Key Levels Holding Steady

Crypto

BTC/USD

1-Day Timeframe

BTC Price has been consolidating mostly above the 0.382 fib retracement level and mostly holds above the 8EMA coupled with an ascending triangle type of chart structure. RSI is still above 60, which in continued uptrends points to additional strength. Unless both the 8EMA and the 0.382 fib level support are lost, longs could be favored, with the 35,800 - 36,850$ zone as an area of interest. If (once) the 8EMA and 0.382 fibs level support is lost (several daily candle closes + struggle to get back above those levels) I will start looking for shorts in the market, but for now my targeted area is still $40 - 42k before a potential retest of the previous range high of around 30 - 31.5k.

ETH/USD

1-Day Timeframe

ETH price has held several retests of support of the 1,940$ level we had marked and is now moving back above its 8EMA. If Bitcoin holds steady, or better yet, moves upwards to $40 - 42k as mentioned above, I see it likely that ETH will follow and break through the relative equal highs of 2,142$. From there we will have to see what BTC, as the market lead, does next. If things really start taking off and you took the opportunity to long ETH during its retests of 1,940$, partial profit areas are the above mentioned 2,142$ (+ move SL to BE when price reaches here), and then 2,300$ for a potential exit to reassess the market. 

Legacy

Weekly Review

The US dollar faced a challenging month due to a series of setbacks. Disappointing data releases, alongside news of the Treasury altering its debt issuance toward shorter-term maturities, led to a significant drop in US bond yields. Consequently, this reduced the dollar's interest rate advantage.

On a broader economic scale, the labor market appears to be easing, with the unemployment rate rising over the past few months. This trend has somewhat relieved Fed officials, as weaker job conditions typically correlate with lower inflation. Although core inflation has gradually decreased this year, it remains high at 4%, leaving the Fed unable to claim a victory against it.

Despite resilient consumer spending, the Fed has kept the option of another interest rate hike open. However, market indicators suggest that the period of tightening monetary policy has concluded, and the next move might be a rate cut, likely in the second quarter of 2024. Consequently, the forthcoming release of the FOMC meeting minutes holds significant importance.

Europe seems to be edging toward stagflation, where the economy teeters toward a mild recession while inflationary pressures persist. This poses a challenge for central banks, as cutting rates could reignite inflation, while keeping rates high could harm the economy, particularly in the UK, where core inflation remains at 5.7%.

The November PMIs will offer insights into the economic health of the regions. Any indications suggesting a looming recession in the Eurozone could weaken interest in the euro, slowing down their recent rebounds.

S&P 500 

1-Day Timeframe

The S&P 500 continued its upward momentum from the last two weeks and surpassed the 4,500 mark, marking its first breach of this level since September. The ABC I was expecting did not play out so far, but could still happen after taking liquidity above the 4,607$ high that was created in late July. If such a pattern emerges, wave C could drive price to a new ATH in Q4, but more likely in Q1 next year. We will have to see how things develop over the coming weeks. It could be worth watching the RSI for negative divergence once (if) it enters the overextended area (>70) for potential warnings of the B wave coming closer. 

DXY 

1-Week Timeframe

DXY had a rough couple of weeks. I would not be surprised if we see a slight uptick over the next two weeks and then a pullback towards the 0.618 fib level at this point. Like with the S&P 500 I will be watching this for a few weeks, but my base case at this moment is as described above.

Weekly Schedule

United States

The FOMC meeting minutes will come out earlier than usual, on Tuesday, due to a public holiday on Thursday in the US. During this meeting, the Fed kept rates steady and adopted a neutral stance, expressing uncertainty about whether rates are sufficiently high to control inflation.

Traders will scrutinize the minutes for hints regarding potential future rate hikes. Yet, considering the string of disappointing data following the meeting, markets might not readily accept such cues from the Fed. Consequently, any positive reaction in the DXY resulting from this release might be limited.

Apart from the minutes, upcoming agenda items include durable goods orders on Wednesday and the preliminary S&P Global PMIs for November on Friday. The latter is not expected to have strong effects on the market.

Eurozone

No high impact event is scheduled in the Eurozone and most of the attention will be on the latest business surveys set for release on Thursday. Overall the Eurozone has shown a pattern of stagnant economic growth throughout the year, potentially nearing negative growth according to past editions of these surveys.

Besides the business surveys, the release of the latest European Central Bank meeting minutes on Thursday may draw attention from traders. Although typically not a major market event, this release might garner interest this time as traders seek clues about the ECB's potential rate cuts. Following that, focus will shift to Germany's Ifo survey on Friday.

Written by: Gunter Lackmann