I am not a fundamental expert (nor an economist) but I found FEDFUNDS chart really interesting!
I never thought that basic technical analysis tools can also be applied to such economic instruments!
From a technical perspective, FEDFUNDS has been bearish for a while making lower lows and lower highs.
For the momentum to be shifted from bearish to bullish, as mentioned in the title "see light again", FEDFUNDS has to break above the last swing high. (highlighted in gray as trigger)
It would be interesting to hear your thoughts on this one.
Exactly the same chart as the interest rates. What I find interesting is that during 1980 till today, everytime the FED increased the rates, they had less margin to play with the next time they had to raise the rates. Now when we hit the 0%. How will turn out if they raise it today?
TheSignalyst
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@Lucassornicle, really interesting Lucas! who knows ;) let's wait and see
EWcycles
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@TheSignalyst, In Sweden, they turned the rates to negative but the central bank is not private as the FED. So they just increased the taxes dramatically to reduce their pain (the pain of the ruling elite). In the short run, it works because the money makes a different kind of circle back to the state governement as interest rates do. But in the long run, bussinesses move to better countries and also it makes people poorer and more depended on their loans. Sweden for example has a 90% private debt as a percentage of GDP which is within the top 5 in the free world (top 10 if you include very poor countries). I find it difficult to beleive that this could happen in the US because the system is much less socialist but if that comes to question then you can check how the swedish economy (private and public) has done the last 10 years. :)
Since the fed funds rate is not subject to support and resistance levels perhaps the conclusion is that all technical analysis lines are ultimately like reading tea leaves.
TheSignalyst
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@trade-God interesting really. That's what I said in the description 😁