1/ Here's why Thursday, June 10, has the potential to significantly move financial markets (including $CRYPTO)
(Retweets appreciated!)
2/
June 10 sees KEY economic data out of the US scheduled for release at 12:30pm UTC...
This data has the potential to 'spook' investors into selling their 'long-risk' positions.
'long-risk' referring to equities, commodities and $CRYPTO etc.
3/
Given the current uber-relaxed stance to monetary policy by central banks, most investors are currently positioned for risk-ON (long equities, crypto, commodities etc.)
Borrowing money and therefore spending/investing it is currently very cheap, thanks to Central Banks.
4/
Thanks to the world's central banks, ever-increasing risk-taking by investors has become less 'risky', leading to inflated asset prices as investors 'buy the dip' every.single.time...
But when will this change!?
5/
Investors have been confident buying the dip up til now as they knew that central banks would be were there to support markets and promote a more macro risk-ON environment, leading to economic recovery.
6/
That 'plunge protection team' narrative where central banks are there to 'pump' markets looks to be slowly changing...
It seems that the economic stimulus that has been provided by CB's since the COVID-19 outbreak has done it's job in helping the global economy recover
7/
This is important to know and helps decipher when the narrative will shift and when the recent 'risk-ON' environment isn't as powerful anymore!
The secret to protecting those bull-run gains is to understand and time the central bank's next policy move, particularly the FED's
8/
Currently, the market is pricing in a 94% probability that the US federal reserve, DON'T raise their target rate in 2021
This is good for bulls, low interest rates promote borrowing and therefore spending or investment!
The longer rates stay down here, the longer we pump
9/
Knowing this, we need to understand WHAT will cause the FED to change their stance and increase that probability of hiking rates...
It all comes down to the data!
Strong economic data will point to inflation and CB's of the world must shift their stance to keep a lid on it
10/
Data like the CPI is gives a direct insight into inflationary trends and therefore an insight into the central bank's next move...
To keep a lid on rising inflation, the central bank must TIGHTEN their policy (not loosen as they've done since the COVID-19 breakout)
11/
While the FED continue to remain unchanged in their commentary and overall stance to monetary policy, US data is becoming more and more significant each month
Hence, why Thursday June 10 is shaping to be a big day for the markets when the CPI data for May is released
12/
Strong economic data out of the US on Thursday, will increase the probability that the US federal reserve hike rates sooner than expected!
The market will price this strong data in, by selling equities and $CRYPTO, leading to a more risk-OFF environment
13/
So in the short of it, flag Thursday as a potentially high volatility day!
This is an edge, understanding what a good CPI data print will mean in this environment...
Typically positive data promotes risk-taking, but no, not in this instance!!
14/
I use the @federalreserve as the benchmark when it comes to understanding global monetary policy, as they are the world's largest central bank.
The decisions made by the FED have a significant impact on global trends with regard to setting monetary policy.
15/
Thanks for listening to my ted talk
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'Max pain' is often talked about and is made out to be quite complex, so let's make it simple!
The 'Max pain' price refers to the option 'strike price' for which the most number of options contracts will expire worthless 📉
Follow this thread and you may learn something 😀
2/
The 'max pain' theory suggests that the underlying asset price e.g. #Bitcoin will gravitate towards that max pain price headed into the option expiry (OPEX)
3/
Theory behind this is that typically market makers attempt to remain 'hedged' against their open interest
When a market maker deals a 'call' or 'put' it's in their best interest to remain hedged that position. They do this by longing/shorting the futures market for example.
So, Crypto and Macro Financial Market Analysis huh?
The two surely cannot go together, one touted a Ponzi scheme by many, the other has been around serving our society for centuries... surely, you are taking the piss by even inferring that the two are correlated!
A THREAD!
1) What is it and Why care about Macro Analysis?
It's not important to understand the ins and outs of what defines macro-analysis, to put it simply, it is analyzing a particular market over the medium-term, considering fundamental drivers that will underpin it‘s performance.
2) Macro analysis is almost always boring and larped on by academics, these people often explain moves in hindsight, useless to us as traders… but what if I was to tell you that you can predict and effectively speculate on the macro-environment, to create ACTIONABLE trade ideas.