Nasdaq, Bitcoin, inflation – FinTwit trends for next week

TOP FINTWIT TRENDS – NASDAQ ($ NDX), BITCOIN ($ BTC), INFLATOIN IN FOCUS NEXT WEEK

  • The Nasdaq Composite was exposed to strong selling pressure amid rising government bond yields
  • Bitcoin and Dogecoin fell sharply as Major cryptocurrencies struggle to stay in demand
  • Fears of not-so-transitory inflation reinforce that Federal Reserve rejuvenating debate

Inflation has been the theme of the city for the past week and is likely to remain a dominant theme for the coming week. Fears of inflation then worsened scorching hot The CPI data was released last Wednesday, which intensified the debate over the rejuvenation of the Fed. Speculation that inflation will not be so transitory and that mounting price pressures will force the Fed to act – by rejuvenating asset purchases and favoring guidelines for rate hikes – has driven government bond yields sharply higher.

This has had a negative impact on tech-heavy Stock indices like the S&P 500 and the Nasdaq, but less so the Dow Jones. Major cryptocurrencies like Bitcoin and Dogecoin crashed, partly due to the lack of hyping by Elon Musk, who announced on Twitter that Tesla will no longer accept Bitcoin as payment for its electric vehicles. What are FinTwit traders looking for in the coming week with these key market topics?

NDX – NASDAQ PRICE TABLE: DAILY TIME FRAME (OCTOBER 22, 2020 TO MAY 13, 2021)

Chart of @ RichDvorakFX created with TradingView

I pointed this out when the Nasdaq extended its decline as bond yields rose in response Fed rejuvenates fears that the sale looked a bit excessive. The climb Trend line Linking the November 2nd and March 5th swing lows is likely to be vital to sustaining the Nasdaq bulls. The tech support near the price level of 12,930 is also highlighted by the 61.8%. Fibonacci Retracement level of the Nasdaq trading range since the beginning of the year. If the height is not adhered to here, the result is a Fibonacci retracement level of 78.6% and a 200-day retracement level moving average in focus.

In recapturing the 50-day simple moving average, the Nasdaq could see some higher results to test resistance to support around the 13,715 price level before reconsidering the all-time highs. Stocks could continue to face headwinds if inflation fears persist and government bond yields continue to rise. On the flip side, weaker government bond yields could ease some downside pressure on stocks and could open the door for the Nasdaq to rebound higher.

BTC – BITCOIN PRICE TABLE: DAILY TIME FRAME (DEC 27, 2020 TO MAY 13, 2021)

Bitcoin price table

Chart of @ RichDvorakFX created with TradingView

Bitcoin price movement officially fell into bear market territory last week after falling over -20% from its April 14 swing high of just under $ 65,000. Bitcoin bears drove crypto sharply down after Elon Musk rolled back its support by announcing that Tesla has stopped buying vehicles using BTC due to environmental concerns related to bitcoin mining. When Tesla first announced its $ 1.5 billion Bitcoin investment on February 8, it sparked a staggering 19.5 percent gain that day, closing just over $ 46,400. Though Elon written down Since Tesla will not sell Bitcoin, this development is not a good sign of the increasing acceptance of the private sector. Not to mention, after further criticism from SEC Chairman Gary Gensler during a Congressional report saying the chances of a Bitcoin ETF approved in 2021 being approved are very slim, there has been another blow to Bitcoin -Demand.

The potential for Bitcoin to retreat has been hinted at by a bearish divergence in the relative strength index for a while, like me previously pointed out. This brings into focus possible levels of tech support that can potentially keep the largest cryptocurrency afloat by market cap. Bitcoin bulls could attempt to defend the $ 45,055 price zone that was held until the close of trading on Feb.28. Breaking this technical barrier will expose previous resistance supported by the Jan 9th high. A major correction could cause Bitcoin bears to push toward the 200-day moving average before hitting year-to-date lows around the $ 30,000 price level. That said, maybe Ethereum can continue to outshine Bitcoin performance.

DXY – US DOLLAR INDEX PRICE TABLE WITH TEN-YEAR ESTIMATE RESULT OVERLAYED: DAILY TIME FRAME (DEC. 24, 2020 TO MAY 13, 2021)

US dollar price chart showing ten-year government bond yields

Chart of @ RichDvorakFX created with TradingView

Fears of inflation – or the lack of it – are likely to be reflected in changes in government bond yields and the corresponding US dollar volatility. Another sharp spike in government bond yields could suggest that bond market investors are taking the upside risks to inflation seriously and pricing in the potential the Fed may have to save sooner rather than later. Invalidation technical resistance The 1.70% level could be meaningful. While this could have a negative impact on speculative assets like stocks and crypto, it would likely coincide with a stronger US dollar, highlighted by the generally positive correlation between the DXY index and ten-year government bond yields.

Conversely, weaker government bond yields would likely indicate that the Fed is doing its job to anchor long-term inflation expectations and buy the markets into the passing narrative. Because of this, FinTwit traders may want to consider moving up the direction of government bond and US dollar yields to find potential reasons as to where the markets could go next.

— Written by Rich Dvorak, Analyst for DailyFX.com

Connect to @ RichDvorakFX on Twitter for real-time market insights

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