March 10, 2021

Daily Market Analysis

Market Focus

US stocks jumped sharply today after US Treasury bond yields declined, causing investors to pour back into the equity markets, especially the beaten- up technology shares, which dipped badly yesterday. Nasdaq Composite climbed as much as 4%, the best day since November 2020, led by Tesla, soaring 20%. The majority of technology shares bounced back as bond yields stabilized, easing worries from a potential overshoot in the economy will bring inflation. Moreover, for the recap, the Dow Jones Industrial Average rose around 1% while the S&P 500 gained around 1.5%.

Specifically, shares of Tesla jumped as much as 20% today, erasing most of losses in the past five trading days. A steady stream of positive news, such as an upgrade from New Street Research, a rally in Bitcoin, which has close relationship with Tesla, are luring investors back to Tesla. Notably, after the surge, New Street Research analyst raised the recommendation on Tesla from neutral to buy, with a price target of $900.

The first bond auction of the new monthly cycle went smoothly, with the sale of $58 billion for three- year bonds stopping at 0.355%, which was slightly lower than the issued yield of 0.359%. With this outcome, it encouraged for those worried about more bond market mayhem. Today, US bond yields fell, which tempered the equity markets a little bit.

Market Wrap

Main Pairs Movement

Gold rose the most in two months as a weaker dollar boosted gold, resulting from more stable US bond yields. Gold’s bullish rebounded from a nine- month low with the dollar falling from the highest since November and after the first bond auction. Gold’s positive move might extend as the passage of a massive US stimulus plan will potentially make a slide for the US dollar.

Oil retreated further from recent high, staging a deep correction. Futures dropped toward $64 a barrel today in choppy trading as the US government is expecting domestic crude production to rise drillers take advantage of oil’s prices. Even though oil prices dipped today, further price gains seem to be expected as OPEC+ outputs cuts are seen holding the marker over until demand comes back.

GBPUSD climbed for the first time in five days as the successful vaccination roll-out in the UK and a weaker US dollar. Moreover, the Pound rose as investors reflected on the lack of dovish comments from BOE Governor Andrew Bailey. A less dovish remarks from Bailey seemed to encourage the blurring of lines between the reflation trade and the vaccine trade, boosting the GBPUSD pair.

Technical Analysis:

XAUUSD (Daily Chart)

Gold witnessed some short- covering today and bounced back from nine- month lows, 1676ish. Aftering dipping to the nine- month lows and reaching the resistance level at 1676.89, gold bounced back sharply to 1720 as the RSI indicator has reached the oversold condition, below 30. However, technical indicators, including the MACD and the 50 SMA, on the daily chart are still holding deep in the bearish territory. In the meanwhile, gold remains downside as it still falls within the descending trend. On the flip side, current resistance 1676 mark seems to protect the immediate downside. If the pair can sustain its current bullish momentum toward 1746.91, and break further north, penetrating 1761, where the midline of Bollinger Band, then the pair might potentially turn into a positive mode in the near- term.

Resistance: 1676.89

Support: 1746.91, 1790.23, 1825.24, 1860.26

GBPUSD (Four- Hour Chart)

GBPUSD turns green as the mix of weaker US yields, weakening the US dollar. According to the MACD indicator, GBPUSD has flipped from bearish to bullish as the MACD line crosses the signal line. Bulls are eyeing the next resistance level at 1.3952, where the 100 Simple Moving Average hits has been converging with the price; if the pair can hit above 1.3952, which will confirm a more bullish momentum. In the near- term, the pair is still to the downside as the pair still trades below the majority of the SMA. At the moment, immediate movement for the pair cannot be determined as the RSI indicator is neither toward overbough nor oversold.

Resistance: 1.3952, 1.4006, 1.4061

Support: 1.3776

BTCUSD (Daily Chart)

Bitcoin has consolidated around $50,000 in the past few days, suggesting that it is in a more stable market recently. Today, it has finally broken the condolidated mode, reaching $54000 intraday. On the daily chart, Bitcoin remains bullish mode as it continues to fall within three- month ascending channel as well as above the 50- Simple Moving Average. Bitcoin is expected to keep up its trend in the positive territory until it contests the next signicant resistance level at $58,350.41, all- time high. It will probably confront a corrected period as the RSI indicator will most likely reach the overbought level and the pair will reach the upper band of Bollinger Band. That being said, in the near- term, Bitcoin is still in the bullish mode.

Resistance: 58350.41

Support: 46972.95, 39934.35, 34245.62

Economic Data