Today's Highlights
May Tanks the Pound
Chinese Reserves their Reserves
Bitcoin Technical Analysis
Please note: All data, figures & graphs are valid as of January 9th. All trading carries risk. Only risk capital you're prepared to lose.
Market Overview
Once again the Dow Jones failed to hit it's long anticipated goal of 20,000 points. I'm not sure just how many times it can happen that the stocks end on record highs without managing to break higher. Perhaps today could be the day. As they say, do your business or get off the pot.
The commodities seem to be flattening out since the NFP results on Friday.
The most significant moves so far this week are coming from the currency markets. Two regions have been particularly volatile.
United Kingdom
Theresa May was on the telly yesterday and her words have had a very clear effect on the pound sterling. Mainly, down.
We can see above that the GBP/USD opened the week with a gap down (yellow circle) and has continued downward ever since. We’re now just 100 pips from the multi-decade low levels that we saw just after the flash crash of October 7th.
May promised us another speech today. If she tries to, May could easily take the pound back up to that yellow line at 1.2700. However, if she continues this hard line language and takes us below the red line of 1.2069 things may get ugly.
The Sleeping Dragon
China released some important data last night and revealed that they're now down to $3.01 trillion in foreign reserves. Chinese reserves were as high as $4 trillion in 2014, but have been declining steadily since then.
The level of $3 trillion has been seen as a red line, so the fact that they were able to report a number above that has stopped a panic.
Now that investors feel confident that the PBoC has finished with their intervention, the yuan has continued on its path of devaluation. The USD/CNH has continued to climb and our Chinese investors continue to look forward to the 7.00 benchmark.
Good for Bitcoin
Both of the events above should technically be positive for the price of bitcoin. Dropping pounds and yuan fevaluation has been two of the biggest reasons for the BTC surge in the first place.
The question at this point is, have we found support?
You'll recall from the video we made on Thursday, the price tends to surge after passing a new high, then eventually come back to that level and use it as support. The recent surge was brought on by a break of the level $775 per coin (yellow line).
In the meantime, we've found temporary support at $875 but if it continues down we could easily end up another $100 down. However, with the yuan and the pound selling off citizens of China and the UK will be looking for alternatives to place their savings.
One more word to the wise. There are rumours in the market that China is considering adding restrictions on Bitcoin. If that happens, it would certainly take the life out of this party.
Let's have an awesome week ahead!!
This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation. Past performance is not an indication of future results. All trading carries risk. Only risk capital you're prepared to lose.