April 23, 2021 14:24:07
We look at three of the most compelling trade set-ups, as seen by a veteran ex-City trader:
The Bank of Japan meet next week but no changes are expected after they tweaked some of their policy tools last time around. The yen is very sensitive to US interest rates and as these have come off their March highs, so USD/JPY has sold off dramatically from its high, close to 111. Any more selling seen in risk and stock markets will also see more investors flock to the safe haven JPY, pushing this pair lower.
We started today at a key area of support trading below the 50-day moving average and on a crucial Fibonacci retracement level (38.2%) from this year’s high to low. A strong break lower through this last line of support sees no major level until the 50% retrace level at 106.77. The weekly close is critical here and below 108 is bearish. That said, after three sharp down weeks, we could consolidate around here especially if stocks hold up.
Bitcoin has bust through the hugely psychological $50,000 level on news that President Biden is proposing a dramatic increase in capital gains tax that will potentially impact profits from currency trading, just as with any other profitable income. Although this has to get passed and isn’t “new” news as it was flagged in the Democrats pre-election campaign, markets are fearing the worst if wealthy investors have to exit the market.
Bitcoin has been struggling this week after failing to hold its ground and support around the 50-day moving average. Last Thursday’s spike low at $51,300 offered another marker for bulls to defend but the break of an important Fibonacci level (23.6%) points to a possible trend change, rather than just a correction. We are trading right on the 100-day moving average so a weak close means we could head for big figures below ie $48k, $47k. As we know with BTC though, we should expect sharp moves in either direction and momentum indicators are stretched.
Company results invariably cause volatility so Tesla’s release on Monday should offer up plenty of opportunities for the nimble! If earnings miss, which they have done in five out of the last eight, the average move in the stock has been nearly 6% while a beat has seen gains on average of close to 10%. Key figures to watch out for in the company report will be guidance on delivered vehicles (ie sales) for the year and revenue of $10.43 billion, up from $5.99 billion a year ago.
Technically, the strong uptrend from around this time last year exploded in November with prices touching record highs at $900 in late January. Since then, the pullback has recovered to the halfway mark between this year’s high and low. Prices are just above the 100-day moving average, but bulls will want to see a move above this month’s top at $780 to be confident of another march on those all-time highs. If we lose the 100-day MA support, then bears will target the long-term trendline around $630.
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