It is the first Friday of the month, which means NFP is coming out later. However, non-farm reports have played a significantly smaller role in moving the markets recently, with many other pressing events happening around the world.
Source: Trading Central Economic Insight
We can observe that in the past 3 instances, the price of EURUSD has moved less than 10 pips after 4 hours of the news releases, which is significantly slower compared to previous months. Still, we have to trade carefully around major news events as there might be surprises.
EURUSD
EURUSD Daily Chart. Source: Tradingview
It is still looking very bearish for EURUSD as Euro is trading at its weakest against the dollar in 5 years. Lingering around the 1.05000 key level, NFP could be the catalyst for a continued down move, targeting 1.03500 support. 1.0650 and 50,200 double moving average will limit further move to the upside.
XAUUSD
XAUUSD H4 Chart. Source: Tradingview
From a technical perspective, gold made a lower high and formed a nice little bearish trendline, while maintaining its prices under both 50 and 200 moving averages. Rising interest rates will keep gold prices in check in the short term. If gold takes a dive later today, we are looking at 1850 key support.
Crude Oil
USOIL H4 Chart. Source: Tradingview
Oil continues to rise for a third straight day, mainly due to the ongoing supply concern and an upcoming EU embargo on Russian oil. The US is also expected to purchase 60 million barrels of oil for its emergency stockpile.
SP500
SP500 Daily. Source: Tradingview
SP500 closed 3.56% lower following the announcement on interest rates and Powell’s talk.
It is getting pretty heavy at 4150 level. We will see where the market opens later and if it breaks to the downside, we will be looking at 4000 psychological level.
BTCUSD
BTCUSD Daily Chart. Source: Tradingview
Bitcoin had a 7.94% drop yesterday, trading in the range of 36000. As the minor bullish trendline got broken, Bitcoin is in a bearish territory and we may see the coin hit 34400 support shortly. However, there are still no significant moves and our outlook remains neutral.
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What is ApeCoin?
ApeCoin is one of the hottest cryptocurrencies and has been the talk of the town lately. If you have ever done slight research on NFTs, you will surely come across Bored Ape Yacht Club (BAYC) and ApeCoin is very much linked to these ultra-expensive NFTs.
According to Apecoin’s official website, the coin is intended for the web3 economy and will serve as a protocol layer for future initiatives. It is the governance asset within ApeCoin DAO and coin holders will be able to vote on proposals made by the community. However, it is also worth noting that owners of BAYC NFTs are entitled to a certain amount of ApeCoins for free. Is that good or bad news? Only time will tell.
Recent developments
ApeCoin has had an extraordinary rally, bagging more than 130% in gains between 19 and 28 of April. However, the tables turned rather quickly, and let us find out why.
The main driver for the significant gains was the anticipation of Otherdeed NFTs, a virtual land sale backed by BAYC creators, Yuga Labs.
Since Dutch auction is a common minting method for NFTs, investors are buying and hoarding ApeCoins so that they could purchase as much Otherside Metaverse Virtual Land as possible during the auction. It turned out that the NFTs were sold at a flat price of 305 ApeCoin, sending ApeCoin down the drain. Adding to the disappointment is the implementation of a limit in terms of how many such NFTs can be minted per wallet in the first release.
On the flip side, ApeCoin is accepted as a means of purchase for all Yuga Labs products. Yuga Labs is huge. It is valued at a whopping $4 billion just a year after its inception. A close association with the company will add a nice little support to its bullish outlook in the long run, considering all the potential use cases of ApeCoin. Not only that, but OpenSea, one of the biggest marketplace for NFTs has also announced that ApeCoin will be accepted for purchasing some of the NFTs on the platform.
Impact
While the virtual land sold out like hotcakes, a huge amount of money (over $80 million) was lost in gas fees as the investors failed in their attempt to mint the land NFTs.
Two parties
A. The lucky ones
Those who were lucky enough to mint the land NFT, sold it, and made a lucrative amount of profits (Easy $10k bagged.)
Figure1: One of the offers for Otherside Land NFT. Source: OpenSea
B. The not-so-lucky ones
Those who were not lucky enough wasted thousands of dollars, failed to mint the land NFT ended up dumping their ApeCoin in rage, which causes the extended sell-off in ApeCoin
What Now?
As ApeCoin (APEUSDT) just went through a huge retracement, the most pressing question then becomes: “Should I jump on the bandwagon and buy the dip?”
But before you do so, let’s do some quick analysis:
APEUSDT Daily
Source: TradingView
From a technical standpoint, ApeCoin plummeted by more than 40% in the past 3 days, with the previous swing low and 200 MA acting as immediate support. If the support holds, the price may resume its upwards trajectory. However, if prices break through the first support, we are looking at the next support level at $10.90 for a potential rebound.
The plunge may seem like a huge drop, but if we take a step back and shift our perspective, ApeCoin is actually trading at the same prices as it was a week ago.
Source: CoinMarketCap
ApeCoin is also the metaverse coin with the highest market capitalization, followed not so closely by Decentraland in second place and The Sandbox in third. Could this be a signal that ApeCoin is still relatively overvalued?
BTCUSD Daily
Source: TradingView
We can also make a quick comparison to see how ApeCoin performed relative to Bitcoin, the leader in the Cryptocurrency market.
Even after a retracement of greater than 40%, ApeCoin still outperformed Bitcoin by a staggering amount. Since its listing back in March 18 on Coinbase, ApeCoin has risen by more than 82% at the time of writing. On the other hand, Bitcoin has lost almost 6% of its value during the same period.
Summing It Up
To conclude, ApeCoin is still the new kid on the block, and we can see its unlimited potential as the Metaverse and the cryptocurrency industry, in general, continue to evolve.
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Welf
Trader, Technical Analyst
Economic calendar
Monday- UK, China bank holiday
Tuesday- China, Japan bank holiday, RBA interest rates
Wednesday- China, Japan bank holiday, ADP Non-farm employment change
Thursday- Japan bank holiday, FOMC statement, GBP monetary policy, and interest rate
Friday- NFP
We should all keep an eye on the post-FOMC press conference as Jerome Powell may provide a lot more information in regards to interest rates and markets in general. It is expected that the Fed is going to raise interest rates by 50 basis points in May and June, but considering how overheated the inflation figure has become, there may be surprises. We also have Australia and UK announcing their interest rates later this week. Are they going to follow suit and raise interest rates together with the Fed?
USDJPY
We are also very excited about USDJPY. Bank of Japan is offline until Friday while the Fed is raising interest rates and Powell making comments. Its volatility may increase even more amidst trading at decades-high levels.
USDJPY H4
Technical-wise, the resistance turned support is holding up pretty well while working together with the 50 moving average to keep prices in the bullish territory. It is very likely that prices will continue upwards with the next medium-term target at 133.82.
Gold
Gold H4
In our previous analysis, we thought gold was doing another fake-out as it traded back into its consolidation zone. Turns out, it is continuing its downward move as the New York session commenced last Friday. The faster 50 moving average also crosses below the 200 moving average which is a bearish technical signal. At the time of writing, it is approaching the demand zone marked in blue again.
As for now, I am just sitting on the sidelines and waiting patiently for the FOMC meeting later this Thursday for a clearer directional bias in the medium to long term. I would also like to see how other market participants react to Powell’s statement while processing all the macroeconomic and political uncertainties around the world.
Oil
Crude oil breached $105 per barrel last week but it failed to close above. Apparently, the slowing down in China’s demand is outweighing supply concerns fears as the EU is looking to ban Russian Crude. If a short-term retracement is to take place, $94 would act as the most solid support. Otherwise, we are still aiming at $115 as our next target.
US Stocks
The stock market is not reacting too well to the interest rate hike plans. In a textbook scenario, higher interest rates make it costlier for businesses to take loans, make investments, etc. which would reduce their bottom line performance in terms of revenues and profit margins. Thus, investors’ confidence drops, and capital flees away for higher returns assets.
SP500 Daily
SP500 closed 2.9% lower last Friday. It crashed into 4150 level with a big red candle but did not penetrate it. You can also look at the pre-markets before the market open to get a better grasp of where the market will open.
Nasdaq Daily
Tech-focused Nasdaq is trading around 13000 key levels. However, it feels like the prices are getting heavier and the index could fall to the next support at 12300. FOMC statement remains the most important catalyst this week for all USD-related assets.
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Welf
Trader, Technical Analyst
It is a bank holiday in Japan while their home currency is stumbling to a new decades-low as USDJPY surged past the 130 key levels.
Dollar on Steroids
USDJPY Daily Chart
The dollar Yen rallied more than 240 pips yesterday to close significantly above its previous swing high. As Asia opened this morning the pair did start to retrace slightly, but considering the strong momentum that his pair has, we are eyeing for 133.80 level as our next target, which is currently 360 pips away. As the Japanese traders are out for the day, trading volume is definitely low, and do watch out for higher volatility if you are trading Yen.
DXY Daily
It is also worth mentioning that the Dollar index went for a good run and has had a streak of 6 consecutive green days where it gained more than 3.3 % against a basket of foreign currencies.
GBPUSD Daily
As USD strengthens, other major currencies suffer. If we look at GBPUSD on the Daily, the key support was broken without any effort, as if it wasn’t there in the first place. GBPUSD lost 4.82% against the dollar in just 6 trading days. We may see Pound Dollar testing 1.2250 key support next, with confluences including the strong bearish momentum, and also a very asymmetrical order book from the retail traders where more than three-quarters of them are buying into the downtrend.
GBPUSD H4: cTrader
Oil: Ending the month in green?
US Crude Daily
Oil continues to post gains for the fourth day and is attempting to break above $105 resistance. It is set to close the month with gains as supply concerns trump the fall in oil demand from China’s lockdowns. I am expecting prices to rise in the medium to long term when China eases its COVID measures, and the supply is not boosted enough to replace Russia’s crude.
Gold: Another Fakeout
Gold H4
It is very interesting as the USD was beating most of the other currencies, but gold has had a significant bounce from the $1880 demand zone. It is now trading back into its consolidation range, and this could be another fakeout as highlighted in the blue circles. Outlook on gold remains mixed as the dollar is going to continue gaining strength with the upcoming rate hikes, while on the other hand, it is still the go-to safe haven with so many uncertainties in the markets.
US Stock Indices
SP500 H4
As 4300 key support got broken, it encountered another level of buying pressure at 4150. Will the broken support turn into a resistance level and prevent SPX from going up further in the short term?
Nasdaq Index Daily
Looking at the tech-heavy Nasdaq index, 13000 key support is holding up pretty well despite a disappointment in earnings from Apple and Amazon. However, I don’t think the support will last long. The smaller companies in the Nasdaq index may not fare any better when the largest players are getting impacted negatively byfactors from supply chain disruptions to inflation and war.
Bitcoin: Please stop hitting the Pause Button
Bitcoin Daily
Bitcoin is not moving much. In fact, the entire crypto market is slowing down to a halt as capital fled from riskier assets.
We can see that the Crypto exchange volume has dropped by more than half since the end of last year. We are still waiting for a breakout to either side for a more solid directional bias.
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Welf
Trader, Technical Analyst
It is finally happening?!
In a rapid turnabout, Twitter’s board has accepted Elon Musk’s offer to take the social media company private at $44 billion and it is quite a surprise as the board was against it initially.
Musk has said that his main goal is not about economics and profits but to make Twitter a place for free speech. With that objective in mind, he came out with a financing package comprising of $25.5 billion of fully committed debt and margin loan financing with some of the top financial institutions like JP Morgan and Bank of America and is using about $21 billion of his own equity to finance that purchase.
The next steps would be the shareholder vote and obviously going head-on with regulatory bodies like the SEC. As we know, the Saudi shareholders are completely in opposition to the acquisition. However, they do not represent enough ownership to prevent the deal from happening and most likely are unable to influence other shareholders to follow suit. As for SEC, Musk has had some feuds with them in the past over his “funding secured” statement he made in regards to his other company Tesla and that may pose some obstacles to his takeover.
NYSE: TWTR Daily Chart
Markets reacted positively to the offer acceptance and closed 5.63% higher than the previous day. It has surpassed the half-century mark and is heading straight for the recent swing high as it breaks past the 200 daily moving average.
There are mixed reactions from Twitter users. Some users tweeted #RIPTwitter and decided to leave the platform when Elon Musk takes over, while on the other hand politicians like Senator Ted Cruz, Greg Abbott and Marsha Blackburn fully back Musk’s takeover.
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BreadMaker
Trader, Technical Analyst
Economic Calendar
Monday- Australia, New Zealand, and Italy Bank Holiday
Wednesday- AUD CPI
Thursday- BOJ monetary policy report (tentative)
Investors breathe a sigh of relief as Macron beat Le Pen in the French presidential election. They were worried because Le Pen supports nationalizing key industries, cutting French’s contribution to EU budgets, and all the other policies that are not in favor of the markets.
STOXX 50 Daily Chart
EU Stock Indices are expected to open higher as the Eurozone starts its session later.
Currently, STOXX is trading below both its 50 and 200 MA and has been ranging for the past month. If it opens above 50 MA, our first target will be the 200 MA.
China’s covid situation has not been improving. In fact, Shanghai recorded the highest number of daily deaths from Covid as the city enters its fourth week of lockdown.
Elon Musk has begun talks with Twitter after many of its shareholders approached the company and urged them not to miss out on the deal with Musk. In terms of the offer price, hedge funds want Twitter to accept the offer as they are concerned about inflation and the recent plunge in technology stocks (Nasdaq – 10.2% over the past 3 weeks)
TWTR Daily Chart
Twitter is now trading at 10.87% or $5.31 below Musk’s offer price. Should the deal be successful, Twitter’s shares could rally way past $54.20, with a longer-term target at $68 area.
FOREX
USDJPY M30 Chart
USDJPY has been ranging since the 20th of April and is currently in an ascending triangle formation with its lower trendline and 200 MA acting as support. Although we are expecting a continuation to the upside with the first target at 129.13, we still mark our next support level at 127.50.
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EURUSD Daily Chart
EURUSD is trading just below its recent swing low. There might be a retracement to the upside as the market reacts to Macron winning the presidential election and EUR gaining some strength. However, the aggressive interest rate hiking plan is going to underpin USD’s strength in the short to medium term.
Stocks
SPX Daily
The stocks market is not taking the interest rate hike plan too well with SP500 down 5.36% and Nasdaq down 5.42% in the past 2 trading sessions. SP500 we are still waiting to see if the 4300 support can prevent the price from falling further and for Nasdaq we are eyeing the 13000 key level.
USTEC Daily Chart
Energies
USOIL H2 Chart
China’s crude demand in April is estimated to have declined by 1.2 million bpd compared to the same time last year. Gasoline demand in eastern China has plummeted by roughly 40 % this month and it spells bad news as China is the top crude oil importer in the world.
Oil dropped out of its consolidation range as the market opens this morning and is trading sub $100 again. If the decline gathers momentum, we may see oil testing the $94 support level in the near term
Cryptocurrencies
Bitcoin has not moved much over the weekend, still sitting tight on the 40000 support level. No directional bias is available for now until further breakout.
Welf
Trader, Technical Analyst
Market News
Fed Chair, Jerome Powell, confirmed yesterday that a 50 basis point rate hike during the next FOMC meeting is on the table. He said that we should be moving faster (raising interest rates) as the current monetary policy is relatively loose compared to the tightening cycle in 2004-2006 although the inflation levels now are at record levels.
Russia rejected a proposal for a truce over the Easter period, saying that the Ukrainian army may use that time to arm themselves.
A filing with U.S. regulators showed that Elon Musk has secured a $46.5 billion financing commitment (with JP Morgan contributing $5.5 billion dollars) to acquire Twitter Inc and is considering starting a tender offer for its outstanding shares
Technical Analysis
Oil
Crude Oil H2 Chart
Oil has been range-bound for the past 3 days, trading in between 100 and 105 and 50,200 moving averages. There is a higher tendency for the price to advance though as the war continues after Russia rejected the truce proposal, tightening the global oil supply. If it breaks above 105, we are looking at 115 next.
Gold
Gold H4 Chart
Gold is ranging now after a fierce pullback from its recent highs at $2000 area. Not much movement still as the price is in between the moving averages. Waiting for markets to come back to full force as parts of Europe is still celebrating the Easter holidays.
USDJPY
USDJPY H1 Chart
After hitting a decades-high at 129.40, USDJPY is now consolidating with the price failing to push higher after three attempts. It is now trading underneath the 50 moving average, and the relatively strong bearish momentum may lead the price towards the 200 moving average. Longer-term view remains bullish as we view this as a normal retracement to the impulsive move.
EURUSD
EURUSD Daily Chart
As the Fed is getting more hawkish, USD is expected to strengthen against other currencies and assets in a quicker fashion. It is now lingering around 1.0810 previous swing low. 50 and 200 daily moving average is also adding to the downward momentum. 1.0645 will be our next target if the price breaks below.
BTCUSD
BTCUSD Daily
Bitcoin pulled away from its recent high at 43,000 after the comments from Fed. It failed to close above the 50 daily moving average to initiate another up move.
We have no directional bias as of now, not until the digital currency undergoes a significant break out to either side of 40,000.
SP500
SP500 H4 chart
Wall Street closed down 2.65% following Powell’s comment. Both moving averages acted as a decent dynamic resistance and a short-term target will be set at 4300 support level.
Welf
Trader, Technical Analyst
Dead cat bounce refers to when the price appears to be recovering from a prolonged downwards trend, but in reality, it is just a brief retracement before continuing its previous bearish trajectory.
A lot of traders will mistake a dead cat bounce for an actual market reversal, where they will buy into the pattern only to get beaten up by the bears.
This pattern can occur in any market and here we spotted a few dead cat bounces from some of the major Forex pairs this past week as markets are filled with uncertainties from record inflation data and China’s covid cases to the ongoing war between Ukraine and Russia.
EURUSD Daily Chart
Two dead cat bounce formations are evident in the chart above. In the first instance, there was a 350 pips up move within a short span of time (6 trading days) following a downward trend that lasted for 7 months. In the second instance, a 370 pips up move built up over time. Traders would have thought that the market was preparing to reverse and start a new bullish move and was busy placing long positions. Not long after, all the bids were gobbled up by the market and the pair proceeded to trade lower.
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GBPUSD Daily Chart
GBPUSD has been trading in a bearish channel since July last year. The pair kept making lower highs and lower lows as it trades lower. On March 15, it began to reverse and rallied nearly 300 pips in six trading days. That was pretty significant as the retracement was about 40% of its most recent bearish impulsive move. Traders would have been thinking that it was a market reversal and bought into the short-lived rally, only for the price to go back to its swing low 2 weeks later.
Have you guys ever fell for this trap?
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BreadMaker
Trader, Technical Analyst
Economic Calendar
Today- Bank holidays in most major economies except the US
Wednesday- CAD CPI
Friday- Fed, ECB, and BOE speak
Tesla (NASDAQ: TSLA) is going to release their first-quarter earnings on 420, 5.30 pm EST. However, investors are concerned about the production halt in China and also Musk’s latest involvement in the Twitter takeover.
Technical Analysis
USDJPY
USDJPY Weekly
After six consecutive green weeks for USDJPY, can it continue the bullish momentum this week? There is no major news for the pair this week, so it may not be as volatile. The next target is situated at around 129.1. Do keep in mind that these levels are from 20 years ago when you are doing your technical analysis. The support level remains at 125.8, which is a resistance-turned-support.
EURUSD
EURUSD H4
It was a quiet Friday as markets were closed. However, it is likely that fiber is testing the 1.0760 previous swing low with price trading below both 50 and 200 MA. If it breaks with the USD strengthening, we may see 1.0650 next.
XAUUSD
XAUUSD H4
Surprisingly, gold’s weekend gap was smaller than expected. Price gapped down just 30 cents and then gained $10 as of writing. Technical wise, the 50 MA is crossing over the 200 MA and that serves as one bullish confluence. Other than that, price is able to maintain above 1970 key level. If it continues to rise, we are looking at 2000 key psychological level as our first target.
USOIL
US Crude oil H4
EU government executives have been drafting proposals on a heavier Russian crude ban last week as tensions grew and no sign of a ceasefire in sight. Concerns of an even tighter oil supply sent crude prices higher as Asia opened, and is currently trading 1.17% higher than last week’s closed, at $107.36 per barrel. With both 50 and 200 MA supporting prices and the fundamental development, we may see price testing 115 again.
NASDAQ
Nasdaq Daily
There was no trading last Friday as the markets were closed. In terms of technicals, the price respected the 50 MA as resistance and continued downwards. It is falling back to a 4-week low as investors weigh in inflation data, rising rates, and all the things that are going on in the world.
BTCUSD
BTCUSD H4
It seems like the bulls lost the tug of war at the 40000 level and bears took control as Asia opened this morning. It is trading right under 39000 at the time of writing, and 50 MA is tracking prices closely. If bears continue to gain strength, Bitcoin may test the 37200 area soon as we can see multiple bounces at that zone previously.
Welf
Trader, Technical Analyst
After becoming the largest individual shareholder in Twitter, Elon Musk offered to take Twitter (NYSE: TWTR) private for $54.20 a share, which is 20% higher than the last traded price. He stated that the goal of his move is for freedom of speech instead of financial gains.
It is still unclear which side the board is leaning toward, but rumors said that the board may consider a poison pill to prevent the takeover. Not only that but there is another obstacle standing in the way. Bin Talal, a Saudi royalty who reportedly owns 5% of Twitter has publicly rejected Musk’s offer.
Musk said that he has a Plan B if the offer is rejected, but did not disclose what the plan is. Not only that but Musk also threatened to sell his shares (9.2% at the time of writing) if his offer is not accepted.
Knowledge base:
The poison pill, also known as the shareholder rights plan is a defense mechanism used by companies to prevent a hostile takeover by another company. It accomplishes such an objective by triggering an automatic stock dilution by issuing new shares when the potential hostile entity owns too much of the company’s shares and has a larger than comfortable stake in the company.
One such example is in the case of Netflix when Carl Icahn, the investor who is famous for hostile takeovers, acquired 10% of Netflix back in 2012. Netflix’s poison pill plan will allow existing shareholders to purchase two shares for the price of one when there is a new acquisition exceeding 10% of ownership, or when the transfer of assets exceeds 50%.
Breadmaker
All things Trading
