Harnessing Market Trends: Insights on Investment Strategies, 21-Day Moving Averages and Emerging Opportunities in the Digital Era

Dear students, hello everyone!  

I’m very happy to join all of you here at Diamond Ridge Financial Academy, seizing the investment opportunities brought by the tech wave. I hope my sharing can help you and I wish you all a pleasant evening.

Last night, we learned the basic rules of investment profits and used technical analysis to understand what makes a successful investment.  

The core of profitable investing lies in: direction, risk control, strategy and fund management. Success in investing doesn’t depend on luck but on accurately identifying market trends. We must choose assets aligned with long-term growth, set strict stop-loss plans and avoid significant losses on single investments. At the same time, learning and applying effective technical analysis methods, like the 21-day moving average we studied, can help us find the best trading opportunities.  

Of course, reasonable fund allocation and position management are also critical for reducing risks and ensuring long-term profitability. By taking a steady and forward looking approach to investing and combining these elements effectively, we can achieve sustained profits in the market.

After studying the 21-day moving average recently, some students messaged me about price fluctuation patterns. For example, how do you judge price trends? How can you evaluate whether an asset’s price is high or low and what are the reference points?  

To address the questions you’ve encountered in your investing and learning, tonight, I’ll explain the rules of 21-day moving averages and the changes in support and resistance levels. I’ll also recommend related investment targets based on these rules, helping you grasp core investment knowledge through practical trading. Before starting, let’s first review today’s market situation.

Today, the UK stock market saw an unexpectedly sharp drop. The FTSE 100 closed below the 8200 support level, reflecting a mix of cautious market sentiment and negative stock-specific news.

First, the upcoming Federal Reserve interest rate decision and the previously strong US economic data have heightened expectations of a hawkish Fed stance. A stronger dollar puts pressure on UK stocks priced in pounds.  

Second, a series of earnings warnings and updates from companies have further fueled market concerns. For example, Bunzl lowered its earnings outlook due to prolonged price deflation, causing its stock to plunge and dragging the market down. Capita’s adjusted revenue decline and Hollywood Bowl’s concerns over rising national insurance have increased investor caution. These negative factors reduced risk appetite, leading investors to take profits and causing widespread stock declines.

Recent economic data also casts a shadow over the market. Although UK wages rose in Oct for the first time in over a year, falling job vacancies suggest a less optimistic employment situation. Yesterday, UK PMI data dropped sharply and inflation rebounded, reducing expectations of a Bank of England rate cut this week. This suggests the Bank of England won’t cut rates this year and next year’s cuts may also slow.  

In contrast, the market expects the Federal Reserve to cut rates by 25 basis points this week. However, President-elect Trump’s policies could push up inflation, slowing the Fed’s pace of rate cuts next year. Weakness in the US stock market today is mainly due to this expectation.  

Additionally, the FTSE 100 has recently been near historic highs. Concerns about next year’s economic outlook triggered profit-taking, leading to sell-offs. However, tech-related stocks, like Rolls-Royce, which we’ve traded before, still show strong resilience against declines.

Some learners might wonder, "Why does an interest rate cut have such a big impact on the stock market or the economy?" As a monetary policy tool, rate cuts directly influence the economy mainly through funding costs, liquidity and asset prices. On a deeper level, from the perspective of pricing and the nature of money, the transmission and feedback mechanisms of rate cuts are especially important.

First, a rate cut lowers the cost of borrowing. For businesses, reduced loan costs can significantly ease their financial burden, encouraging investments and production. Cheap funding supports innovation and infrastructure projects, boosting economic growth in the short term. Similarly, consumers can benefit from lower borrowing rates during a rate-cutting cycle, such as for mortgages or car loans, directly stimulating demand.

Since consumer spending drives economic growth, rate cuts can help the overall economy grow by encouraging consumption. However, this mechanism requires a stable monetary environment to work effectively. If external conditions are complex, like a Middle East war driving up international energy prices or escalating US-China tensions disrupting supply chains, the transmission effect of rate cuts could be significantly weakened.

Second, rate cuts clearly affect price levels. In modern economies, many goods are priced based on global models and monetary policy alters supply and demand by impacting market liquidity. When interest rates drop, money supply increases and capital becomes more abundant. This can lead to rising asset prices, such as in real estate and stock markets.

As a result, investors may move more money into higher-risk assets to seek greater returns, pushing up overall market prices. At the same time, loose monetary policies can influence commodity prices through imported inflation, especially in economies like the UK and US that heavily rely on imports. When currencies depreciate, import costs rise, leading to higher domestic prices and adding to inflation pressures.

From the perspective of monetary attributes, rate cuts redefine the value of money. The value of money depends not only on its purchasing power but also on its appeal as a store of value. Lowering rates weakens the currency’s attractiveness, especially in international capital markets. For foreign investors, rate cuts mean lower returns, which may trigger capital outflows and put pressure on the local currency to depreciate.

This is particularly important in the current policy adjustments in the UK and US Initially, markets expected the Bank of England and the Federal Reserve to continue cutting rates due to slowing economic growth. However, with the Middle East war and the complexity of global events driving up commodity prices, both countries have had to slow down rate cuts to control imported inflation and stabilize their capital markets. Trump's inflation-driven policies have further raised concerns about future inflation expectations, making the Fed even more cautious about rate cuts going forward.

Against this backdrop, countries like the US and Russia have started exploring the potential of using BTC and other crypto as strategic reserve assets. This strategy helps stabilize prices and balance inflation expectations for the following reasons:  

1. Anti-inflation properties: Crypto, especially BTC, have anti-inflation characteristics because their total supply is capped, unlike fiat currencies that can be printed endlessly. Their scarcity is turning them into “digital gold.” By adding BTC and other cryptos to a country’s reserve assets, they can protect against wealth loss caused by currency depreciation.  

2. Stabilizer for international trade: In global trade, the volatility of fiat currencies like the dollar brings uncertainty. Using decentralized currencies like BTC can reduce the impact of political and economic conflicts on trade. For instance, Russia expanded its trade options by holding BTC reserves while facing Western sanctions.

3. Boost in market confidence: Increasing the share of crypto in a country’s reserve assets can boost market confidence in its economic stability. Investors see this as an effective way to combat excessive money printing and inflation, encouraging capital inflow and stabilizing asset markets.  

4. Tech-powered price discovery mechanism: Unlike traditional precious metals, crypto have fast price fluctuations but operate on a transparent trading system. Their global network based consensus mechanism allows for real-time price discovery, which quickly reflects economic changes and helps central banks craft more accurate monetary policies.  

From a long-term investment perspective, mainstream cryptos like BTC and Eth are worth continuous buying.

While rate cuts can stimulate economic growth, overreliance on a low-interest environment may weaken the long-term effectiveness of monetary policy. As BTC and other cryptos gradually become part of national strategic reserves, the traditional logic of rate cuts and liquidity releases is being redefined. By adjusting the balance between digital assets and fiat currency reserves, central banks can make policy changes more flexible.  

On one hand, introducing digital assets creates an “anchoring” effect on money supply, curbing unlimited easing. On the other hand, the volatility of crypto reminds policymakers to carefully set interest rate strategies to balance economic growth and inflation pressures.

Overall, rate cuts as a monetary policy tool are being reshaped by the increasingly complex global economic environment. By incorporating BTC and other crypto into their national strategic reserves, major powers like the US, UK and Russia are attempting to break through the limits of traditional monetary policy. In the future, we may see a new type of monetary policy framework that seeks balance between traditional fiat currencies and digital assets, achieving the dual goals of price stability and economic growth. This isn’t just policy innovation, it’s a profound transformation in the concept of currency value.  

The driving force behind this transformation in currency values is the tech revolution. The tech revolution doesn’t just improve productivity, more importantly, it reshapes how information flows, value is transferred and trust is built. This is the fundamental reason why we recommend investing in the tech industry.

Although the stock market has recently pulled back due to monetary policy influences, looking at the long-term development of the tech revolution, this adjustment actually provides a great opportunity to find high-quality investments. Coinbase (COIN), which we recommended this morning, is a great example worth paying attention to.  

Coinbase’s core business, digital asset trading, is itself a product of the tech revolution. Blockchain technology gives digital currencies their decentralized, transparent and secure features, perfectly aligning with the spirit of the tech revolution. As a pioneer in the industry, Coinbase naturally benefits directly from the booming growth of blockchain technology and the digital economy.  

It’s ahead of the curve, with a large user base and a solid reputation, creating strong network effects. Plus, it’s not just about trading, Coinbase actively expands into areas like the stablecoin USDC and blockchain rewards, making its revenue streams more diverse and its risk resistance stronger. Most importantly, it places a high priority on compliance, which is a huge advantage in the volatile Crypto market.

In addition, it continues to invest in tech development, constantly improving platform performance and security, actively exploring emerging fields like Web3 and DeFi and building its ecosystem, such as its partnership with Base chain.  

All of these allow Coinbase to better adapt to the tech revolution and profit from it. The ongoing development of the digital economy, the growing popularity of crypto and clearer regulations will all be strong drivers for Coinbase's long-term growth. Following current trends, the improving trading systems and policies in various countries are providing short-term benefits. In the long run, Coinbase, as a leading company, has a very bright outlook.

With the current stock price pullback, now is a great opportunity to buy at a lower price, with a buy range between $305-315. The first target price is $349.5 and the second target is around $385. For specific instructions, please contact the assistant.

Of course for beginners, analyzing fundamentals, policies and so on can be difficult. But if you approach it purely from a technical perspective, trading becomes much simpler. By following price trends and referring to the 21-day moving average, you’ll get good buy signals. In actual trading, some students often hesitate to buy when the price seems high, like when we recommended buying Tesla at $360 and many students thought it was too expensive and missed a good opportunity.  

Similarly, we previously discussed Quantum Computing (QUBT) in the quantum tech field. Although it had risen significantly before, after pulling back to support levels, it broke through again and saw a big rally recently.

Taking QUBT as an example, its stock price started at $1.3 and after two waves of increases, it broke through $6. Although $6 seems high compared to $1.3, the pullback after the breakout did not fall below $6, indicating strong buying support in the market and $6 became a relatively low level.  

As shown in the chart, the "green candlestick engulfing the red candlestick" pattern (Charts 1 and 2) is a signal of a bullish reversal. After the second confirmation, the stock price crosses the 21-day moving average (Chart 2), signaling a large upward movement in the short term.  

Therefore, the $6 breakout and pullback form an important support level, becoming a reference price for future buying. The previous high point forms a resistance level (Chart 3 horizontal line).  

As we can see, the high and low prices are not absolute, but relative. The key is confirming the support and resistance levels and the market forces at play. Confirming technical patterns, such as candlestick formations and moving averages, helps us better judge the timing for buying and selling.

That’s it for tonight’s share. I hope that through the above content, you can better understand the patterns of price fluctuations. For those looking to seize the wealth opportunities brought by the tech revolution, please prepare your investment accounts in advance, especially mainstream accounts like stocks and crypto. Through these accounts, we can follow the trend of technological development and combine the advantages of different asset classes to build a portfolio with stable return potential.  

In actual investment, if you have any questions, feel free to reach out to me anytime.  

Through tonight’s session, please think about:  

1. What is the essence of monetary policy? What investment information can be gained from it?  

2. How do you identify high and low prices? How is the 21-day moving average buy signal formed?