Week-over-week performance:
- BTCUSD: 25,761 / +0.25%
- ETHUSD: 1,580 / -2.58%
- US02Y: 4.99% / +11bps
- DXY: 104.63 / +0.22%
- GOLD (USD/OZ): 1,919 / -0.92%
- NDX: 15,461 / -0.18%
- VIX: 13.81 / +5.58%
On the macro side:
Canada’s central bank opted to maintain interest rates at 5% last week, asserting that the current interest rate level effectively aligns with their goal of achieving a 2% inflation rate.
This decision might serve as an indicator for the upcoming FOMC meeting, where there is a likelihood of a rate “skip,” with expectations that Chair Powell will maintain his “wait and see” strategy and 2% inflation target.
Looking ahead:
This week, attention is focused on two crucial economic indicators in the United States: the CPI on Wednesday and the PPI on Thursday.
The market is forecasting a deflationary trend; in the event that these expectations are significantly off the mark, there is a potential for increased market volatility.
On the FX side:
The ascent of the US Dollar remains limited, with the DXY currently standing at 104.6.
If it struggles to maintain support above 104.27 (bull trap), there’s a strong possibility of revisiting the 103 level.
Conversely, as other G10 currencies continue to exhibit weakness, my inclination still leans toward the DXY at year-to-date highs.
Chart 1: DXY, 1d
On the crypto side:
As volumes remain this low, there are just two kinds of market participants:
- Natural sellers (i.e. miners, foundations)
- Forced sellers (i.e. FTX liquidations)
As long as there are no natural bids in the market, which typically arise from usage, staking, or deflationary pressures, it makes it challenging to sustain prices.
However, it’s worth noting that previous sell-offs or liquidation announcements, such as the recent one from FTX, have often served as favorable pivot points in the short term.
Ethereum stands out as one of the tokens with a continuous influx of natural buying interest, driven by activities like ERC-20 transactions, staking, and deflationary mechanisms.
Ethereum’s price action has been notably sluggish, with ETHBTC trading at 0.061 (hovering near the year-to-date low of 0.06053).
While a move to 0.060 seems likely in the near future, this could also present an opportune moment for a reversal.
Looking at the chart, ETHUSD is trading in a falling channel around my Bear Trap level at 1562 USD.
This is to me a good entry point for a short-term reversal which could be set with TP at $1774 and SL at $1484.
The RSI indicator also indicates an oversold condition.
In case of a failure to reverse, a key support level lies at $1,375.
Chart 2: ETHUSD 1d
In BTCUSD, I continue seeing strength in a low-volatility environment. Key support $25k and key resistance $26.9
Chart 3: BTCUSD 1d
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