TA Tuesday: Positioning for a Year-End Rally Amid Shifting Trends

Week-over-week performance:

  • BTCUSD: 36,633/ +4.92%
  • ETHUSD: 2,058 / +8.61
  • US10Y: 4.63% / -1bp
  • DXY: 105.68 / +0.28%
  • GOLD (USD/OZ): 1,944 / -1.47%
  • NDX: 15,482 / +2.16%
  • VIX: 14.77 / -0.87%

On the macro side:

Jerome Powell is clearly making an effort to maintain stability and reassure the markets, but the overall outlook and positioning seem to tell a different story.
The market seems to be signalling that the downside risk is behind us (in the short run): VIX is below 15, US10Y is topping, and gold prices are now lower.
Positioning for a rally makes sense, especially as we approach the end of the year and money managers are making strategic plans.
This narrative applies not only to traditional risk assets such as equities, but also, in my view, to digital assets.

Looking ahead:

  • Tuesday: EU GDP, US CPI
  • Wednesday: UK CPI, US PPI
  • Thursday: Lagarde speaks, US Jobless Claims
  • Friday: EU CPI, US Housing starts

On the FX side:

As key economic data continues to align, FX volatility has eased.
In this environment of low volatility and increased clarity, I favour the EUR and am most inclined to sell the CHF.
My positioning anticipates a downtrend in the DXY, possibly back to 105, which is a scenario that could benefit the crypto market in general.

Chart 1 : DXY 1d

I am keeping a close eye on the EURCHF pair, which recently broke a bullish trendline.
A decisive break of 0.9673 could trigger significant market movement, and I have set a target price (TP) at 0.98, with the trendline acting as the stop-loss (SL) around 0.962.

Chart 2 : EURCHF 1d

On the crypto side:

The rotation from BTC to altcoins continues as we see many of them rally (WoW: SOL +31.37%, MATIC: +27.52%, DOT: +10.22%, XTZ: +7.74%, etc.).
Bitcoin’s dominance is at 52.20%, but I see a likely retreat to 51.4%; until then, I prefer altcoins to bitcoin.

This preference is based on two factors:

  1. In general, in a risk-on market, the smartest way to leverage the trade is high-beta assets (i.e., smaller caps = alts)
  2. Should the BTC spot ETF come with more subscriptions than expected, this is likely to be the trigger for a crypto summer.

Looking at the charts:

In BTCUSD, $36.2k is a strong support, followed by $35.4k. Holding these levels is bullish as I expect volatility to quiet down (except for news) and traders to reduce the carry on their leveraged positions.
Resistance is first at $38k and then at $40k.

Chart 3 : BTCUSD 1d

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