A1 Trading Company

March 15, 2023

The Banking Collapse Explained

Frank Cabibi

Sudden panic entered the market over the weekend that sparked a major downturn in stocks and USD. What are known as Silicon Valley Bank (SVB), reported a $2 billion loss in their investments as a result of interest rate hikes. This caused a severe sell off over the next trading session. The goal of this article is to help explain what happened in this most recent banking collapse and why certain assets are reacting the way they are.

What Caused the SVB Collapse

Here is a brief summary of what happened according to USA Today:

Back in 2020-21, when interest rates were low, the Fed-fueled rally had taken bond yields to nearly 0%, causing a spike in bond prices. The bank decided to invest in bonds for the long as a result. However, the Fed began raising interest rates, and this caused bond prices to fall. This weekend, SVB announced that they had lost $1.8 billion from bond investments.

When the public saw this, the bank's stock cratered lower. Panic withdrawals occurred as over $150 billion of SVB's value was lost in a matter of hours. Bond yields, stocks and USD tanked while gold soared. Other regional banks fell in fears of a larger collapse. This was one of the biggest bank failures in US history.

What This Means For The Markets

In order to prevent another calamity like 2008, the Fed may have to step in and keep these failures to a minimum. The problem of inflation still remains, and Powell has to be careful not to repeat 2020's stimulus scheme that bailed us out but caused higher inflation in the first place.

Broken banks tend to hurt stocks and help gold. In this particular case, USD might also be bullish. Here are some trade setups on these assets.


In the last 2 days, SPX500 fell as much as 2% following the SVB news over the weekend. Price has a nice level of resistance on the 4H timeframe where there is a falling trend line coupled with a double top around $3924.


Gold went up as much as 3.7% since the collapse and is testing resistance in the $1920s. A close above this zone could take price up to the $1950s which was a 2023 high.


The USD jumped up from its 50 DMA on the 1D timeframe and regained about half of what it lost in the last three days. Resistance lies around 105.480.

A1 Edgefinder

All-In-One Fundamental Dashboard!
Simplify your fundamental analysis with our all-in-one fundamental dashboard! 
Discount code: READER

Learn more

My Crazy Trade On Gold: Up $8000

Hey Traders! This week has been wild for Gold! Thanks to insights from the EdgeFinder, I've been in a trade on XAUUSD since May 3rd. Initially, I jumped in due to weak jobs and PMI data, sticky inflation, and solid support/market structure. Here’s a quick look at my gold trade: Entry Recap: On May 13th, […]

Read More
Is Gold the Buy of 2024?

Rates move lower after the BoE announced their latest monetary policy report to keep rates unchanged at 5.25%. Unemployment came in higher this morning with the 30-year bond auction coming up Thursday afternoon. In the midst of a slow news week in the US, gold is sitting at a very favorable position according to the […]

Read More
Yields Fall Ahead of Earnings

More earnings reports come out this week is causing an inflow of buyers in the equities market while yields begin the week on a decline. Last week's Fed meeting showed up as "less hawkish" than investors expected causing risk appetite to increase at the start of the summer months. EdgeFinder Analysis As we come off […]

Read More
DISCLAIMER: All comments made by TraderNick’s Forex Group, LLC are for educational and informational purposes only. All comments should not be construed as investment advice regarding the purchase or sale of any securities or financial instrument of any kind. Please consult with your financial adviser before making an investment decision regarding any securities or financial instruments mentioned by TraderNick’s Forex Group, LLC. TraderNick’s Forex Group, LLC assumes no responsibility for your trading and investment results. All information on any of the platforms utilized by TraderNick’s Forex Group, LLC was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. TraderNick’s Forex Group, LLC, its employees, representatives, and affiliated individuals may have a position or effect transactions in the securities and financial instruments herein and or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves very high risk and may not be suitable for all investors. TraderNick’s Forex Group, LLC, its subsidiaries and all affiliated individuals assume no responsibility for your trading and investment result. Read our full disclaimer here
There is a significant degree of risk involved in trading securities. With respect to foreign exchange trading, there is considerable risk exposure, including but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or currency pair. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you can afford to take the high risk of losing your money.
homesmartphonelaptop-phonemenucross-circle linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram