CURRENCIES

EURO (EUR/USD, EUR/GBP) technical analysis:

• Fed speak to dominate today’s scheduled event risks (Williams, Waller)
• EUR/USD drifts lower in search of a catalyst
• EUR/GBP eyes support ahead of UK CPI print

Fed Speak to Dominate Today’s Scheduled Risk Events:

• Quiet day on the economic calendar in a generally quiet week.
• Euro PMI data on Thursday is the next notable event.
• Last few days of the month feature US PCE and EU inflation data.
• Fed speakers continue to promote the idea of maintaining high interest rates to control inflation.
• Afternoon speakers: Fed Governor Christopher Waller and New York Fed President John Williams.
• Williams previously hinted at potential rate hikes if inflation does not improve; current focus shifts to timing rate cuts.

EUR/USD Drifts Lower in Search of a Catalyst:

• EUR/USD shows a slight downward trend after bouncing off channel resistance.
• Quiet week favors higher-yielding currencies like the dollar.
• The pair reversed before reaching overbought conditions, similar to the trend in March.
• Resistance at the upper limit of the ascending channel; support at channel support, 1.0800 psychological level, and 200-day SMA.
• A catalyst may emerge towards the end of next week with US PCE and EU inflation data.

EUR/USD Key Data:

• Mixed Sentiment: Data provided by clients are net short.
• Daily Changes: Longs +15%, Shorts -1%, Open Interest +5%.
• Weekly Changes: Longs -10%, Shorts +8%, Open Interest 0%.

EUR/GBP Eyes Support Ahead of UK CPI Print:

• EUR/GBP started the year within a defined trading range, showing bullish momentum after breaking out.
• Bullish advance struggled, facing resistance at the 200-day SMA.
• Current selling shows fatigue, with potential support from trendline.
• UK CPI data tomorrow could influence the pair’s direction.
  • Expectation of a notable move lower from the prior month.
  • Disappointment may lift sterling if data fails to meet low expectations.
  • April data might surprise the upside with price rises and index-linked increases.
  • If CPI meets or falls below consensus, EUR/GBP may rise as markets anticipate a BoE cut sooner.

STOCK MARKET

Expectations for Nvidia’s Earnings:

• Traders are anticipating a significant move in Nvidia’s shares post-earnings on Wednesday.
• Nvidia’s options suggest an 8.7% swing in either direction by Friday.
• This implies a market cap change of $200 billion, exceeding the market cap of about 90% of S&P 500 companies.

Nvidia’s Market Data:

• Current Price: $947.80 +23.01 (2.49%) at close, $951.43 +3.63 (0.38%) pre-market.

Historical Comparison:

• The implied move is less than the 16.4% jump after the last quarterly earnings.
• Also lower than the average 12% move priced in for the last eight quarters.

Analyst Insights:

• Chris Murphy, Susquehanna Financial Group: “Volatility and expectations were higher previously.”
• Nvidia’s stock, up 87% this year, is crucial for the AI industry with a market value of $2.3 trillion.
• Wall Street anticipates a strong quarterly report from Nvidia.

Broader Market Impact:

• AI-related gains are spreading to other sectors like power, commodities, and utilities.
• BofA strategists expect Nvidia to drive 9% of S&P 500 earnings growth in the next 12 months, down from 37% over the last 12 months.

Options Market Sentiment:

• Matt Amberson, ORATS: Implied volatility for out-of-the-money calls and puts is equal, indicating potential for both upside and downside moves.
• Traders expect up moves to be as violent as down moves.

Projected Earnings:

• Expected earnings: $5.59 per share.
• Quarterly revenue: Expected to rise to $24.65 billion from $7.19 billion a year ago (LSEG data).

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Dear Client,

Affected by international holidays, the trading hours of some VT Markets products will be adjusted. Please check the following link for the affected products:

Notification of Trading Adjustment in Holiday (Updated)

Note: The dash sign (-) indicates normal trading hours.

Friendly Reminder:
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Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

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Flip, eat, sleep, repeat – such is the degen lifestyle of a forex trader. While majority of people are still debating about on-site jobs, hybrid work or full remote opportunities, degens traders are thriving on market volatility in attempt to tenfold or even hundredfold their small capital, living the dream lifestyle of many. 

Or at least that is how social media portray them to be living. 

Half the time, these market enthusiasts are glued to their computer screens and following the latest market movements for the next big opportunity.  

Opportunity and risks

Even the S&P500 companies would be out of manpower if and only if everyone could easily be a successful forex trader. No one would be interested in a “job” if it is straightforward to achieve such a degen lifestyle.

While social media seems to display that life is great as a trader, the truth is that such lifestyle that demands one to possess dedication in learning and a high-risk tolerance to market fluctuation. 

Without any consistent or stable income stream at the onstart, a degen forex trader typically has a super small capital and often has the wildest dream of flipping $100 to his first million. While this is not impossible given that there are endless opportunities in the financial market, traders are often subject to certain challenges that would make or break them. 

If a market always stays quiet and flat, there would be no opportunities to for profits to be made. On another end, extreme volatility or swings would either result in a huge fat profit or wipe a trader’s account out.

It can be tricky for a newbie to figure out on the right balance to strike, and in this case may benefit from following a signal provider using the copytrading feature.  

News and information overload: To follow or not to follow?  

Staying up to date in the financial markets is a constant battle. On top of economy calendars, fundamental data, technical analysis and news articles, degen forex traders also tend to receive tips from social media channels such as Twitter.

Not only it is easy to drown in a sea of information, but traders may also struggle to filter or verify the validity of the same. It is no surprise to see some traders would rather just purely rely on technical analysis as their trading strategy instead of trading on news. 

Failure of risk management is the highway to hell 

Many degen traders are prone to take on excessive risk as they all hope to make money quickly. As such, they often trade in a speculative manner, and further amplify the risk using high leverage.  

Let’s use a trade in gold (XAUUSD) as example. 

If a trader with a balance of $4,120 decided to short one (1) standard lot of XAUUSD at $2,060 with target price of $2,000, he is using a leverage of 1:50. If things moved according to his plan, he would make a profit of $6,000 on this trade alone. That is a whooping 145.63% on his capital of $4,120 – which is impressive! 

However, XAUUSD eventually rallied in the opposite direction, past the $2,100 price level. If the same trader set a stop-loss at $2,080, his position would have been closed with a loss of $2,000, which is quite a painful loss of 48.54%. 

Now imagine how can he recover such a sum back? Only if he doubles the trades that he subsequently makes with his new balance of $2,080. Ouch. 

Pictured: Financial hell

Worse, if no stop-loss was set at all, his entire account would have been wiped out once XAUUSD moves past $2,101.20. This is exactly how over-leveraging kills a forex trading account. 

P/S: You can also check out how to trade gold (XAUUSD) if this is your choice of asset to trade. 

The moral of the story 

By setting a stop-loss too far away, not adhering to a stop-loss or not using a stop-loss at all, a forex trader is throwing risk management out of the window. However, managing risk is crucial for survival as a degen trader, as one will need to survive through series of trades before striking a big successful transaction.

In the meantime, one single mismanaged trade can wipe out an entire portfolio, sending all previously made profits back into the market. This is why it is essential to strike a balance between risk and rewards. 

Is this degen lifestyle as a forex trader really sustainable? 

No doubt the market is a place full of high risks and speculation. Although a retail forex trader cannot control the market, what he can control is his own risk management and mental state in avoiding impulsive or reckless decisions.  

With strong commitment in learning the markets and good discipline in managing risks, a forex trader will be able to achieve consistency in his trades. From there, the profits piled over time will generate a significant sum, leading to financial freedom envisioned by most. 

Trade 1,000+ assets with VT Markets 

Embark on your journey as a forex trader with VT Markets now. With 1000+ assets being offered, ECN and STP accounts, forex economy calendar, academy and analysis being made avail to you, there is nothing to stop you from living the lifestyle you desire. As a new client of VT Market, you can also claim welcome bonus on your deposits. So, hesitate no more, start today! 

Open a live account 

CURRENCIES

Highlights from Last Week:

• U.S. Dollar Decline: The DXY index dropped significantly due to softer-than-expected consumer price index figures. This reignited optimism that the disinflationary trend, which began in late 2023 but had stalled, is back on track.
• Federal Reserve Speculation: Encouraging inflation data has fueled speculation that the Federal Reserve might ease its monetary policy sooner than anticipated, possibly this fall.
• EUR & GBP Strength: The euro and British pound surged to multi-month highs against the U.S. dollar.
• Precious Metals Rally: Gold is nearing its all-time high, and silver has reached its strongest level since 2013.

Upcoming Week:

Economic Calendar: A relatively light schedule is ahead, with the FOMC minutes and May S&P Global PMI results being the main highlights. This suggests that recent market moves may consolidate as investors wait for more significant catalysts.

UK Economic Focus:

April Inflation Data: Set to be released on Wednesday, this data could be crucial. A stronger-than-expected reading might reduce the likelihood of a Bank of England rate cut in June, while a subdued report could solidify expectations for such a cut.

STOCK MARKET

Key Highlights

Record-Setting Week for Stocks:

• Signs of an inflation cooldown led to optimism about potential Federal Reserve interest rate cuts.
• Major indices hit record highs:
  • Nasdaq Composite (^IXIC) rose over 2%.
  • S&P 500 (^GSPC) increased by more than 1.5%.
  • Dow Jones Industrial Average (^DJI) surpassed 40,000 for the first time.

Upcoming Focus

Nvidia Earnings:

• Highly anticipated earnings results from Nvidia (NVDA) are expected to be the key market catalyst.
• Analysts expect Nvidia’s earnings to have grown by over 400% in the prior quarter, with revenue up 242%.

Other Earnings Reports:

• Target (TGT), Palo Alto Networks (PANW), and Lowe’s (LOW) will also release earnings.

Economic Updates:

• Updates on the manufacturing and services sectors.
• Final reading of consumer sentiment for May.
• Minutes from the Fed’s May meeting to be released on Wednesday.

Inflation and Interest Rates

Consumer Price Index:

• Core prices rose 3.6% over last year, the lowest annual rise in three years.
• Investors are now pricing in two full interest rate cuts this year.

Market Projections:

• Investors aligning with the Fed’s projections of two or three rate cuts this year.
• BMO Capital Markets expects the S&P 500 to end 2024 at 5,600, a 7% increase from the latest close.

Analyst Insights

Fed Meeting Minutes:

• Expected to provide a deeper look at the discussion among officials.
• Bank of America economist Michael Gapen suggests the minutes might sound more hawkish than Chair Powell’s press conference.

Equity Strategist Forecasts:

• Deutsche Bank’s Binky Chadha raised his year-end target for the S&P 500 to 5,500 from 5,100, citing robust earnings growth and an improving macroeconomic outlook.

Nvidia’s Market Impact

AI Leader’s Performance:

• Nvidia’s stock is up more than 86% in 2024 and over 200% in the past year.
• High expectations for continued growth in earnings and revenue.

Broader Market Implications:

• Nvidia’s performance could influence other AI-related stocks and the broader market.
• Interactive Brokers’ Steve Sosnick notes the AI trade’s dependency on Nvidia’s continued success.

Expansion of the AI Trade

Sector Impact:

• AI mentions soared in earnings calls, with significant growth in sectors like Energy and Utilities.
• Dell shares rose about 10% due to bullish AI research from Morgan Stanley and Evercore ISI.

Strategist Views:

• JPMorgan’s Jack Manley highlights the importance of the AI story’s longevity for market stability.

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Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact [email protected].

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact [email protected].

CURRENCIES

Overview: EUR/USD fails to sustain bullish momentum, GBP/USD pauses after breakout.

Introduction to Contrarian Trading:

• Herd mentality can dominate trading, but experienced traders often explore contrarian strategies.
• Contrarian trading involves recognizing when the majority sentiment may be incorrect and capitalizing on those opportunities.
• Tools like IG client sentiment can identify extreme optimism or pessimism, signaling potential market reversals.
• Contrarian signals are most effective when integrated with technical and fundamental analysis.

Gold Market Sentiment:

• 54.01% of IG clients are net-long on gold, with a buyer-to-seller ratio of 1.17 to 1.
• Increase in net-long traders: +8.22% since yesterday, +1.60% from last week.
• Decrease in bearish bets: -3.65% since yesterday, +2.22% from last week.
• Prevailing bullishness suggests a potential pullback, but mixed positioning trends create uncertainty.
• Key Takeaway: Combine contrarian signals with technical and fundamental analysis for comprehensive trading decisions.

Dow Jones 30 Market Sentiment:

• 75.94% of IG clients are betting on a decline in the Dow Jones 30, with a short-to-long ratio of 3.16 to 1.
• Increase in sellers: +9.59% since yesterday, +8.17% from last week.
• Decrease in bullish exposure: -6.93% since yesterday, -10.37% from last week.
• Overwhelming pessimism may indicate a near-term upside surprise.
• Key Takeaway: Use contrarian signals along with other analysis methods to make well-informed trading decisions regarding the Dow Jones.

USD/JPY Market Sentiment:

• IG data shows a heavy bearish sentiment on USD/JPY, with a short-to-long ratio of 2.37 to 1.
• Decrease in sellers: -0.85% since yesterday, -8.77% from last week.
• Increase in bullish positions: +9.28% since yesterday, -4.13% from last week.
• High bearish bets suggest potential upside, but recent easing of selling pressure introduces uncertainty.
• Key Takeaway: Mixed signals emphasize the need for a comprehensive trading strategy, incorporating sentiment data with price action and fundamental analysis.

STOCK MARKET

Overview:

• President Biden retains Trump’s China tariffs and introduces new levies.
• New tariffs aim to protect domestic industries, especially semiconductors and green energy.

Biden vs. Trump on Trade:

• Both leaders support protectionism but have different approaches and rationales.
• Biden focuses on tariffs for Chinese electric vehicles (EVs) and specific industries.
• Tariff on Chinese EVs raised to 100%, significantly increasing their cost in the US.

Impact on Chinese Imports:

• Tariffs apply only to products shipped directly from China.
• Loopholes exist, allowing Chinese companies to bypass tariffs by producing in other countries (e.g., Mexico, Canada).

Industry Concerns:

• US auto industry worried about Chinese automakers setting up in Mexico or Canada.
• Free trade agreements with these countries complicate direct tariff application.

Political and Legal Challenges:

• Biden and Trump have no clear solutions for the loophole issue.
• Trump’s proposed tariffs on Chinese cars made in Mexico might face legal hurdles.
• Executive action could be challenged in court, with potential long-term litigation.

Legislative Action:

• New laws might be needed to address loopholes, but Congress is not ready.
• Potential hearings and draft bills expected, but real legislative action likely post-election.

China’s Strategy:

• China subsidizes critical industries like EVs and green energy to compete globally.
• Chinese companies could leverage government support to offset tariff impacts.

Election Implications:

• Trade policy on China is a key issue in swing states with manufacturing bases.
• Both Biden and Trump aim to appear tougher on China to win voter support.

Key Takeaways:

• Expect ongoing protectionism regardless of election outcome.
• Addressing trade policy loopholes will be a significant challenge for either administration.
• Political and economic strategies will continue to evolve in response to global trade dynamics.

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Dear Client,

VT Markets value your trading experience and funds security. Effective on May 21, 2024, we are implementing Two-Factor Authentication (2FA) verification measures for Cryptocurrency addresses and E-wallet withdrawal methods.

Here’s the recommended 2FA software download link:

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If your withdrawals are restricted due to the above reasons, please wait for the specified time before re-submitting your request.

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Dear valued clients:

VT Markets is committed to providing customers with a faster and more stable trading environment. We will upgrade our server from 02:00 -04:00 and 08:00 – 11:59 server time on May 18^th, 2024 (Saturday).

Please refer to the MT4/MT5 software for the specific update completion and trading opening time.

Please pay attention to the following matters:

1. During the maintenance period and before the opening of the market, the quotation servers will be stopped. You will not be able to open new positions, close, or adjust any existing positions.

2. There might be a gap between the maintenance period and before/after the trade opening time. Pending orders or stop loss/take profit which is within the gap range will be executed at the market price after the maintenance ends. We recommend you pay attention to your positions.

We hope you understand the inconvenience caused by this upgrade and maintenance, and we commit to providing you with better services.

If you have any questions, our team will be happy to answer them. Please send an email to [email protected] or contact online customer service.