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Chart of the Day
GMTT / Chart of the Day / Bitcoin (BTC-USD) / March 22, 2021
Bitcoin is a focus for many. Some big investors believe that even at current levels the Bitcoin it is only the beginning of a major up move. Other Investors are more sceptical and believe that the Bitcoin is one big hype and air bubble.
At GMTT we have analysed the Bitcoin for a while and update our view in our three weekly GMTT Research Report. Our highest target so far was 62000 and that came already very close. After that target was reached, we saw a relatively small pullback and now Bitcoin is stuck in a trading range. We expect to see a more serious pullback and the value of Bitcoin can evaporate further before it finds a tradable low. Short term outlook is that Bitcoin cancels its technical buy signal below 54700. On the chart we showed possible breakout levels, but to see a new up-move (not very likely) BTC/USD needs a good close above 62000. In summary, at GMTT we expect to see a significant correction (fast and furious) which is supported by our overall technical model.
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GameStop Earnings, Powell and Yellen Testify Tuesday Wednesday before Congressional Committees
The VIX closed at 20.95 on Friday, down from 28.57 on Thursday, March 4th. While a low VIX tends to indicate less volatility, I do not think that will be the case this week or in the weeks to come. The non-stop stock market gyrations and constant rotations coupled with the falling bond market and an overextended bull market run has made for some very large intraday rallies and falls. Despite negative price action of the S&P futures (ESM21:CME), the futures at ES 3900 are only 47.75 points off its 3947.75 contract high. Based on the daily ranges, that’s just a stone’s throw away.
The week ahead should be no different than many lately; GameStop reports earnings and Federal Reserve Chairman Powell and Treasury Secretary Yellen testify before the House Financial Services Committee on Tuesday and the Senate Banking Committee on Wednesday where they will discuss the health of the U.S. economy and the importance of fiscal and monetary stimulus in the recovery from the pandemic. There are also several key economic reports coming out starting with durable goods orders, personal income, existing home sales, and the fourth quarter 2020 GDP. It should be a busy week.
Our view, that 46.75 points to get to new ES highs may be a very rough road. There is no doubt the stock market is ‘spooked’ about the prospects of higher taxes and how the Biden Administration is going to pay for its spending plan. While I remain optimistic I also think Michael Berry warning of speculative bubbles in markets and predicting a devastating crash isn’t that far fetched. Do I think something like that is coming soon? No, I don’t, but as US debt climbs over $30 trillion I think there is reason to be concerned. Our lean is to sell the early rallies and buy the pullbacks. I think the markets close up today but I’m not overly bullish for the week.
Danny Riley is a 39-year veteran of the CME trading floor. He ran one of the largest S&P desks on the floor of the CME Group since 1985.
As always, please use protective buy and sell stops when trading futures and options.
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