Risk rally stabilises

This Daily Digest will cover:

• 📊 Risk rally stabilises
• 🪙 Crypto consolidates
• 🎙 Powell speech in focus later

Yesterday saw an extension in the recent risk rally as Stocks, Crypto and FX built upon the gains from Friday.

FX aside the momentum waned late in the session as comments from a FED member emerged urging higher interest rates for longer. Interestingly whilst stocks turned lower and actually finished in the red, the USD sell off barely regained any ground.

The markets are at an inflection point here with both the bears and the bulls having an opportunity to back their views. This setup is perfectly illustrated by the Crypto majors. Bulls can cheer the break and close above 1700 for the first time in over a month. Bears can treat the rally in ETH as a cheap risk reward sell with a stop above the crucial 1350 level as shown in the chart below.

Focus today will shift to market momentum and then, in the absence of any meaningful data, on FED chairman Powell’s speech this evening. I suspect we will struggle to garner any momentum today in either direction, and frankly a pause for breath is no bad thing after a fairly wild start to the year. The danger with Powell is a harsh reminder to the market that rates are going up and I find myself feeling the risk reward is short risk, long USD and short ETH with tight stops later today.

Good luck as always!