Altcoins have gone up, but BTC still has few bullish signals
The crypto market has again surpassed $2 trillion, adding almost 2.7% in the last 24 hours. Bitcoin, meanwhile, has not kept pace with the rise in altcoin prices: BTC strengthened by 1.45% against a 4% rise in ETH, while other leading coins added between 3% and 7%.
The purchase of altcoins has intensified after the first cryptocurrency defended the $40K mark. This was like a sign of faith in the sector's short-term prospects, which again allowed enthusiasts to invest in potentially more undervalued coins and projects.
The crypto Fear and Greed Index added 1 point to 22 overnight, but we can see that investors took the recent plunge as a buying opportunity.
On the chart, bitcoin rebounded from a psychologically important support level for the second time since September. In addition, the RSI indicator on the daily charts came out of the oversold area, signalling a pause in the bearish momentum.
The crypto market has again surpassed $2 trillion, adding almost 2.7% in the last 24 hours. Bitcoin, meanwhile, has not kept pace with the rise in altcoin prices: BTC strengthened by 1.45% against a 4% rise in ETH, while other leading coins added between 3% and 7%.
The purchase of altcoins has intensified after the first cryptocurrency defended the $40K mark. This was like a sign of faith in the sector's short-term prospects, which again allowed enthusiasts to invest in potentially more undervalued coins and projects.
The crypto Fear and Greed Index added 1 point to 22 overnight, but we can see that investors took the recent plunge as a buying opportunity.
On the chart, bitcoin rebounded from a psychologically important support level for the second time since September. In addition, the RSI indicator on the daily charts came out of the oversold area, signalling a pause in the bearish momentum.
However, it is too early to say that we are seeing the beginning of a new growth wave. There are several reasons for that.
In this wave of decline, the RSI indicator reached lower lows than earlier in December and markedly lower levels in September and July, marking more persistent and prolonged selling than in previous episodes.
Bitcoin's consolidation attempts this week is only a wobble near the bottom. A bullish reversal will be indicated by solid upward momentum in July or September. The mini rebound in December was quickly eaten away by the bears.
BTCUSD is consolidating near the lower boundary of the descending channel. To say that we see more than just a bounce within this trend is only possible if it grew above 45k - where the previous local lows and the downside resistance line are concentrated.
If bitcoin fails to develop an uptrend, it will seriously spoil sentiment for cryptocurrency traders, creating a toxic environment in the sector and putting selling back on the agenda, despite the prospects of individual projects.
In this wave of decline, the RSI indicator reached lower lows than earlier in December and markedly lower levels in September and July, marking more persistent and prolonged selling than in previous episodes.
Bitcoin's consolidation attempts this week is only a wobble near the bottom. A bullish reversal will be indicated by solid upward momentum in July or September. The mini rebound in December was quickly eaten away by the bears.
BTCUSD is consolidating near the lower boundary of the descending channel. To say that we see more than just a bounce within this trend is only possible if it grew above 45k - where the previous local lows and the downside resistance line are concentrated.
If bitcoin fails to develop an uptrend, it will seriously spoil sentiment for cryptocurrency traders, creating a toxic environment in the sector and putting selling back on the agenda, despite the prospects of individual projects.
Oil positive on Omicron and Powell's confidence in the economy
WTI crude oil surpassed the $80 mark in Tuesday's trading, near two-month highs and solidly above the 2018-2021 pivot levels near $75. Oil's fall in November-December by more than a quarter from a peak in late October probably served as a reset for oil.
Interestingly, oil rose yesterday against plainly bearish news. The WHO warned of a sharp rise in omicron cases in coming weeks, and Oman's oil minister said OPEC+ did not want to see oil at $100 and overheat the market.
However, traders were reading between the lines. The rapid spread of omicron is coming closer to the point of reaching collective immunity, raising the chances that summer travel and the holiday season will this time be much more pre-pandemic like.
While initially causing some pressure on quotations, Oman's comments on oil did not present anything new in substance. As before, the cartel intends to stick to its plan to raise production by 400K per day every month. This is more than enough to shift the balance in the market towards surplus at the start of the year, but not enough to avoid causing excessive overheating of oil and provoking a new shale boom in the US and elsewhere.
Producers in developed countries complain that banks are reluctant to finance new crude projects, requiring companies to become 'greener'. This raises the breakeven price of production projects, giving OPEC+ a head start.
In addition, oil was probably positively impacted by Powell's confidence in the economic recovery, which is not threatened by either omicron or several rate hikes this year. Locally, investors interpreted this as confidence in a surge in oil demand in the coming months, which boosted the price.
WTI crude oil surpassed the $80 mark in Tuesday's trading, near two-month highs and solidly above the 2018-2021 pivot levels near $75. Oil's fall in November-December by more than a quarter from a peak in late October probably served as a reset for oil.
Interestingly, oil rose yesterday against plainly bearish news. The WHO warned of a sharp rise in omicron cases in coming weeks, and Oman's oil minister said OPEC+ did not want to see oil at $100 and overheat the market.
However, traders were reading between the lines. The rapid spread of omicron is coming closer to the point of reaching collective immunity, raising the chances that summer travel and the holiday season will this time be much more pre-pandemic like.
While initially causing some pressure on quotations, Oman's comments on oil did not present anything new in substance. As before, the cartel intends to stick to its plan to raise production by 400K per day every month. This is more than enough to shift the balance in the market towards surplus at the start of the year, but not enough to avoid causing excessive overheating of oil and provoking a new shale boom in the US and elsewhere.
Producers in developed countries complain that banks are reluctant to finance new crude projects, requiring companies to become 'greener'. This raises the breakeven price of production projects, giving OPEC+ a head start.
In addition, oil was probably positively impacted by Powell's confidence in the economic recovery, which is not threatened by either omicron or several rate hikes this year. Locally, investors interpreted this as confidence in a surge in oil demand in the coming months, which boosted the price.
It will not be surprising if oil goes off to retest October highs near $85/bbl WTI and $87/bbl Brent in the next couple of weeks.
If the demand for risky assets remains in place by then, we would expect a start of a rally towards $100 and an entrenchment in the $80-100 range through 2022.
However, we cannot rule out that the speculative optimism in oil will fade as the Fed's tough stance on the economy is realised.
If the demand for risky assets remains in place by then, we would expect a start of a rally towards $100 and an entrenchment in the $80-100 range through 2022.
However, we cannot rule out that the speculative optimism in oil will fade as the Fed's tough stance on the economy is realised.
US dollar under pressure on inflation data
US consumer prices rose 0.5% in December, accelerating to 7.0% y/y. The core index added 0.6% on the month and 5.5% y/y. Prices excluding food and energy added more than 1.7% in the last three months, noting that inflation is creeping into the core of the economy.
However, fears of this trend may be exaggerated. Inflation data published earlier today in China showed a faster-than-expected slowdown. China could start exporting deflation again or at least stop pushing up prices around the world.
Noteworthy is the market reaction where the release put pressure on the dollar and spurred demand for risky assets: EURUSD is up 0.5% after the release, above 1.1400, Nasdaq100 is again testing the 16000 level (+0.9% so far today).
The dollar has been consolidating for a long time without much direction, so a breakout of the 1.1250-1.1350 range could start a strong momentum or even set a trend for a few months.
US consumer prices rose 0.5% in December, accelerating to 7.0% y/y. The core index added 0.6% on the month and 5.5% y/y. Prices excluding food and energy added more than 1.7% in the last three months, noting that inflation is creeping into the core of the economy.
However, fears of this trend may be exaggerated. Inflation data published earlier today in China showed a faster-than-expected slowdown. China could start exporting deflation again or at least stop pushing up prices around the world.
Noteworthy is the market reaction where the release put pressure on the dollar and spurred demand for risky assets: EURUSD is up 0.5% after the release, above 1.1400, Nasdaq100 is again testing the 16000 level (+0.9% so far today).
The dollar has been consolidating for a long time without much direction, so a breakout of the 1.1250-1.1350 range could start a strong momentum or even set a trend for a few months.
#WaveAnalysis
#AIG reversed from key resistance level 62.00
• Likely to fall to support level 59.00
AIG recently reversed down from the pivotal key resistance level 62.00 (former monthly high from November), strengthened with the upper daily Bollinger Band.
The downward reversal from the resistance level 62.00 stopped the previous intermediate impulse wave (3).
Given the strength of the resistance level 62.00 and the overbought daily Stochastic – AIG can be expected to fall further toward the next support level 59.00.
#AIG reversed from key resistance level 62.00
• Likely to fall to support level 59.00
AIG recently reversed down from the pivotal key resistance level 62.00 (former monthly high from November), strengthened with the upper daily Bollinger Band.
The downward reversal from the resistance level 62.00 stopped the previous intermediate impulse wave (3).
Given the strength of the resistance level 62.00 and the overbought daily Stochastic – AIG can be expected to fall further toward the next support level 59.00.
#WaveAnalysis
#USDCHF reversed resistance level 0.9250
• Likely to fall to support level 0.9110
USDCHF recently reversed down from the pivotal resistance level 0.9250 (which has been reversing the price from the end of November), intersecting with the upper daily Bollinger Band and the 61.8% Fibonacci correction of the downward wave (ii) from November.
The downward reversal from the resistance level 0.9250 created the daily reversal pattern Dark Cloud Cover.
Given the strength of the resistance level 0.9250 – USDCHF currency pair can be expected to fall further toward the next support level 0.9110 (which has been reversing the pair from August).
#USDCHF reversed resistance level 0.9250
• Likely to fall to support level 0.9110
USDCHF recently reversed down from the pivotal resistance level 0.9250 (which has been reversing the price from the end of November), intersecting with the upper daily Bollinger Band and the 61.8% Fibonacci correction of the downward wave (ii) from November.
The downward reversal from the resistance level 0.9250 created the daily reversal pattern Dark Cloud Cover.
Given the strength of the resistance level 0.9250 – USDCHF currency pair can be expected to fall further toward the next support level 0.9110 (which has been reversing the pair from August).
The value of the cryptocurrency market rose almost 3% over the past 24 hours to 2.07 trillion. Exceeding the psychologically important circular mark pulled demand for coins outside the top 10.
However, it is too early to say that a new rally in crypto has begun. The crypto market remains 30% below its peaks in early November, and capitalisation growth is uneven.
It is reasonable to talk about a rebound within the descending channel until that time.
If the dollar goes back to growth in the nearest future, it will pressure stock markets. The cryptocurrency market, in these circumstances, risks reversing back to the downside, stopping the rebound and remaining in a prolonged downtrend channel.
We should be wary of a smooth decline like this, as it drains optimists. We saw a similar descent in 2018 when the fall became uniformly smooth in the second half of the year, and a wide range of crypto-enthusiasts switched to standby mode until mid-2020.
However, it is too early to say that a new rally in crypto has begun. The crypto market remains 30% below its peaks in early November, and capitalisation growth is uneven.
It is reasonable to talk about a rebound within the descending channel until that time.
If the dollar goes back to growth in the nearest future, it will pressure stock markets. The cryptocurrency market, in these circumstances, risks reversing back to the downside, stopping the rebound and remaining in a prolonged downtrend channel.
We should be wary of a smooth decline like this, as it drains optimists. We saw a similar descent in 2018 when the fall became uniformly smooth in the second half of the year, and a wide range of crypto-enthusiasts switched to standby mode until mid-2020.
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Fundamental and technical factors on the dollar locally give opposite signals. However, after a long period of strengthening the American currency, a corrective DXY pullback looks like a logical short-term prospect.
On Wednesday, the US dollar came under pressure, the sharpest loss since last May and coming out of a prolonged consolidation.
Often such a decisive move out of the range is followed by a further breakout move, which we may well see in the coming days.
The Dollar Index closed below the 50-day moving average on Tuesday and made a further move lower on Wednesday. The fall out of the range gave an informal start to the correction after the rally from May through most of November and the sideways movement in December.
Fundamental and technical factors on the dollar locally give opposite signals. However, after a long period of strengthening the American currency, a corrective DXY pullback looks like a logical short-term prospect.
On Wednesday, the US dollar came under pressure, the sharpest loss since last May and coming out of a prolonged consolidation.
Often such a decisive move out of the range is followed by a further breakout move, which we may well see in the coming days.
The Dollar Index closed below the 50-day moving average on Tuesday and made a further move lower on Wednesday. The fall out of the range gave an informal start to the correction after the rally from May through most of November and the sideways movement in December.
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A potential target for such a pullback is seen in the 93.50-94.00 area. Near 94 is the 61.8% Fibonacci retracement of the dollar's move amplitude in 2021 and the starting point of the last rally in November. Near 93.50, the peak area of the index last year could be equally strong support.
It hardly makes sense to say now that we are seeing the start of a big wave of dollar decline, as solid fundamentals support its growth. It looks like Fed members started a competition on whose expectations and comments are the most hawkish, and consumer inflation has given little reason to change the rhetoric.
Among the latest comments is Powell's reassurance that the economy can cope with rate hikes. Fighting inflation is a top priority for the US central bank. Mary Daly, president of the Federal Reserve Bank of San Francisco, predicts a first rate hike as early as March. This practically rules out a pause between the end of balance buying and the first policy tightening.
Furthermore, there are increasing signs that rate increases can continue to occur more frequently than once a quarter, as was the case in the previous tightening cycle. Many other central banks in developed countries are not yet prepared to tighten their policies as vigorously, which generally creates a sustained pull towards the USD on the interest rate differential in its favour.
A potential target for such a pullback is seen in the 93.50-94.00 area. Near 94 is the 61.8% Fibonacci retracement of the dollar's move amplitude in 2021 and the starting point of the last rally in November. Near 93.50, the peak area of the index last year could be equally strong support.
It hardly makes sense to say now that we are seeing the start of a big wave of dollar decline, as solid fundamentals support its growth. It looks like Fed members started a competition on whose expectations and comments are the most hawkish, and consumer inflation has given little reason to change the rhetoric.
Among the latest comments is Powell's reassurance that the economy can cope with rate hikes. Fighting inflation is a top priority for the US central bank. Mary Daly, president of the Federal Reserve Bank of San Francisco, predicts a first rate hike as early as March. This practically rules out a pause between the end of balance buying and the first policy tightening.
Furthermore, there are increasing signs that rate increases can continue to occur more frequently than once a quarter, as was the case in the previous tightening cycle. Many other central banks in developed countries are not yet prepared to tighten their policies as vigorously, which generally creates a sustained pull towards the USD on the interest rate differential in its favour.
#WaveAnalysis
#Gold reversed from resistance level 1826.71
• Likely to fall to support level 1800.00
Gold recently reversed down from the pivotal resistance level 1826.71, intersecting with the daily upper daily Bollinger Band and the 61.8% Fibonacci correction of the downward correction (ii) from November.
The downward reversal from the resistance level 1826.71 stopped the previous impulse waves (iii) and 3.
Gold can be expected to fall further toward the next round support level 1800.00 (which has been reversing the pair from November).
#Gold reversed from resistance level 1826.71
• Likely to fall to support level 1800.00
Gold recently reversed down from the pivotal resistance level 1826.71, intersecting with the daily upper daily Bollinger Band and the 61.8% Fibonacci correction of the downward correction (ii) from November.
The downward reversal from the resistance level 1826.71 stopped the previous impulse waves (iii) and 3.
Gold can be expected to fall further toward the next round support level 1800.00 (which has been reversing the pair from November).
#WaveAnalysis
#USDJPY broke daily up channel
• Likely to fall to support level 113.50
USDJPY currency pair recently broke the key support level 114.50, intersecting with the daily up channel from November and the 50% Fibonacci correction of the upward impulse 3.
The breakout of the support level 114.50 accelerated the active short-term correction 4 from the start of this year.
USDJPY currency pair can be expected to fall further toward the next support level 113.50.
#USDJPY broke daily up channel
• Likely to fall to support level 113.50
USDJPY currency pair recently broke the key support level 114.50, intersecting with the daily up channel from November and the 50% Fibonacci correction of the upward impulse 3.
The breakout of the support level 114.50 accelerated the active short-term correction 4 from the start of this year.
USDJPY currency pair can be expected to fall further toward the next support level 113.50.
#WaveAnalysis
#Novartis broke round resistance level 90.00
• Likely to rise to resistance level 91.30
Novartis continues to rise steadily after the earlier breakout of the round resistance level 90.00 (which reversed the price earlier this month).
The breakout of the resistance level 90.00 accelerated the active minor impulse wave 1 of the intermediate upward impulse wave (C) from the end of December.
Novartis can be expected to rise further toward the next resistance level 91.30 (former support from August and the target for the completion of the active wave 3).
#Novartis broke round resistance level 90.00
• Likely to rise to resistance level 91.30
Novartis continues to rise steadily after the earlier breakout of the round resistance level 90.00 (which reversed the price earlier this month).
The breakout of the resistance level 90.00 accelerated the active minor impulse wave 1 of the intermediate upward impulse wave (C) from the end of December.
Novartis can be expected to rise further toward the next resistance level 91.30 (former support from August and the target for the completion of the active wave 3).
Bearish signals in Ether and Bitcoin
The technical picture for ETHUSD is quite gloomy as the selling intensified earlier after failed attempt to went back above 200 SMA. The dip and consolidation below it suggests a break of the bullish trend formed in May 2020.
In a worst-case scenario, it could be a road to $1300-1700, which is about half of the current levels. It is extremely unlikely that in this bear market cycle, the price of ether will lose 95% of its peak, as it did in 2018, which could completely nullify the rise from 2020.
Bitcoin's disposition is no less worrisome. A death cross is forming in it as the 50-day dips below the 200-day. At the same time, the price is below these averages, which reinforces the bearish signal. Attempts earlier in the week to form a rebound are encountering stronger selling, further indicating seller pressure.
The bearish picture in Ether and Bitcoin makes the entire cryptocurrency sector look cautious in the near term.
The technical picture for ETHUSD is quite gloomy as the selling intensified earlier after failed attempt to went back above 200 SMA. The dip and consolidation below it suggests a break of the bullish trend formed in May 2020.
In a worst-case scenario, it could be a road to $1300-1700, which is about half of the current levels. It is extremely unlikely that in this bear market cycle, the price of ether will lose 95% of its peak, as it did in 2018, which could completely nullify the rise from 2020.
Bitcoin's disposition is no less worrisome. A death cross is forming in it as the 50-day dips below the 200-day. At the same time, the price is below these averages, which reinforces the bearish signal. Attempts earlier in the week to form a rebound are encountering stronger selling, further indicating seller pressure.
The bearish picture in Ether and Bitcoin makes the entire cryptocurrency sector look cautious in the near term.
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Ruble's fall on geopolitics is likely to continue
On Thursday, the Russian ruble lost more than 2% against the dollar and euro, as both sides' hawkish comments followed the Russia-NATO meeting. In early trading on Friday, the dollar was above 76.6, and the euro was 87.8 on the Moscow exchange. Friday morning, the Russian market shows cautious buying as investors generally believe that all sides benefit from the talks and reduced tensions. In such an environment, we see the third attempt in two and a half months to buy back the ruble after a failure. At the time of writing, the dollar is back below 76, and the euro is back to test 87.
In our view, it is now too premature to buy back the fall and bet on normalisation. The rhetoric of the statements indicates a willingness to escalate, so the situation is likely to get worse before it gets better.
The investor reflex formed in recent years - that a sharp fall in the ruble and the equity market are an opportunity to buy a good asset at a discount - is now highly questionable.
By and large, the ruble and the Russian economy face risks no less serious than in 2014, when US and EU sanctions and Russia's response to them raised Russian market volatility to global financial crisis levels.
In the coming days or weeks, geopolitics override solid fundamentals for the Russian ruble, such as strong consumer demand and expensive oil.
Ruble's fall on geopolitics is likely to continue
On Thursday, the Russian ruble lost more than 2% against the dollar and euro, as both sides' hawkish comments followed the Russia-NATO meeting. In early trading on Friday, the dollar was above 76.6, and the euro was 87.8 on the Moscow exchange. Friday morning, the Russian market shows cautious buying as investors generally believe that all sides benefit from the talks and reduced tensions. In such an environment, we see the third attempt in two and a half months to buy back the ruble after a failure. At the time of writing, the dollar is back below 76, and the euro is back to test 87.
In our view, it is now too premature to buy back the fall and bet on normalisation. The rhetoric of the statements indicates a willingness to escalate, so the situation is likely to get worse before it gets better.
The investor reflex formed in recent years - that a sharp fall in the ruble and the equity market are an opportunity to buy a good asset at a discount - is now highly questionable.
By and large, the ruble and the Russian economy face risks no less serious than in 2014, when US and EU sanctions and Russia's response to them raised Russian market volatility to global financial crisis levels.
In the coming days or weeks, geopolitics override solid fundamentals for the Russian ruble, such as strong consumer demand and expensive oil.
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Recent weeks have brought the ruble back down, forming the third EUR/RUB rebound in the last five years from the 50-month average, which has acted as a long-term trend benchmark over the previous 20 years.
The long-term technical picture suggests that the strengthening of the ruble for most of last year was a corrective rebound from the growth impulse from the lows of early 2020 to a peak later in the year. From this perspective, the euro could surpass 90 and the dollar 80 by the end of this year.
Recent weeks have brought the ruble back down, forming the third EUR/RUB rebound in the last five years from the 50-month average, which has acted as a long-term trend benchmark over the previous 20 years.
The long-term technical picture suggests that the strengthening of the ruble for most of last year was a corrective rebound from the growth impulse from the lows of early 2020 to a peak later in the year. From this perspective, the euro could surpass 90 and the dollar 80 by the end of this year.
Market Holiday for Martin Luther King, Jr. Day📅
There are upcoming changes in the trading schedule due to Martin Luther King Jr. Day in the US. Therefore, US stocks and agricultural Futures will be closed today, with some instruments also closing early.
You can check the full trading schedule here: https://www.fxpro.com/trading-tools/market-holidays
There are upcoming changes in the trading schedule due to Martin Luther King Jr. Day in the US. Therefore, US stocks and agricultural Futures will be closed today, with some instruments also closing early.
You can check the full trading schedule here: https://www.fxpro.com/trading-tools/market-holidays
#WaveAnalysis
#USDCHF reversed from key support level 0.9100
• Likely to rise to resistance level 0.9150
USDCHF currency pair recently reversed up from the key support level 0.9100 (which has been reversing the price from August), intersecting with the lower daily Bollinger Band.
The upward reversal from the support level 0.9100 stopped the previous short-term ABC correction (ii).
USDCHF currency pair can be expected to rise further toward the next resistance level 0.9150.
#USDCHF reversed from key support level 0.9100
• Likely to rise to resistance level 0.9150
USDCHF currency pair recently reversed up from the key support level 0.9100 (which has been reversing the price from August), intersecting with the lower daily Bollinger Band.
The upward reversal from the support level 0.9100 stopped the previous short-term ABC correction (ii).
USDCHF currency pair can be expected to rise further toward the next resistance level 0.9150.