Risk trades take a hit as stimulus hopes start to fade
Financial markets came under heavy selling pressure this week, as Republican and Democratic party negotiators failed to come to an agreement on the latest US coronavirus stimulus package. Risk trades took a major hit, with the S&P 500, Nasdaq, Dow Jones Industrial Average, gold and Bitcoin all slumping lower as hopes of a stimulus deal before the US elections next month faded. Financial market participants expecations had been high at the start of the week that US politicians could reach a deal, following a series of positive Tweets from United States President, Donald Trump. Traders and investors decided to move back into the safety of US bonds and the US dollar on the bearish news.
- The S&P 500 is only bullish while trading above the 3,460 level, key resistance is found at the 3,530 and 3,600 levels.
- The S&P 500 is only bearish while trading below the 3,460 level, key support is located at the 3,420 and 3,380 levels.
Bitcoin remained well-supported above the psychological $11,000 level this week, following yet more bullish fundamental news surrounding the pioneer cryptocurrency. The BTCUSD pair traded towards the $11,700 level in early-week trade, after the news of yet more instutional Bitcoin adoption. Bitcoin’s network hash rate also hit a new all-time high this week, marking a thirty-six percent gain since the start of the year. The BTCUSD pair eventually eased back towards the $11,000 support region as risk trades took a hit on the negative US stimulus news. Bitcoin has recently shared an increased price correlation with the S&P 500 index, and technology related stocks.
- The BTCUSD pair is only bearish while trading below the $10,800 level, key support is found at the $10,500 and $9,800 levels.
- The BTCUSD pair is only bullish while trading above the $10,800 level, buyers may test towards the $11,700 and $11,900 resistance levels.
Sterling and the FTSE 100 both incurred significant price volatility this week, as Brexit drama and fears over a second coronavirus lockdown. The GBPUSD pair traded between the 1.3100 to 1.2860 price range as bearish Brexit news and coronavirus lockdown fears hit sentiment towards the British currency. The FTSE 100 also incurred a wild week of trading action, with the index trading between the 6,040 and 5,780 price range. Traders and investors generally remained extremely cautious over taking on risk, and were nervous over the critical Brexit meeting between EU Finance Ministers.
- The GBPUSD pair is only bearish while trading below the 1.2900 level, key support is found at the 1.2800 and 1.2660 levels.
- If the GBPUSD pair trades above the 1.2900 level, buyers may test towards the 1.3060 and 1.3140 resistance levels.
Altcoins staged a powerful recovery this week, as traders moved back into the top digital assets, and moved away from DeFi related cryptocurrencies. Ethereum and Litecoin surged, due to positive fundamental news surrounding the coins and the strong correlation they have with Bitcoin. Ethereum rallied back towards the $400.00 area, after finding strong technical support from the $330.00 level. Litcoin also staged a notable rally back above the $50.00 level, and news broke of the coin receiving investment from institutional buyers. On-chain data recorded substantial whale activity for both ETHUSD and LTCUSD, which may help support further upside for both coins.
- The ETHUSD pair is only bearish while trading below the $360.00 level, key support is found at the $350.00 and $330.00 levels.
- The ETHUSD pair is only bullish while trading above the $360.00 level, buyers may test towards the $400.00 and $430.00 resistance levels.