For about 24 hours, the international financial markets have entered a rebound sequence , a technical recovery largely linked to the day of expiration on Friday, March 20, 2020, the “four witches” day.
For institutional traders, it is above all a question of projecting themselves into the next monthly maturity on the options market and, to a lesser extent, of future contracts. Should the PUT options (bearish strategy on the underlying price) be cashed in or extended for the next month, or even switch the open position to CALLs (bullish strategy)?
After 40% drop in the CAC 40 price in one month, it seems that professional and managerial traders are choosing to secure gains, to restore the liquidity that is so sorely lacking.
In order to envisage a stable technical rebound , it is necessary to observe a fall in the volatility indicators. The implied and historical volatilities of several asset classes are falling after a month of sharp increases and that of Bitcoin is declining after reaching and even exceeding its record in 2017/2018; a signal of the return of institutional investors? Too early to say.
In all cases, the technical analysis revealed strong support between $ 4,200 (upward acceleration threshold of April 2) and $ 5,000 (upward chartist trend line straddling the years 2018 and 2019).
After the bearish shock of the session on Thursday March 12 which hinted at the worst, the technical damage is therefore limited and the market could erase the fall of March 12. The upward trend line mentioned is plotted on the two graphs below, that in Japanese weekly candles then that in daily; it produced its bullish effect with relative precision.
Conclusion : It is not yet certain that the ultimate market trough has been registered, but the technical rebound still has potential. First of all, the $ 7,000 (Kijun-sen daily, ichimoku system), $ 7,100 and $ 7,600, the latter being the threshold for dropping out of the fall session on Thursday, March 12. Invalidation of the rebound under the support at $ 5900.
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The article is written and prepared by our foreign editors from different countries around the world – material edited and published by Ordo News staff in our US newsroom press.