BTC), INFLATOIN IN FOCUS NEXT WEEK
- The Nasdaq Composite has confronted heavy promoting strain amid surging Treasury yields
- Bitcoin and Dogecoin fell sharply as major cryptocurrencies wrestle to remain in demand
- Fears of not-so transitory inflation are intensifying the Federal Reserve tapering debate
Inflation has been the speak of city this previous week, and it’ll seemingly stay a dominant theme within the week forward. Inflation fears worsened after red-hot CPI information was launched final Wednesday, and this intensified the Fed taper debate. Hypothesis that inflation is not-so transitory and that mounting worth pressures will drive the Fed to behave – by way of tapering asset purchases and bringing ahead rate of interest hike steerage – has despatched Treasury yields snapping sharply larger.
This has weighed negatively on tech-heavy stock indices just like the S&P 500 and Nasdaq, however much less so on the Dow Jones. Main cryptocurrencies like Bitcoin and Dogecoin nosedived, partly because of lack of hyping from Elon Musk, who introduced on Twitter that Tesla will not settle for Bitcoin as fee for its electrical autos. What are FinTwit merchants watching out for throughout these key market themes within the week forward?
NDX – NASDAQ PRICE CHART: DAILY TIME FRAME (22 OCT 2020 TO 13 MAY 2021)
I identified when the Nasdaq prolonged its slide as bond yields spiked in response to Fed taper fears that the selloff was beginning to look a bit overdone. The ascending trendline connecting the 02 November and 05 March swing lows will seemingly be essential for Nasdaq bulls to keep up. Nearside technical help across the 12,930-price degree can also be highlighted by the 61.8% Fibonacci retracement degree of the Nasdaq’s year-to-date buying and selling vary. Failure to keep up altitude right here brings the 78.6% Fibonacci retracement degree and 200-day easy moving average into focus.
Reclaiming the 50-day easy shifting common may see some comply with by way of larger by the Nasdaq to check support-turned-resistance across the 13,715-price degree earlier than all-time highs are reconsidered. Shares may proceed to face headwinds if inflation fears linger and Treasury bond yields maintain pushing larger. Alternatively, softer Treasury yields stand to alleviate a few of the downward strain felt by shares and will open the door for the Nasdaq to rebound again larger.
BTC – BITCOIN PRICE CHART: DAILY TIME FRAME (27 DEC 2020 TO 13 MAY 2021)
Bitcoin worth motion formally fell into bear market territory this previous week after sinking over -20% from its 14 April swing excessive simply shy of $65,000. Bitcoin bears drove the crypto sharply decrease after Elon Musk backpedaled his help by asserting that Tesla has suspended automobile purchases utilizing BTC because of environmental considerations round Bitcoin mining. When Tesla first introduced its $1.5-billion Bitcoin funding on 08 February, it sparked an eye-popping 19.5% acquire that day to shut proper above $46,400. Although Elon noted that Tesla won’t be promoting any Bitcoin, this improvement doesn’t bode nicely for the narrative of accelerating personal sector adoption. To not point out, after extra criticism from SEC Chair Gary Gensler throughout a congressional testimony, who mentioned the “odds we’ll see a Bitcoin ETF accepted in 2021 are very low,” there was one other blow to Bitcoin demand.
Potential for a pullback by Bitcoin was hinted at by bearish divergence on the relative energy index for some time, as I previously pointed out. This brings to focus doable technical help ranges that may be capable of maintain the most important cryptocurrency by market cap afloat. Bitcoin bulls may look to defend the $45,055-price zone underpinned by the 28 February shut. Breaching this technical impediment exposes prior resistance-turned-supported supplied by the 09 January swing excessive. A bigger correction may see Bitcoin bears make a push towards the 200-day shifting common earlier than eying year-to-date lows across the $30,000-price degree. That each one mentioned, maybe Ethereum can continue to outshine Bitcoin efficiency.
DXY – US DOLLAR INDEX PRICE CHART WITH TEN-YEAR TREASURY YIELD OVERLAID: DAILY TIME FRAME (24 DEC 2020 TO 13 MAY 2021)
Inflation fears – or lack thereof – will seemingly be mirrored by modifications in Treasury yields and corresponding US Dollar volatility. One other sharp leap in Treasury yields may point out that bond market traders are taking upside dangers to inflation severely and pricing in potential that the Fed may must taper coverage earlier than fairly than later. Invalidating technical resistance posed by the 1.70% degree might be telling. Although this may increasingly weigh negatively on speculative property like shares and crypto, it will seemingly coincide with a stronger US Greenback as highlighted by the widely optimistic correlation between the DXY Index and ten-year Treasury yields.
Conversely, softer Treasury yields would seemingly recommend that the Fed is doing its job protecting long run inflation expectations anchored and markets shopping for into the transitory narrative. Because of this FinTwit merchants may need to take into account protecting the route of Treasury yields and the US Greenback towards the highest of their radars for potential bellwethers to the place markets may head subsequent.
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