This morning, legacy financial markets were forced out of denial regarding the state of the U.S. economy.
Job growth slowed notably for the first time in a while. As is always the case with legacy markets, bad economic news is seen as “good” because the stock market expects rates cuts and money printing from the Fed.
As a result, the U.S dollar Index has finally started to really decline. A negative weekly stochastics divergence can potentially fuel future declines. 96.41 remains a key level in DXY (Figure 1). If DXY starts falling below that, there is a lot of downside potential. In our view, a weaker dollar is constructive for both crypto and precious metals.
The Dollar down move has stopped the decline in Bitcoin (BTC) for now.
Looking at the Bitcoin (BTC) weekly chart, the fact that $7,500 held as support seems positive (Figure 2). Given that weekly stochastics for Bitcoin (BTC) are still overbought, bears do have a case for more corrective action, unfortunately.
Bottom Line: This is potentially a big weekend for Bitcoin (BTC). We would love to see Bitcoin (BTC) catch everybody off guard for the third time this year. Bitcoin (BTC) has shown a recent tendency to rally on a weekend when big institutional traders are at the beach. Conversely, Bitcoin (BTC) charts could turn ugly if there is a big gap move lower over the weekend.
We hope you’ll forgive us for cheering on another “beach-rip” up in Bitcoin (BTC).
The Cyrpto.IQ Trading Desk has been taking advantage of the pause in Bitcoin (BTC) to do some solid trading in smaller alt coins. I learn something new every day.
Join me there.