Bitcoin Price and CME Futures Gaps

As seen on several news outlets, there was a big potential for correction according to the CME Futures Gap theory. This theory basically establishes that Bitcoin’s price action tends to move in favor of filling these gaps that happened due to the market closing and opening during the weekends.

Even though realistically there is no reason for these gaps to be filled, time and time again this has been the case. My theory is that this is purely psychological as more and more news and traders focus their attention on this. I would say this is what is called a self-fulfilled prophecy, where just the fact of people thinking this might happens makes it so it actually happens.

Last week in the markets, the US stocks finished with another positive week with optimism that some states would begin to re-open for business in the coming few weeks and the epicentre of the Covid-19 in the US, New York cases and deaths beginning to recede.

Last week’s optimism with a rally into the Easter weekend may continue into this trading week, European markets lacklustre but still trading slightly higher thanks to decent numbers out of China and the continued hope that governments are getting a grip on the Covid-19 pandemic.

The COVID-19 virus is having an immense impact on people’s health, financial situations and day-to-day living. As most of you are aware, markets across the world have also been heavily affected.

The Coronavirus pandemic has dominated the news with its surge worldwide as Central Bankers loosen monetary policies and Governments ramp up fiscal stimulus packages. The number of Coronavirus cases has more than doubled in a week to the region of 330,000 cases. The term of week had been ‘Social Distancing’ as world leaders enforce lockdown measures to mitigate the spread of the coronavirus.

Global markets are continuing to tumble at the start of the week following another dramatic intervention from the Federal Reserve. US stock futures hit their lower limit prior to the first market open of the week. Finally Goldman Sachs has stated the US markets have further to fall.

As the Coronavirus outbreak continues to expand its global reach and put further uncertainty in the markets, two important indicators led to a pessimistic view last week, the Fed delivered an emergency 50bp rate cut and OPEC+ failed to agree on further production cuts.

Here is what traders have been watching, the continuing effects of the coronavirus after the death toll exceeded the total from SARS. Meanwhile, Chinese inflation jumped, as the response to the virus caused shortages and pushed up the prices of household goods. Finally, the US jobs report came in better than expected with Fed’s Powell to testify in congress this week.