Breakdown of Luna Crash

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Summary:

In this technical analysis, we will provide you with the technical reasons and patterns that occurred before the huge crash of the stable coin “Luna”.

Detailed Analysis:

Weekly Time Frame:

By looking at the weekly time frame we can see that this security was moving hugely to the upside since June 2021 where a series of higher highs and lows had been posted until reaching a high on December 21st, 2021. The market after this swing high posted another new high on March 2022 at 118.46 USDT mark. Here we had our first red flag, where the recent highs mentioned in the screenshot above, they weren’t far from each other signaling that the sellers started to push the price in the opposite direction of the main trend. Another sign that the buyers aren’t doing well is the huge bearish bars inside the corrections highlighted in blue rectangles. This shows that bears are shorting more and more the coin and forcing the price to post deep correction. Since the market posted two swing highs that are closed to each other, this is a recognized pattern which is the “double top” where the price failed to move higher than the previous high by far. Third point that I would like to talk about is the breakout of the bullish trend line (dotted black line) to the downside which is known as “BOS” or “Break of Structure” where the buyers are no more able to push the price higher.

Daily Time Frame:

On the lower time frame, we can see that the price formed a head and shoulders at the top of the trend this is an indication that the sellers are getting more involved. The real meaning behind a head and shoulders is that the price posted a lower high and lower low which is another sign that sellers are about to push the price downward. After this pattern the price broke and closed below the neckline and then smashed the trendline to the downside which led to a huge drop off all the way down to the zero level. This is a 100 % drop if we measure it from the peak and the maximum high to reach the ground level which is the 0 mark.

Final Note:

Please do you own research before investing/trading any asset. This article is for educational purpose. It might help you to have a different view of the market and learn from the way an expert see the market. But at the end you should know which trading ideas fit your personal analysis.

Have a happy trading day.

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You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

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Owen Li

U.S. small business optimism held steady in April after three consecutive falls. Nonetheless, businesses retain the ability to pass higher costs onto their customers and this will keep inflation sticky. Ongoing supply chain issues and rising fuel costs mean 2% inflation is a distant prospect.

Business sentiment holds steady, but firms still want to hire

The recent U.S. data has been mixed and that has helped to fuel fears that the economy could experience a marked slowdown, especially with the Federal Reserve firmly focused on inflation and hiking interest rates. Dollar strength is acting as a further headwind to growth by making U.S. exports less price competitive in what is already a challenging external demand environment for companies.

In this regard this morning's National Federation of Independent Business survey for April was marginally better than expected at the headline level with optimism holding steady versus expectations of a fourth consecutive monthly drop. Nonetheless it is still the weakest level since April 2020 in the immediate aftermath of the pandemic striking. The details show a slight improvement in the proportion of small businesses expecting higher sales, but there was a little more pessimism on the outlook for the economy and whether it was a good time to expand.

Set against this softer environment, firms are still struggling with worker shortages and are desperate to hire. The NFIB released the labour components last Thursday, which a net 46% having raised worker compensation during the past 3 months and 27% expecting to do so further.

Inflation pressures show no sign of moderating

Looking to tomorrow's inflation data the NFIB report shows a net 70% of companies raised their selling prices in the past 3 month - down from last month's 72% balance, but this is still the second highest reading in the survey's 47-year history. Moreover, a net 46% of firms plan to raise their prices further over the next three months (down from 50%, but this is still the 6th highest reading in the survey's history). This reinforces the message the despite concerns about where the economy is heading, businesses continue to have pricing power and highlights the breadth of inflation pressures in the economy. The ability to raise prices is seen across all sectors and all sizes of businesses

NFIB price indicators show no sign of a turn in inflation (Source: Macrobond, ING)

Inflation may be peaking, but 2% is a long way away

Tomorrow's CPI report will probably show that inflation has passed the peak, due largely to lower used car prices, but in the absence of major improvements in supply chains and geopolitical tensions, the descent to the 2% target will be very slow and may not be achieved until the very end of 2023. However, with national gasoline prices hitting a new all-time high yesterday that will come as little comfort to most households.

Source: ING

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Glendon

Economic

Global stock markets as the Federal Reserve's hawkish stance on monetary policy sent shockwaves through investor confidence. The Dow Jones Industrial Average and Nasdaq 100, bellwethers of the US market, both closed significantly lower, while the Hang Seng Index in Hong Kong continued its downward spiral. This article delves into the factors behind the market selloff and explores the potential implications for investors.

Dow & Nasdaq 100 Tumble, Hang Seng Slump Persists as Global Market Sentiment Sours_1

In our technical analysis of the Dow Jones Industrial Average, we've identified a crucial support level at the 36,000 mark. This is a zone where buying sentiment has historically been strong, providing a floor that cushions the index against further drops. It's a battleground where bulls have consistently rallied, making it a significant point for traders to watch for potential buy signals.

On the flip side, our chart indicates a resistance level hovering around 38,500. This price acts as a barrier, where sellers come into force and bullish momentum begins to wane. It's a ceiling that has proven tough to crack, and a point where investors might consider locking in gains, anticipating resistance to price advances.

These levels are not just numbers; they represent the collective psychology of the market, areas where fear and greed collide. As the index flirts with these levels, we can expect decisive moves. A convincing break above 38,500 could signal a strong uptrend, while a dip below 36,000 may suggest a bearish phase ahead. Investors should keep a close eye on these figures as they map out their market strategies. Dow & Nasdaq 100 Tumble, Hang Seng Slump Persists as Global Market Sentiment Sours_2

Dow & Nasdaq 100 Tumble, Hang Seng Slump Persists as Global Market Sentiment Sours_2

Our technical scrutiny of the NASDAQ 100 ETF chart reveals a substantial support level at approximately 15,000. This price point marks a significant psychological threshold where buyers have previously entered the market in force, providing a robust underpinning that could arrest further price declines. This area serves as a testament to buyer determination and could be a strategic point for market entrants looking for bullish signals.

At the upper echelon, the ETF faces a resistance level near 15,600. This range has acted as a formidable ceiling, where seller influx tends to intensify and upward momentum fizzles out. It's a critical juncture where investors may contemplate exiting positions or initiating shorts in anticipation of a potential reversal.

The tug of war at these price points reflects the market's sentiment and volatility. A decisive close above the 15,600 line could pave the way for a bullish breakout, whereas a fall below the support at 15,000 might signal a bearish downturn. Traders would do well to monitor these levels for cues on the ETF's directional bias.

Dow & Nasdaq 100 Tumble, Hang Seng Slump Persists as Global Market Sentiment Sours_3

In the Hang Seng Index Futures chart, a clear level of support is established around the 15,000 value. This level has shown resilience, acting as a strong demand zone where the market has historically found buoyancy and bounced back. It's a critical point that could entice buyers to reinforce the index's stance against further losses.

On the upper side, a resistance level is observed at about 15,700. This line is a testament to the sell-side's resolve, marking a zone where the index's advances have been consistently halted. It's a pivotal price where traders might look to secure profits, reflecting a collective hesitancy to push the index higher.

These levels are a narrative of the market's collective psychology, demarcating areas where investor sentiment is likely to be tested. A convincing surge above 15,700 could suggest a bullish sentiment takeover, while a breach below 15,000 may indicate a bearish sentiment setting in. Investors should keep these levels in sight, as they could offer significant insight into forthcoming market trends.

Looking Ahead: Navigating Uncertainty

The recent market selloff underscores the heightened volatility and uncertainty surrounding the global economic outlook. Investors are grappling with the potential for a synchronized global slowdown, rising interest rates, and ongoing geopolitical tensions.

Cautious Optimism

While the near-term outlook remains clouded, some analysts believe that markets have already priced in much of the bad news. They point to resilient corporate earnings and healthy consumer spending as potential catalysts for a rebound later in the year.

Sector Rotation: Investors are likely to adopt a more selective approach, favoring defensive sectors like consumer staples and healthcare over growth-oriented sectors like technology.

Focus on Fundamentals: In this uncertain environment, investors should focus on company fundamentals, such as strong balance sheets, consistent earnings growth, and sustainable business models.

Conclusion

The recent market selloff serves as a stark reminder of the inherent risks associated with investing. While the near-term outlook remains uncertain, investors who remain disciplined, focus on fundamentals and adopt a diversified approach can navigate this volatile period and potentially emerge stronger in the long run.

To stay updated on all economic events of today, please check out our Economic calendar

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Kevin Du

Crypto assets have also been swept up in broad selling of risky investments on worries about high inflation and rising interest rates. Sentiment is particularly fragile, as tokens supposed to be pegged to the dollar have faltered.

Bitcoin, the largest cryptocurrency by total market value, managed to bounce in the Asia session and traded at $30,300 at 0623 GMT, up 5%. It has staged something of a recovery from a 16-month low of around $25,400 reached on Thursday.

But it remains far below week-ago levels of around $40,000 and, unless there is a rebound in weekend trade, is headed for a record seventh consecutive weekly loss.

"I don't think the worst is over," said Scottie Siu, investment director of Axion Global Asset Management, a Hong Kong based firm that runs a crypto index fund.

"I think there is more downside in the coming days. I think what we need to see is the open interest collapse a lot more, so the speculators are really out of it, and that's when I think the market will stabilize."

TerraUSD (USDT) broke its 1:1 peg to the dollar this week, as its mechanism for remaining stable, using another digital token, failed under selling pressure. It last traded near 10 cents.

Tether, the biggest stablecoin and one whose developers say is backed by dollar assets, has also come under pressure and fell to 95 cents on Thursday, according to CoinMarketCap data, but was back at one dollar on Friday.

Unstable

Selling has roughly halved the global market value of cryptocurrencies since November, but the drawdown has turned to panic in recent sessions with the squeeze on stablecoins.

These are tokens pegged to the value of traditional assets, often the U.S. dollar, and are the main medium for moving money between cryptocurrencies or to convert balances to fiat cash.

"Over half of all bitcoin and ether traded on exchanges are versus a stablecoin, with USDT or Tether taking the largest share," analysts at Morgan Stanley said in a research note.

"For these types of stablecoins, the market needs to trust that the issuer holds sufficient liquid assets they would be able to sell in times of market stress."

Tether's operating company says it has the necessary assets in Treasuries, cash, corporate bonds and other money-market products.

But Tether is likely to face further tests if traders keep selling, and analysts are concerned that stress could spill over into money markets if pressure forces more and more liquidation.

Ether , the second-largest cryptocurrency by market capitalisation, steadied near $2,000 on Friday after a drop as low as $1,700 on Thursday. Bitcoin and ether are about 60% below record peaks reached in November.

Crypto-related stocks have also copped a pounding, with shares in broker Coinbase steadying overnight but still down by half in little more than a week.

In Asia, Hong Kong-listed Huobi Technology and BC Technology Group, which operate trading platforms and other crypto services, eyed weekly drops of more than 17%.

Amid the turmoil, Nomura on Friday said it had begun offering bitcoin derivatives to clients, the latest move by a traditional financial institution into the asset class.

Source: Reuters

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Damon

Global risk conditions have continued to have an important impact on major exchange rates and this will continue in the short term.

There will be an underlying shakeout of positions built up during the period of extremely low global interest rates which will maintain vulnerability in risk conditions.

There will, however, also be scope for a short-term correction after heavy losses which can provide an element of relief for risk assets, especially if markets dial back on the most aggressive projections surrounding Fed policy.

Inevitably, volatility will remain elevated in the short term with risk recoveries liable to fade quickly.

Pound US Dollar Exchange Rate Outlook

Confidence in the UK economy has continued to deteriorate with increased talk of recession following the latest batch of data releases.

It is certainly possible that the UK economy will contract in at least two quarters this year.

Although Bank of England Deputy Governor Ramsden stated that interest rates have not peaked, there was further speculation that the BoE would have to limit rate hikes due to pressure on the economy.

Risk conditions will also remain very important for the GBP/USD outlook with further losses if equity markets continue to slide.

There will, however, be pressure for at least a limited correction after heavy losses and GBP/USD will bounce if equity markets manage to recover.

Overall, there is scope for GBP/USD rebound, although rallies will attract selling interest quickly with markets still targeting a slide to 1.20.

Euro (EUR) Exchange Rates Today

Although there has been a shift in expectations towards ECB policy and increased expectations of a rate increase in July, the Euro came under renewed pressure on Thursday.

The Euro to Dollar (EUR/USD) exchange rate dipped back below the 1.0500 level which helped trigger aggressive selling and EUR/USD dipped sharply to 5-year lows below 1.0400. It was also trading close to 19-year lows as confidence in the Euro-zone outlook remained weak.

There will be pressure a limited correction, but EUR/USD will be dependent on a wider dollar retreat to secure a significant recovery in the short term.

Speculators will still parity as a key short-term market target.

US Dollar (USD) Exchange Rates Outlook

The dollar posted further strong gains on Thursday as European currencies remained under pressure and the dollar index posted a fresh 20-year high as the Euro crumbled.

There was a slight retreat on Friday as a tentative recovery in risk appetite curbed defensive demand for the US currency.

Fed Chair Powell reiterated that the bank is planning 50 basis-point rate increases at the next two meetings which would take rates to 2.00%.

Yields and risk trends will remain very important for the dollar in the short term.

Wells Fargo maintains a bullish dollar stance; "A hawkish Federal Reserve has boosted the US dollar against most G10 and emerging market currencies year to date, and we believe this trend is likely to continue. Given our view that the Fed is likely to tighten policy aggressively, we believe capital flows should revert back toward the US."

It also considers expectations surrounding rate hikes elsewhere are too high; "As far as the G10 currencies, we believe financial markets may be priced for too much tightening by many foreign central banks. As markets adjust to a more gradual pace of tightening abroad, G10 currencies should weaken and the U.S. dollar should get a tailwind."

Other Currencies

The Japanese yen gained fresh support on Thursday as equity markets came under renewed pressure.

The Pound to Yen (GBP/JPY) exchange rate lumped to 8-week lows below 156.0 before a recovery to around 157.50 as equites attempted to rally.

The Swiss franc was unable to gain more than limited support and the Dollar to Swiss franc (USD/CHF exchange rate broke above the parity level for the first time since late 2019.

The Canadian dollar was resilient as oil prices moved higher again and the Pound to Canadian dollar (GBP/CAD) exchange rate was held below the 1.6000 level.

The Day Ahead

The latest US consumer confidence data will be released on Friday, although the overall impact is likely to be limited unless there is a substantial decline.

Wall Street trends and wider developments surrounding risk appetite are likely to dominate during the day.

Although there will be scope for a further correction after sharp losses, underlying confidence is liable to remain vulnerable which will contribute to further volatility during the day.

Source: ExchangeRates.org.uk

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Devin

Business activity in Dubai's non-oil private sector economy continued to improve in April, albeit at a softer pace, as output grew at the second-fastest rate since mid-2019 and new business rose sharply.

The headline S&P Global Dubai Purchasing Managers' Index slipped to 54.7 in April from 55.5 in March, remaining above the neutral 50 no-change mark for the 17th consecutive month.

Despite falling for the first time since January, the index signalled a strong improvement in business conditions in the non-oil private sector, S&P Global said.

A reading above the neutral 50 level indicates economic expansion, while one below points to a contraction.

"Businesses indicated that the relaxing of Covid-19 measures continued to have a positive impact on demand," said David Owen, an economist at S&P Global.

"The upturn was also encouraging considering that the Expo 2020 has now finished and that overall new business growth, including in the travel and tourism industry, remained strong." Dubai's Non-Oil Economy Improves in April as New Business Continues to Rise Sharply_1

Dubai's Non-Oil Economy Improves in April as New Business Continues to Rise Sharply_1

The single biggest positive influence on the PMI in April was output growth, which businesses surveyed said was supported by a sharp rise in customer sales as the emirate's economy continued to recover from the easing of pandemic-related restrictions.

The output expansion was substantial across sectors, with the most noticeable acceleration in the wholesale and retail segment. Upturns in Dubai's construction and travel and tourism sectors eased slightly from post-pandemic highs in March.

Volumes of new orders in April across the non-oil economy continued to rise at a marked pace, only marginally slower than in March, according to the latest PMI data.

The UAE economy has rebounded strongly from the pandemic-driven slowdown in 2021, carrying the growth momentum into 2022, boosted by Expo 2020 Dubai and sharp rise in, retail, travel and tourism sectors. The success of the UAE's mass testing and vaccination programme has allowed the government to ease Covid-19 restrictions, boosting the national economy.

The UAE's non-oil economy expanded an annual 7.8 per cent in the fourth quarter of 2021, driven by the easing of Covid-related restrictions and travel curbs, the Central Bank of the UAE said in its Quarterly Economic Review.

In March, Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, on Twitter said the country's economy grew 3.8 per cent in 2021, above the World Bank's 2.1 per cent estimate. The International Monetary Fund expects the country's economy to expand by 4.2 per cent in 2022.

Dubai's economy grew 6.3 per cent year-on-year in the first nine months of 2021, according to preliminary data from the Dubai Statistics Centre. Emirates NBD estimates Dubai's economy grew about 5.5 per cent for the full year 2021 — an upward revision from its earlier forecast of 4 per cent.

With slower global growth, higher interest rates and a stronger US dollar, the lender expects growth of 4 per cent to 4.5 per cent in 2022.

Dubai's tourism sector underpinned its economic rebound, with international visitor numbers in the fourth quarter climbing to about 74 per cent of pre-pandemic levels. The emirate was among the first major global tourism destinations to open its borders under strict health and safety guidelines.

Dubai received about 4 million visitors in the first quarter of this year, a 214 per cent surge on the year, Sheikh Hamdan bin Mohammed, Crown Prince of Dubai, said in a tweet earlier this week.

Dubai was also ranked first in the world in terms of the hotel occupancy rates, with hospitality establishments recording a rate of 82 per cent in the first three months of this year, he added.

The Dubai property market also recorded its strongest start to a year, with 12,119 sales transactions in the first quarter of 2022, according to Property Monitor data. The boom in Dubai's prime residential market led to prices rising almost 60 per cent in the past 12 months, driven by growing interest from international investors, according to consultancy Knight Frank.

Despite a strong rebound in the emirate's economy, businesses are feeling the pinch from rising costs driven by higher raw material and fuel prices in global markets.

"Despite increasing reports of higher material and fuel prices since the outbreak of war in Ukraine, the overall rise in input costs was again only modest in April," Mr Owen said. "This allowed businesses to offer additional price promotions, as output charges were reduced for the 10th month running."

Expectations of continued sales increases led to higher optimism for future activity in April, the strongest recorded since last November.

Source: The National News

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Owen Li

Malaysia's gross domestic product expanded 5% in the first quarter of 2022 compared with the same period last year, its central bank announced on Friday, as the Southeast Asian economy continued to recover from the COVID-19 pandemic which had led to the closure of countless businesses and pushed up joblessness.

The GDP figure for the January-March period was higher than the fourth quarter of 2021, when the economy grew 3.6% year-on-year, according to data released by the Bank Negara Malaysia.

The result beats the 4% median estimate of 18 economists polled by Reuters. The economists' forecasts ranged from 2% to 5.7%, highlighting uncertainty over China's economic slowdown and the impact of Russia's invasion of Ukraine on output and activity.

A separate Reuters poll released last month shows average growth estimates of 6.1% for the whole of 2022 and 5.0% for 2023. Malaysia's economy expanded 3.1% for the entire last year.

The central bank is targeting growth of between 5.3% and 6.3% this year on hopes of a continued rise in global demand and higher private sector expenditure. The government's own official forecast is for a 5.5% to 6.5% expansion. Malaysia Economy Grows 5% in Q1 2022_1

Services and manufacturing were the primary sectors that performed better in the first quarter, central bank Gov. Nor Shamsiah Mohd Yunus said at a news conference on Friday.

"The Malaysian economy grew by 5% in the first quarter, mainly driven by consumption activities amid the recovery in labor market conditions," she said.

Nor Shamsiah said growth for the rest of the year will be supported by strengthening domestic demand, amid sustained export growth and the reopening of international borders.

That growth, however, is subject to risks related to the emergence of new COVID-19 variants, heightened geopolitical tensions, global financial market volatility and supply chain disruptions, she added. Malaysia Economy Grows 5% in Q1 2022_2

UOB Global Economics and Markets Research had forecast GDP growth of up to 4.5% in the first quarter of this year, thanks to a sustained expansion of economic activities.

Despite the omicron COVID wave in early February and the lingering impact of flash floods mid-December, January to March economic indicators suggested further improvement in real GDP, UOB economists wrote. They expect growth to be driven by sustained expansion in the services and manufacturing sectors while agriculture, mining and quarrying, and construction sectors continue to be sluggish.

On Wednesday, the central bank increased its benchmark interest rate by 25 basis points to 2.0%, the first adjustment since slashing it to a historic low of 1.75% in July 2020.

"It is important for us to start recalibrating interest rates now, rather than [making] an aggressive move at a later point. OPR has to be recalibrated with the realities on the ground, where the economy is now on a firmer ground and monetary policy is sound," the governor said.

The bank also projected the country's headline inflation to rise to between 2.2% and 3.2% in 2022, as economic activity improves, although Malaysia also faces cost pressures and global price hikes due to the Ukraine war.

Since March 2020, Malaysia has suffered four waves of COVID that had forced the closure of thousands of small businesses as nonessential economic activities were halted. In April, the government relaxed almost all COVID restrictions and economic activity has resumed fully.