NASDAQ 100 Technical Analysis

The NASDAQ 100 has rallied during most of the week, which is not a huge surprise considering that the Federal Reserve has come and gone, and they reiterated their desire to cut interest rates this year at least twice, probably three times. So, with that being the case, Wall Street, of course, celebrates cheap money and the NASDAQ 100 has shown just how bullish they’ve become. If we can break above the top of this candlestick for the week, I do think we will go much higher, perhaps reaching the 19,000 level before it’s all said and done.

The 17,775 level is an area that I think offers support based on the daily chart and the recent consolidation that we’ve seen for the last four weeks. In general, this is an uptrend. You do not want to be fighting it, so there’s not a lot to do other than to buy dips on short-term charts. Longer-term traders are simply in a buy and hold mode. And I think that still serves you well if you choose not to monitor the markets very closely, all things being equal, everything looks like it’s positive and while we will eventually see a significant pullback, there’s nothing on the chart that suggests it’s coming in the short term.

The current recovery in the price of Bitcoin (BTC) has triggered another bout of liquidations in the industry. Current data from CoinGlass shows a shift in short traders, with market liquidations coming in at $311.83 million and more than 90,000 traders liquidated overall.

The price of Bitcoin at the time of writing is pegged at $66,969.92, up by more than 6% over the past 24 hours. For a digital currency that traded as low as $62,082.55 within the time frame, recording this uptick is a major boost, one that has not favored short sellers.

Exactly $98.99 million worth of Bitcoin has been liquidated over the past 24 hours, with shorts sell-offs coming in at $65 million and long liquidations worth $33.99 million. Ethereum (ETH) follows closely as the second most liquidated asset, with $86.4 million worth of coins liquidated. For Ethereum, $48.27 million short traders were liquidated as against a total of $38.13 million suffered by long traders.

The ETH liquidations can be explained considering the alleged investigation into the Ethereum Foundation. The knee-jerk reaction and the subsequent recovery that has helped Ethereum record 13% growth to $3,526.98 marks the reason for the recent liquidation spark.

Market in undefined mode

The digital currency ecosystem is at a tipping point. While the correction recorded in the past week is generally considered healthy for the entire industry, it remains unclear whether the current price boost will mark the beginning of another all-time high play for Bitcoin and other altcoins.

Industry leaders are sticking with Ethereum despite its apparent distress and uncertainties surrounding the likely approval of its proposed spot ETH ETF product, owing to its potential securities classification.

In all, investors are holding onto core building fundamentals like Dencun upgrade, which may help push measurable growth in the long term.

As the North American session begins, the JPY is the strongest and the AUD is the weakest. The USD is battling with the JPY as the strongest.

Central banks have been key this week. The Bank of Japan raised rates, and the JPY moves lower (hmmm). However, the ceiling between 151.91 (high from 2023) to 151.945 (high from 2023) remains as a “governor” to the upside speed for the pair. The high price today did extend to a new 2024 high 151.85, and moved lower. Traders are leaning.

The SNB went the other way and cut rates by 25 basis points, surprising the market. It continued its run to the upside today trading at the highest level since November 14.

The Fed and the Bank of England kept rates unchanged with the market interpreting “a go” for cuts later this year. The Fed kept 3 cuts in play for 2024 in their dot plot. The USD moved lower at first (they were the first to announce this week), but the USD has been the strongest over the last two days helped by stronger data and weakness abroad (technicals have helped as well).

The RBA kept rates unchanged, and then employment came in stronger on Thursday, sending the AUDUSD higher. However, the focus shifted and reversed lower with the USDs rise the last two days.

Staying on the central banks, the leaders have been speaking today:

Bank of England Governor Bailey expressed that market expectations for rate cuts within the year are rational, given the trajectory of inflation. He noted that the technical recession anticipated at the end of 2023 is showing signs of easing, and while optimistic about recent economic improvements, he emphasized the need for consistent progress towards the inflation target before considering rate reductions. Bailey confirmed that contemplating rate cuts in 2023 aligns with the Bank’s outlook, mentioning in his comments to the Financial Times that each meeting presents an opportunity for new decisions, highlighting the importance of wage trends aligning favorably. He clarified that the BOE does not require inflation to reach the 2% target before initiating rate cuts, acknowledging that recent economic developments are positive but reminding that the effort to control inflation is ongoing and not yet complete.

In the EU, ECB President Christine Lagarde, speaking at the Euro Summit in Brussels, indicated that inflation is anticipated to keep decreasing. She highlighted that economic growth is expected to accelerate throughout the year, fueled largely by a rise in purchasing power. Lagarde stressed the importance of enhancing productivity through greater capital investment for economic resilience. She emphasized the critical role of the Capital Markets Union in achieving this goal, underscoring its significance in the broader strategy to strengthen the EU’s economic foundation.

ECB policymaker Joachim Nagel stated that the likelihood of a rate cut before the summer break is rising, with a June rate cut being more probable than one in April. He emphasized that rate cuts are not automatic and depend on the economic conditions at the time.

ECB policymaker Robert Holzmann mentioned that a rate cut is being prepared, although the exact timing remains uncertain, as decisions will be data-dependent. While some anticipate that conditions in June might allow for a rate cut, Holzmann expressed caution, noting his view that inflation may be more persistent than others anticipate, indicating a desire to wait for June data before making a decision.

Today, we get to hear from Fed’s Powell two days after the FOMC rate decision and his press conference. The market hitched onto the 3 cuts in 2024 dot plot, taking stocks higher and to record levels. For the week, the US 10 year is down -7.1 basis points and the 2 year is down by a greater -12.0 basis points.

A snapshot of the other markets as the North American session begins currently shows:

• Crude oil is trading up eight cents or 0.10% at $81.15. At this time yesterday, the price was at $80.76
• Gold is trading down -$13.85 or -0.63% at $2167. At this time yesterday, the price was at $2207.54
• Silver is trading down $-0.11 or -0.46% at $24.58. At this time yesterday, the price was at $5.42
• Bitcoin currently trades at $64,785. The low price yesterday reached $64,537. At this time yesterday, the price was trading at $67,025. The all-time high price reached last week reached $73,794. The high price today reached $66,631.

In the premarket, the major indices are trading lower today after all three indices closed at record levels yesterday (again):

• Dow Industrial Average futures are implying a decline of -20 points. Yesterday the index rose 269.24 or 0.68% at 39781.38
• S&P futures are implying a decline of -7.3 points. Yesterday, the index rose 16.91 points or 0.12% at 5241.54. The S&P closed at a record level for the 20th time this year.
• Nasdaq futures are implying a delien of -49 points. Yesterday, the index rose 32.43 points or 0.20% at 16401.84

In the European equity markets, the major indices are trading mostly higher.

• German DAX, +0.06%
• France CAC , -0.24%
• UK FTSE 100, +0.67%
• Spain’s Ibex, +0.67%
• Italy’s FTSE MIB, +0.08% (delayed by 10 minutes).

Shares in the Asian Pacific markets were mostly higher:

• Japan’s Nikkei 225, +0.18%
• China’s Shanghai Composite Index, -0.5%
• Hong Kong’s Hang Seng index, -2.16%
• Australia S&P/ASX index, -0.15%

Looking at the US debt market, yields are lower:

• 2-year yield 4.614%, -1.7 basis points. At this time yesterday, the yield was at 4.566%
• 5-year yield 4.226%, -0.27 basis points. At this time yesterday, the yield was at 4.192%
• 10-year yield 4.241%, -3.0 basis points. At this time yesterday, the yield was at 4.221%
• 30-year yield 4.411%, -3.0 basis points. At this time yesterday, the yield was at 4.410%

Looking at the treasury yield curve spreads:

• The 2-10 year spread is at – 37.4 basis points. At this time yesterday, the spread was at – 34.4 basis points
• The 2-30 year spread is at – 20.3 basis points. At this time yesterday, the spread was at – 15.4 basis points

European benchmark 10-year yields are lower:

The Fed left interest rates unchanged as expected with basically no change to the statement. The Dot Plot still showed three rate cuts for 2024 and the economic projections were upgraded with growth and inflation higher and the unemployment rate lower.Fed Chair Powell maintained a neutral stance as he said that it was premature to react to the recent inflation data given possible bumps on the way to their 2% target. The US CPI and the US PPI beat expectations for the second consecutive month.The US Jobless Claims beat expectations across the board.The latest US Manufacturing PMI beat expectations while the Services PMI missed slightly. Both the measures remain in expansion though. The market expects the first rate cut in June.

GBPThe BoE left interest rates unchanged as expected but with Haskel and Mann this time voting for a hold instead of a hike. The employment report missed expectations with an uptick in the unemployment rate and an easing in wage growth.The UK CPI missed expectations across the board but with Services inflation remaining sticky, which continues to support the BoE’s patient stance.The latest UK PMIs showed the Services PMI missing expectations slightly and the Manufacturing PMI beating. The market expects the first rate cut in June.

GBPUSD Technical Analysis – Daily Timeframe

On the daily chart, we can see that GBPUSD spiked back to the upper bound of the range following the Fed decision but eventually erased all the gains as the sellers piled in with a defined risk above the resistance to position for a drop back into the 1.2612 support. The buyers, on the other hand, will likely step in around the support to position for a rally back into the resistance targeting a breakout.

GBPUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price broke through the support zone around the 1.27 handle following the more dovish change in the voting split in the BoE rate decision and the stronger US data. The pair should now reach the 1.2612 support where we will likely get some reaction as the buyers will want to buy the dip to position for a rally all the way back to the resistance. If the price were to break below the support though, we can expect the sellers to increase the bearish bets into the 1.25 handle.

GBPUSD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that in case we get a pullback from these levels, the sellers will have a better risk to reward setup around the 1.27 handle where we can find also the confluence with the 38.2% Fibonacci retracement level and the red 21 moving average. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and increase the bullish bets into the 1.28 resistance.

Upcoming Events

Today we conclude the week with the UK Retail Sales data.

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