TA Tuesday: Navigating Uncertainty and Opportunity

Week-over-week performance:

  • BTCUSD: 25,697 / -1.3%
  • ETHUSD: 1,622 / -1.58%
  • US02Y: 4.88% / -11bps
  • DXY: 104.4 / +0.4%
  • GOLD (USD/OZ): 1,937 / +0.73%
  • NDX: 15,490 / +2.91%
  • VIX: 13.08 / -13.26%

On the macro side:
The latest job figures were unveiled, revealing a stark contrast to the data that was reported initially, with subsequent revisions consistently showing weaker numbers (e.g., June payrolls initially reported 209K, which was then revised down to 185K one month later, and revised yet again to 105K two months later).

This suggests that what was originally perceived as a robust job market has proven to be considerably less robust upon closer examination.

From a market perspective, this implies that while the idea of a Fed pivot remains a distant possibility, we may have reached the end of the road for interest rate hikes, and the current rates might persist for an extended period. A glance at the Fed Fund Futures reveals that market participants are pricing in the likelihood of a first 25 bps rate cut on May 1, 2024.

However, the fact that expectations for rate hikes and cuts are closely balanced underscores the high level of uncertainty prevailing in the market.

Chart 1: Fed meeting probabilities

In my opinion, market uncertainty is generally the worst enemy; we might see corrections.

Looking ahead:
The economic calendar for the week ahead appears relatively light, with only US Jobless Claims scheduled for Thursday and Germany’s CPI data set for release on Friday.

I do not anticipate significant volatility stemming from these events.

On the FX side:
The USD is displaying indications of strength, and a chart that has drawn my close scrutiny is the EURUSD pair.

On the daily candles, EURUSD recently breached a rising wedge pattern to the downside, with my focus fixed on the 1.052 level.

This aligns with my inclination towards an increased demand for USD in the current environment, which is marked by rate uncertainty.

Chart 2: EURUSD 1d

On the crypto side:
Everything looks ETF-dependent.

Despite relatively low trading volumes on exchanges, it is evident that market participants are closely monitoring developments.

Notably, robust news triggers substantial price movements, followed by corrective phases (i.e., Tuesday – Thursday).

I see two scenarios:

  1. For those with a medium to long-term investment horizon: engaging in buying during this low-volume market phase can offer significant illiquidity premiums.
  2. For short-term traders: capitalising on momentum.
    Given the low volumes, every news event tends to result in overshooting price actions. Whether you spot these opportunities early or late, they often signal a potential reversal.

Looking at BTCUSD 1d:
We are still in a high vol-of-vol environment, which results in great intraday swings (think of grid trading).

Key levels:

  • Support: $25.3k
  • Resistance: $26.8k

Chart 3: BTCUSD 1d 

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