TA Tuesday: Q3 Surge, Forex Trends, and Crypto Resilience

Week-over-week performance:

  • BTCUSD: 34,323/ -0.25%
  • ETHUSD: 1,804 / -1.15%
  • US02Y: 5.03% / -2bps
  • DXY: 106.39 / +0.85%
  • GOLD (USD/OZ): 1,993 / +0.86%
  • NDX: 14,335 / -1.84%
  • VIX: 19.74 / -3.04%

On the macro side:

Last week, the US GDP showed a remarkable surge of +4.9% in Q3, surpassing Q2’s growth and marking the highest since 2021.

It is worth noting that personal spending contributed significantly, making up 70% of this surge, rising by +4%.
Government spending also played a role, constituting to 17% of the surge, with a notable spike of +4.6%.
Within government spending, defence expenditures stood out with an impressive +8% increase.
Can this momentum be sustained? Probably not in the mid-term.
Many of the factors that propelled the GDP higher in this quarter are likely to be reversed in Q4.

Chart 1: US GDP Quarter-over-Quarter

Chart 2: US GDP Components

Once again, these inflationary pressures contribute to the “higher for longer” narrative for US yields with a negative on equities.

Looking forward:
We have some major companies reporting earnings that I’m keeping a close eye on:

  1. Wednesday features PayPal (let’s examine their crypto holdings in the balance sheet) and Qualcomm, also known for its crypto engines, which reportedly laid off 2.5% of its workforce last week due to “weak demand for its main product”.
  2. Friday brings Berkshire Hathaway, where I’m looking for the negative remarks/comments regarding crypto.

As for the economic calendar:

  • On Tuesday, we have EU CPI.
  • On Wednesday, US JOLTs Job Openings and the FOMC.
  • On Thursday, the BoE Interest rate decision.
  • On Friday, US NFP. It’s going to be a fun week!

On the FX side:

Despite some notable moves in various directions, the overall landscape appears relatively stagnant.

I continue to favour a short-term bullish outlook on the EUR, with the CHF as the most vulnerable currency.
Consequently, my targets are set at EURCHF 0.9605 and USDCHF 0.9189.
I also see short-term strength in the EURUSD, possibly trending towards 1.075.

Considering the broader perspective, I see the DXY trend line as a formidable resistance and I am leaning towards a DXY around 105.
This week’s developments are expected to provide a clearer insight into the overall market positioning, and any unexpected figures could easily reverse the above-mentioned trends.
In general, with the CHF showing weakness, I find it attractive to fund long crypto positions with CHF.

Chart 3: FX matrix

Chart 4: DXY 1d

On the crypto side:

Crypto remains resilient, and that is certainly a positive development.
The “changing hands” of crypto assets between investors has been noticeable with increasing volumes.
The derivatives market appears to be quite stretched, characterised by elevated funding rates and consistently high premiums for calls.
The stability in prices is a reassuring factor, contributing positively to the overall narrative – but the overlong positioning in derivatives could hurt the spot price if positions are closed.

Looking at the chart, I continue to believe that $32.5k is the key support for BTC and that $35.5k is the key resistance.

Chart 5: BTCUSD 1d

With ETH continuing to underperform BTC, and BTC dominance finding a resistance at 54%, I like the rounding bottom in ETHBTC at 0.522 for a long entry in ETHBTC.
I prefer not hedging the fiat side, ensuring that any overall increase in the crypto market is a win on the crypto side.
Therefore, a long EHTBTC with tp at 0.585 and sl at 0.507.

Chart 6: ETHBTC 1d

In derivatives, where calls are so expensive, it looks like a too obvious free Vega trade selling 10d calls for long 10d puts.

Chart 7: BTC smiles at expiry

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