Daily Analysis: Dollar, Oil, and Cryptos Rise as Stocks Flatline

Tuesday Market Recap

Asset Current Value Daily Change
S&P 500 2723 0.04%
DAX 12,307 0.74%
WTI Crude Oil 63.75 2.59%
GOLD 1310.00 -0.52%
Bitcoin 8,980 5.81%
EUR/USD 1.2243 -0.78%

As trading volumes expectedly collapsed on Wall Street ahead of the much-awaited Fed-decision, the major indices finished closed to unchanged, with slight gains across the board after Monday’s sizeable decline.

Facebook (FB), 4-Hour Chart Analysis

Facebook’s politically loaded scandal made headlines and put pressure on the Nasdaq, while Amazon notably outperformed both the tech index and the broader market in the illiquid environment, and the latter could be a sign of a bounce in the coming days although the short-term trend is clearly negative in stocks.

Nasdaq, 4-Hour Chart Analysis

The negative breadth of the post-crash continues to be a worry, as there are no positive divergences emerging under the hood, and thus we remain defensive regarding equities, even as a post-fed spike wouldn’t be a surprise.

Dollar Follows Treasury Yields Higher

EUR/USD, 4-Hour Chart Analysis

Forex markets were much more active today than stocks, with the overnight rally in the Dollar extending into the US session, driving the EUR/USD pair to a new almost 3-week low, as the 2-Year Treasury Yield rose to a new post-crisis high, with the rest of the yield-curve also pushing higher before the rate decision and the crucial monetary statement by the central bank.

We can’t stress the importance of the regime change that we witnessed across financial markets since the February crash, as should the correlation remain positive between treasury yields and the Dollar that could mean that the golden days for US equities are over for now, and a period of underperformance could begin. We will get closer to know the answer later on this week, int eh aftermath of the Fed meeting.

WTI Crude Oil, 4-Hour Chart Analysis

Commodities were little changed in during the US session, although crude oil experienced volatile swings in low volume trading, following an impressive bullish move in the face of negative fundamentals by the WTI contract, which crossed the key $63 level today, clearly breaking out from the recent downtrend.

While the move could turn out to be a fake-out, and the short-term picture is already slightly overbought, barring a quick reversal, the test of the January high is now in the cards.

Cryptocurrencies

Bitcoin continues to lead the market higher off the weekend lows, as the most valuable coin broke out of a shallow short-term consolidation pattern today in late trading, and it is now testing the key $9000-$9200 support/resistance zone that has been the center of action ever since the February lows.

BTC/USD, 4-Hour Chart Analysis

The recent short-term buy signals in Litecoin, Monero, Ethereum Classic, and IOTA remained intact as all of the coins added to their gains, while several other coins started to show short-term strength, including NEO, Stellar, Cardano, and EOS. Ethereum, Ripple, and Dash are still lagging the rest of the segment, but the leadership now looks ample for a sustained rally after the two-week long downswing, that could test the broad declining trend again.

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Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.