The financial markets have chosen the path of optimism at the start of 2023, with a bullish performance in the equity and crypto markets in double digits, although inflation is still unbeaten and the economic framework for the 12-month horizon is uncertain. The stock market session of next Tuesday, February 14 will be the justice of the peace, and Valentine’s Day has nothing to do with it.

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A whirlwind start to the year

Each stock market week reveals its share of micro-economic figures (quarterly company results) and macro-economic figures (the major aggregates of the economic situation), allowing institutional investors to adjust their expectations and their positions on the stock market.

At the start of 2023, they opted for an offensive positioning, with a very clear sequence of outperformance of risky assets on the stock market, to the detriment of defensive assets. This is how the European equity market posted the most bullish performance seen in 15 years for the first 5 weeks of a year. For example, the price of the CAC 40 Global Return (GR), ie the price of the flagship index of the Paris Stock Exchange with its dividends reinvested, has just set a new historic record! Yes, I said a new market record not seen since the birth of the index in 1987.

There is therefore enough to make the cryptocurrency market dream, while the price of Bitcoin (BTC), despite a very good start to the year 2023, remains very far from its record set in November 2021.

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Tuesday, February 14 trading session promises high volatility

This bullish choice by investors is based on a combination of fundamental factors expectations, in particular the conviction that the economic recession will be avoided in the coming months, despite the sharp rise in the cost of money, the firmly rising cycle of interest rates for 16 months.

The other major fundamental dimension expected is the decline in inflation rates in the West, which will allow central banks to adjust their monetary policy between now and the end of the year. It is on this second theme of fundamental concern that we will have to be very attentive next week.

During the stock market session on Tuesday, February 14, it is not Valentine’s Day that should hold your attention as an investor, but the publication of the inflation rate in the United States for the month of January. The consensus among economists sees a further slowdown in the price regime, it is imperative that the consensus is in the right not to question the recent bullish rally in the crypto market. In other words: a number to follow on Tuesday at 2:30 p.m.

Graph showing the dynamics of the annual inflation rate in the United States according to the consumer price index (CPI)

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Bitcoin (BTC) and Ethereum (ETH) offer a graphical Golden Cross

The technical signals offered by the crypto market have been bullish since January 1, on the other hand, a sideways transition phase has started in the short term under the resistance of 25,000 dollars. As long as this market break doesn’t see the break of support at $21,000, then the bullish build is unchallenged. I estimate that the technical threshold for reversal invalidation is at $20,000, where a bullish price gap has developed in the BTC futures contract. It is this gap that must never be filled to preserve the rebound.

This week, I note a chartist signal that the bull camp adds to its argument, this is the pattern of moving averages in Golden Cross. This technical pattern consists of a crossover of the 50-day simple moving average above the 200-day simple moving average, a data observed on the BTC/USD and ETH/USD rates. To be continued with the publication of inflation figures in the United States on Tuesday at 2:30 p.m.

Chart showing the price of the ETH/USD rate in daily Japanese candles

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Vincent Ganne is a market strategist, technical analyst, trainer on the stock market and speaker on BFM Business. With a long experience in the field of analysis, he offers a global approach to financial markets. Both from a macroeconomic point of view and from a microeconomic point of view. Vincent Ganne also uses many aspects of chart analysis with the aim of forecasting trends in financial assets over the medium and long term.

Vincent Gane

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