Trade the Extremes
Crypto Needs to Bounce Soon
When to Buy the Dip?
Yesterday saw a lesson on how not to act like a Central Bank from the ECB. In over 25 years of trading I have rarely seen a less impressive performance at a press conference than we got from Lagarde. The plan was clear. Tell the markets we are going to raise 25bps next month and probably 25 in September. However, under questioning it was clear the ECB had little plan on how to react to the current situation. Inflation is a concern but the state of the various economies being affected by one single policy is clearly causing headaches on how to react. There is clearly no plan B, no cohesion to the voting members and the Euro, as expected, got punished. An initial rally to 1.0774 was swiftly reversed and we traded down to 1.0610. Sell rallies…
Today sees the US CPI released and all eyes will be on that for Crypto, FX and stocks. It really is pretty straightforward. A softer print will bring a relief rally to all asset classes. A stronger print or frankly even in line with expectations will see stocks lower, the USD higher, and key crypto levels come under pressure. Everything pre 1.30 UK time will be transactional, for this scribe the risk is a strong print but this is one occasion I would love to be wrong.
Crypto continues its slumber with recent ranges being even tighter than last week. That will change today. BTC and ETH actually held up well during the sell off in risk yesterday which is encouraging. My view remains intact that medium term dips are to be bought, but I continue to look at 1700 in ETH and fear the inevitable washout. A strong CPI could see the biggest test of that level over the next couple of sessions.
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