A day after the Fed rose the federal funds rate for the third time this year, financial markets still hold impressive ranges. It may turn out 2018 to go down in history as a major consolidation year.
Even the proverbial crypto-market’s volatility seems to be long gone. Bitcoin trades at levels close to those in February this year, with all bounces from the magical $6000 levels being aggressively sold.
Beware of the lower highs series that form. When it builds against a horizontal level, as it does in the case of Bitcoin, the break is fast and furious.
Could it be that such a break will bring volatility back to financial markets?
For the swing trader and investor, the current standoff is pure torture. The professional trader that needs to make a living day in and day out of the markets loses trust in the ability to do so. Not even the Fed press conference isn’t able to generate a sustained trend.
Have a look at the USD/JPY. Despite the Fed hiking rates and U.S. stock market sitting at the highs, it trades in a fifty pips range all week so far.
With just one trading day to go until the end of the month, the momentum seems to have faded. Yet again.
Fundamental traders have little to cheer on too. The Fed reiterated its hawkishness and independence from the White House.
Furthermore, it signaled another rate hike for the end of this year. Selling the USD against other currencies with a much lower interest rate (even negative in some cases) just doesn’t make sense.
And, it becomes illogical with every rate hike the Fed delivers.
For once though, it seems the USD builds energy on all markets. It tries to push against Bitcoin on the $6000, against the Euro at the magical 1.15 and the JPY at 113.
A flush would trigger a tremendous market reaction. Until then, range trading is the norm.