TA Tuesday: Market Insights & Thanksgiving Opportunities

Week-over-week performance:

  • BTCUSD: 37,409 / +2.11%
  • ETHUSD: 2,018 / -1.94%
  • US10Y: 4.39% / -24 bps (!)
  • DXY: 103.29 / -2.26% (!)
  • GOLD (USD/OZ): 1,991 / +2.42%
  • NDX: 16,027 / +3.52
  • VIX: 13.42 / -9.14% (!)

On the macro side:

Last week, the unexpected dip in US CPI provided the macro spark we were anticipating to validate a bullish momentum.
Macro assets swiftly responded to the news, and the reshuffling is evident with UST yields dropping by more than 20 basis points for 5y+, the US dollar sliding by 2.26%, NDX inching just 4.65% away from an all-time high, and VIX expressing downside risk protection below the 25% mark of all historical observations.

We still await earnings reports from some companies, and today marks NVDA’s turn to disclose.
I believe this could serve as a catalyst for a rally in tech equities, possibly extending to a follow-up in the crypto space.

It is Thanksgiving week, meaning that traditional markets and banks are closed (but not crypto).
Typically characterised by low volatility and volumes, the holiday week might present opportunities (fake breakouts) as any market turbulence occurs with slower fiat ramps and fewer individuals glued to their screens.

Looking ahead:
– Tuesday: ECB President Lagarde speaks; US FOMC Meeting Minutes
– Wednesday: US jobless claims
– Thursday: Thanksgiving
– Friday: DE GDP, CH employment, ECB President Lagarde speaks

On the FX side:
The CPI threw a curveball into the markets, and with DXY resting at 103.29, we find ourselves at a crucial support level.
Looking at the charts, it seems likely for a revisit to 103, but considering the downside break in the head and shoulders pattern, I am holding off for a drop to 102.22 before considering any long entry in USD.

With a whopping $5.73 trillion in Money Market Fund Assets (a 27% YoY increase), the swift outflow of these assets (once fund managers make their moves) could easily bring DXY back to 101.
This scenario paints an overall bullish picture for crypto, especially as we approach the year-end.

Chart 1 : DXY 1d

On the crypto side:
The overall crypto atmosphere remains bullish, and the resilience of BTC after reclaiming the $35k mark, as mentioned last week, is pivotal for maintaining a positive bias.

Despite the crypto-year showing relatively little correlation with traditional forces, the current positive macro sentiments, coupled with enthusiasm for a potential ETF approval, are expected to propel crypto prices in a gradual upward trend as traders strategically position themselves for 2024.
Anticipating low realised volatility, the outlook is for prices to steadily trend upward.

For BTCUSD, $38k serves as the resistance, while $35k acts as the support.

Chart 2 : BTC 1d

In ETHUSD, $1,935 is the key support, with $2,146 marking the resistance.

Chart 3 : ETHUSD 1d

In terms of positioning, a short-term short on volatility aligns well with a net-long delta strategy (something like short 10d-C and short 35d-P).
And again, as call wings are this steep, my favourite trade keeps being call-spread.

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