GameStock volatility rocks global financial markets
Volatility in financial markets saw a massive increase this week as retail traders from Reddit and other trading forums pilled into GameStock, which provoked a huge short-squeeze on hedge funds who were bearish towards the stock. An eight-hundred percent move higher in GameStock caused a major market frenzy as Main Street effectively took on Wall Street. The VIX, a key measure of market volatility, spiked to multi-month highs as the S&P 500 and other US indices moved sharply lower. The bearish reversal in equity markets also caused a flight into the US currency, as traders sought a safe-haven as investors moved away from stocks and into cash. Market fears remained elevated as traders and investors pondered whether hedge funds needed to sell other stocks to pay for their losses.
- The S&P 500 is only bullish while trading above the 6,600 level, key resistance is found at the 6,880 and 7,000 levels.
- The S&P 500 is only bearish while trading below the 6,600 level, key support is located at the 6,500 and 6,360 levels.
Bitcoin came back under heavy selling pressure this week as miners continued to book profits, causing any upside rallies to quickly fade. The BTCUSD pair started the week in a positive fashion, as the top crypto quickly rallied towards the $35,000 level, however, a wall of selling pressure caused a massive price drop back towards the $29,000 level shortly after. Nearly $4 billion of BTC options were set to expire this week on the CME exchange, which also added to the overall uncertainty towards BTC. The upcoming Chinese New Year was also seen as being bearish, as a sizable amount of Bitcoin holders in China could choose to book profits and donate cash to family members.
- The BTCUSD pair is only bearish while trading below the $34,000 level, key support is found at the $30,000 and $28,000 levels.
- The BTCUSD pair is only bullish while trading above the $34,000 level, buyers may test towards the $38,000 and $40,000 resistance levels.
The European Central Bank attempted to talk down the euro currency this week, with a number of Governing Council members coming on the wires. ECB member Klass Knot said that the European Central Bank has the policy tools available to fight strength in the euro currency. Another source within the European Central Bank was reported to have said that financial markets are underestimating the risk of negative rates. The euro currency prompted reacted to the ECB’s comments, and quickly sold-off against the US dollar, British pound and a number of other top currencies.
- The EURUSD is only bearish while trading below the 1.2100 level, key support is found at the 1.2060 and 1.1900 levels.
- The EURUSD is only bullish while trading above the 1.2060 level, buyers may test towards the 1.2200 and 1.2250 resistance levels.
ETH new high
Ethereum was once again a major focus of crypto traders as the second-largest cryptocurrency rallied to a new all-time price high, around the $1,475 level. The ETHUSD pair rallied sharply on the weekly open as retail traders and whales continued to accumulate Ethereum. One of the reasons that Ethereum is rallying is due to the upcoming launch of Ethereum futures on the CME exchange. The ETHUSD pair eventually turned sharply lower as Bitcoin and other top cryptocurrencies fell over wide-spread profit taking by miners.
- The ETHUSD pair is only bearish while trading below the $1,000 level, key support is found at the $960.00 and $850.00 levels.
- If the ETHUSD pair trades above the $1,000.00 level, buyers may test towards the $1,380.00 and $1,400.00 resistance levels.