The Dollar Index broke below the support level at $110 falling to $109.5 which caused big moves throughout the market.
We saw Gold break its downward trend and push through the resistance level at $1700. This is a massive turning point for the asset as technical indicators are signaling a reversal for the first time since rate hikes started.
The selloff had no fundamental catalyst and was purely technical. This move comes in anticipation of the inflation data and it seems traders are poised to see strong data thus lighter rate hikes moving forward.
Bitcoin saw a massive selloff during the collapse of FTT. The week started with debates over the sustainability of FTX and Alameda Research, the result of a story from CoinDesk suggesting that Alameda Research had the majority of their collateral held in FTT tokens.
This was extremely distressing as the token was created by the owners of Alameda Research, FTX and the ecosystem has already seen turmoil in multiple projects which had similar strategies. This meant that FTT and Alameda are bound to one another and one’s failure could have substantial consequences for the other.
As a result, investors started to pull their funds out of FTX, leading to a liquidity crunch totaling $6B. The exchange started to face issues as it couldn’t handle withdrawals on this scale in a single day as opposed to tens of millions of dollars on an average day. This culminated in the complete capitulation of FTT and the once global leading crypto exchange.
In today’s DIFX Analytics, we’re going to look into the following assets:
The dollar has settled in a consolidation stage
The DXY fell to $109.5 which was the support level indicated in the previous analysis. This is the first time that DXY has fallen into the Ichimoku Cloud on the Daily chart since the start of the Fed rate hikes in March this year.
This is a massive signal that we have entered a consolidation stage for the USD. We can expect the price action to hover inside the Cloud until CPI data is released on Thursday.
A break to the downside would cause significant long liquidations and we may see the price slide to $108 levels. A break to the upside, on the other hand, may have the same effect and we could see price action approach $112.
Bitcoin is recovering after a tough night
Bitcoin has set a new low since the sell-off that occurred in June this year.
We saw heavy selloffs in major tokens yesterday as the FTT meltdown sent shockwaves through the crypto ecosystem. Bitcoin is now trading at $18,350 and has started to recover some losses.
If there is some clarity released soon over the control of FTX moving forward then we can assume Bitcoin will hold steady at this support range and potentially move back into the $20,000 range.
Gold is eyeing a reversal
Gold has risen into the Ichimoku Cloud on the Daily chart for the first time since rate hikes started. The asset is trading at $1709 at the time of writing.
We saw a significant bull rise breaking the support at $1700 at the same time the DXY fell to its support. This is a consolidation confirmation and traders will start looking for established indicators of a reversal.
Investors can now turn their attention to Thursday’s inflation data release for more signals on the sentiment of the asset.
Euro is expecting more gains
EUR/USD has broken through the Ichimoku Cloud establishing a substantial bullish momentum above $1.00. This is the first time the pair has closed above the Cloud since May 2021.
RSI is sitting at 59 which is not yet overbought and could see more gains. We should see more gains in the currency pair for the next resistance level if there are no surprises in CPI data. The next resistance level is at $1.02.
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DIFX shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee, or implication by DIFX that the forecast information will eventuate, that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses in particular if the conditions or assumptions used for the forecast or mentioned in the analysis do not eventuate as anticipated and the forecast is not realized.
