Investors across asset classes have been keeping a close watch on the United States Federal Reserve’s monetary policy because that sets the stage for a risk-on or a risk-off environment.
The strong rally in the U.S. stock markets on Jan. 6 and in cryptocurrencies over the weekend suggests that market observers anticipate the Fed to slow down its frantic pace of rate hikes. The optimism was fuelled by the greater-than-expected slowdown in wage gains in the December jobs report and the first contraction in U.S. services industry activity since May 2020. The next trigger that may influence the markets could be the Consumer Price Index data due on Jan. 12.
Could the strength in the S&P 500 (SPX) and the weakness in the U.S. dollar index (DXY) boost crypto prices higher? Let’s study the charts to find out.
SPX
After consolidating in a range for several days, the S&P 500 index broke above the 20-day exponential moving average (3,875) on Jan. 6. This suggests that the uncertainty has resolved in favor of the buyers.
Contrary to this assumption, if the index turns down from the current level or the overhead resistance, it will suggest that bears continue to sell on relief rallies. The bears will be back in the game if the price dips below the 20-day EMA.
DXY
The bulls pushed the price above the important resistance of 105 on Jan. 5 but they could not sustain the recovery on Jan. 6. This suggests that the bears continue to sell on rallies. The price turned down sharply and dipped back below the 20-day EMA (104).
Alternatively, if the price turns up sharply and rises above 103.39, it will suggest demand at lower levels. Buyers will then try to push the pair toward 105.82. A break and close above this resistance could tilt the short-term advantage in favor of the bulls.
BTC/USDT
Bitcoin (BTC) broke above the resistance of the $16,256 to $17,061 range on Jan. 8, indicating that the uncertainty has resolved in favor of the buyers.
If the price turns down sharply from $18,388, it will suggest that the BTC/USDT pair may oscillate inside the large range between $16,256 and $18,388 for a while longer.
The short-term advantage could tilt in favor of the bears if they pull the price back below the moving averages.
ETH/USDT
Ether (ETH) has been gradually rising toward the overhead resistance at $1,352. The downtrend line is placed just above this level, hence the bears will try to defend it with all their might.
Contrary to this assumption, if the price turns down from $1,352 and slides below the moving averages, it will indicate that traders are selling near the resistance. That could keep the pair stuck inside the range between $1,150 and $1,352 for a few more days.
BNB/USDT
BNB (BNB) continued its up-move and soared above the 50-day simple moving average ($268) on Jan. 8. This suggests strong demand at higher levels.
On the way down, the first support is at the 50-day SMA and then at the 20-day EMA. A break below the moving averages could signal that the bears are back in the driver’s seat. The pair could then tumble to $250.
XRP/USDT
The bears repeatedly failed to sustain the price below the support line of the symmetrical triangle in the past few days. This indicates that traders bought the dip in XRP (XRP).
Contrarily, if the price turns down from the current level or the resistance line, it will suggest that the pair may continue to trade inside the triangle. The bears will have to sink and sustain the price below the triangle to gain the upper hand.
DOGE/USDT
Dogecoin’s (DOGE) tight range trading resolved to the upside with a break above the 20-day EMA ($0.07) on Jan. 9. The price could next reach the 50-day SMA ($0.08) where the bears may pose a strong challenge.
On the contrary, if the price turns down and breaks below the 20-day EMA, the bears will again try to sink the pair below the support near $0.07. If they manage to do that, the pair could start a downward move to $0.05.
Related: Why is Ethereum (ETH) price up today?
ADA/USDT
Cardano (ADA) continued its strong recovery and broke above the 50-day SMA ($0.29) on Jan. 8. That was followed by another sharp rally on Jan. 9, which took the price above the downtrend line of the falling wedge pattern.
However, the long wick on the Jan. 9 candlestick shows that the bears may not give up easily. This suggests that sellers are trying to trap the aggressive bulls by pulling the price back into the wedge. If they do that, the pair could slide to the 20-day EMA.
Polygon (MATIC) climbed above the 20-day EMA ($0.81) on Jan. 8 and followed that up with another up-move on Jan. 9.
Another possibility is that the price turns down sharply from $0.97 and slumps below the moving averages. Such a move will suggest that the MATIC/USDT pair could consolidate between $0.97 and $0.75 for some more time.
LTC/USDT
Litecoin (LTC) rebounded off the moving averages on Jan. 6 and surged above the overhead resistance at $80 on Jan. 9. The emboldened bulls will try to build upon this momentum and thrust the price above $85.
Conversely, if the price turns down from $85, the pair could slip to $75. If the price bounces off this support, the bulls will again try to clear the overhead resistance. The bears will have to drag the price below $72 to gain the upper hand.
The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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