TA Tuesday: Low volatility and thin volumes on the market before year end

The markets are thin in terms of volume, and volatility is low. The market is also unlikely to see much movement until December 30th. On the macro side, we are not expecting any news this week. Movement could stem from the larger options expiration at the end of the month (https://metrics.deribit.com/options/BTC). Additionally, greater demand for USD at the end of the year could help the dollar index rebound. The combination of potential increased volatility due to the options expiry, a potential dollar rally, and thin liquidity makes the risk reward ratio of a long position uninteresting. And this is why we are closing our short-term long position at the desk, and will stay on the sidelines until early next year.

Now let’s move on to the charts:

Chart 1: BTC$ 4h

Since the beginning of December, we have been in a sideways movement. The medium-term trend is still clearly pointing downwards. The falling trendline is at approx. USD 17,000. In combination with the short-term support, a descending triangle is currently forming. Should we break through the triangle to the downside, a further price drop is likely. I would expect to see a first support at USD 13,500.

Supports: 16,000, 1,‘500
Resistances: falling trendline 17,000

Chart 2: ETH$ 4h

A similar picture can be seen in ETH vs. USD. Here, we are also seeing the formation of a falling triangle. Should this triangle be broken to the downside, the USD 800 mark will form a support around 30% lower.

Supports: 1,000, 800
Resistances: falling trendline 1,350, 1,670

Chart 3: DXY 4h

After the decline from 115 to 104 since October, a rebound in the dollar index (DXY) could be expected, as mentioned above. Fundamentally, dollar demand is basically higher over the end of the year. But also technically, a rebound scenario is forming. The falling trend has already been broken to the upside and is now consolidating at the upper trendline. A negative divergence is already forming in the RSI, which makes a rebound even more likely. I see the dollar index at 107 in the short term.

Supports: falling trendline 103

Resistances: 105, 106, 107.

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