China’s debt bomb Evergrande is causing the stock and crypto markets to collapse non-stop

Global financial markets tumbled on Monday on a range of concerns including an upcoming Fed meeting, complex delta variations, potential economic disruption in China, and weather conditions.

Chinese real estate developer Evergrande is suffering from liquidity constraints with obligations to pay more than $ 300 billion to creditors. This also includes the main interest payment deadline for their foreign bonds, which is due on September 23.

DW notes that a collapse of Evergrande could wreak havoc on many banks, as Lehman Brothers did during the US housing bubble crisis in 2008.

The S&P 500 index fell 1.7 percent on its worst day since May 12 this year. At the daily low, the average of 500 stocks is 5% from its daily high and is now 4.1% below its record.

The Dow Jones Industrial Average fell 614 points, or 1.8%, the largest daily decline since July 19. Meanwhile, the Nasdaq Composite Index fell 2.2% as the hardest hit.

The Federal Reserve begins its two-day monetary policy meeting on Tuesday, and investors are asking Chairman Jerome Powell for more information on the central bank’s plan to ease its bond purchases. Last month, Powell said it was likely that the Fed would cut its monthly purchases by $ 120 billion sometime this year.

The crypto market is not out of the woods either, facing a massive sell-off in the past 24 hours, which has resulted in total market capitalization falling to $ 1.8 trillion.

Data from TradingView shows that the sell-off in Bitcoin intensified this morning as the price fell as low as $ 40,486 before the bulls tried to push the price back above $ 41,884.

BTC / USDT 4-hour chart. Source: TradingView

With fear growing and uncertainty spreading in the marketplace, analysts say the following about price action over the past 24 hours and what to expect in the days ahead.

Go on for Bitcoin

Bitcoin’s fall in price has surprised many in the crypto market, but according to analyst John Wick, the price action that led to yesterday’s pullback formed a confirmed bearish reversal bar on the 4-hour chart, signaling a deeper correction is imminent.

The source: Twitter

According to the trader, the decline follows recent developments related to Evergrande, which really caught attention last week when a bearish reversal pattern formed for Bitcoin.

It may take several weeks for the negative shock waves around Evergrande to gain momentum and spread to global financial markets, suggesting that traders are facing a period of increased volatility.

Analyst CryptoCapo sets key levels to watch through a chart that highlights the support zone between $ 42,000 and $ 44,000 and the lower support at $ 38,000.

“I’ll bet a jump from the blue zone, but if she breaks that zone and tests again, the green zone will be the next support. Both are good starting prices for the coming months ($ 100,000+). “

Source: Twitter

One final analysis comes from trader Scott Melker, who shows that this decline resulted in an oversold bullish divergence on the 4-hour chart.

Previously, he said that the weekend BTC price action was an early warning of yesterday’s pullback as it formed an overbought bearish divergence as the RSI moved down.

Now that the market is oversold again, the analyst is looking for another bullish divergence that will form as a signal that a safe re-entry into the market is possible.

What about # 2?

The recent sale in the Ether market also sparked a classic bearish pattern that is 75% accurate when it comes to meeting its bearish goals.

This pattern, known as the “double high”, develops after a strong rally, then declines, then rebounds towards the previous high and corrects again – all of which occurs when the borderline support is reached. Eventually, the price drops below the neckline and seeks lows that are the distance between the high of the double top and the neckline.

Ether seems to be half the formation of a double top. The cryptocurrency chart below shows that it peaked near $ 4,385 on May 12, fell to neck support at $ 1,984, and rebounded to another high of $ 4,030 on September 3.

1W ETH / USD chart. Source: TradingView

If the double top pattern moves strongly, ETH / USD can extend the ongoing sell-off and push the price towards USD 1,984, only to see a possible collapse afterward. It doesn’t look sustainable, however, as ETH / USD drops below the USD 1,984 neckline.

This level is also close to the 50-week exponential moving average (EMA) of Ether (Velvet Wave), which is currently at $ 2,118, and provides another level of support to protect the upside. Previously, this wave served as an entry point for the bulls after a stronger ETH / USD pullback.

At the same time, in the daily timeframe, the next support line for Ether appears near its 200-day EMA (orange wave) at $ 2,536. Therefore, a large pullback from the specified level will invalidate the double-top setup.

1D ETH / USD chart has 200-day EMA support. Source: TradingView

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Annie

Bitcoin magazine

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