An important week lies ahead following the aftermath of SVB’s downfall. What should traders bear in mind?
It was a busy and eventful week. We started with weakness on BTC, which saw further acceleration in downward pressure.
Any attempts to push the market higher were absorbed by sellers and they were even much shallower than in the previous week.
The market was pressed down with sellers coming to the market lower and lower, meaning bulls were becoming weaker and sellers stronger.
Powell’s hawkish speech on Tuesday contributed to that. It eventually resolved in a breakout to the downside on Wednesday with further accelerated move on Thursday driven by key event of the week - SVB troubles popping up.
After printing lows at around $19,500 on Friday, BTC started to consolidate. Incoming bad news related to SVB assets seizure, and knock-on effects on others (including $USDC depeg) didn’t cause the market to sell-off further.
BTC was resilient with buyers absorbing the selling pressure, and then stepping up even more aggressively.
Eventually, the market broke up and on Sunday we had further acceleration first on the back of positive news that the US is protecting all SVB deposits, and then on the announcement about SVB backstop and the Fed Emergency Fund.
As BTC got close to $22,700 (a major resistance), we see signs of buyers losing steam and we expect some reaction down even to $20,700 - $20,300 area with smaller challenges on the way around $21,900 and $21,350.
On the other hand, if BTC gets over $22,700, we may retest $25,300 with challenges around $24,000.
The situation is so dynamic now that it is difficult to determine where the market wants to go and with a lot of uncertainty, big shifts can happen during the week.
As such, it’s good to watch how the balance between buying and selling pressure changes (especially around key levels) and trade with momentum intraday. Flexibility in this kind of market environment is key.
This week, the market will be focused on further developments after Fed, Treasury and FDIC intervention in the banking sector. On the data front, CPI on Tuesday will be the most important number to be released.
Other data to keep an eye on:
Wed: PPI, Retail Sales
Thu: Jobless claims, Housing Starts
Fri: Eur CPI, Industrial Production
It’s going to be a very important week and we can expect big market moves, so be prepared for different scenarios in this dynamic environment. There will be many opportunities so stay focused, disciplined and flexible.
Good luck and have a wonderful trading week!
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