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.

 Figure 1

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.

 Figure 2

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.