Cryptocurrency and equity markets could see a sharp spike in volatility due to this week’s CPI print, interest rate hikes, and a conference call by Federal Reserve Chairman Jerome Powell.
The December 13 Consumer Price Index (CPI) data and the outcome of the December 14 Federal Reserve meeting could influence US stock markets and cryptocurrency markets in the short term.
Traders are likely to play it safe and not make large directional bets until CPI is released because any nasty surprise could trigger a strong knee-jerk reaction.
Some analysts believe that Bitcoin (BTC) could fall further before bottoming out, but Arthur Hayes, the former CEO of crypto derivatives platform BitMEX, believes that Bitcoin may be past its worst phase of this cycle.
While speaking with podcaster and independent market analyst Scott Melker, Hayes said he believes the “largest and most irresponsible entities” have largely dumped their Bitcoin and “virtually everyone who could go bankrupt has gone bankrupt.” bankruptcy”. Hayes expects Bitcoin to recover sometime in 2023.
Could risk assets see a Santa Claus rally and end the year on a solid footing? Let’s study the graphs to find out.
SPX
The failure of the bulls to push the S&P 500 Index (SPX) above the downtrend line may have tempted short-term traders to book profits. The price turned lower on December 1 and broke below the 20-day exponential moving average (3.958) on December 6.
The bears are trying to turn the 20 day EMA into resistance. If successful, the index could see more selling and break below immediate support at 3.918. That could push the price down to the 50-day simple moving average (3,847).
Alternatively, if the price rises above the 20 day EMA, it will suggest demand at lower levels. The index could then rally to the downtrend line. A break above this level could indicate a potential trend change. So the index could go up to 4,300.
DXY
The US Dollar Index (DXY) has been oscillating near the critical support of 105 for the past few days. The bears pushed the price below this level on December 1, but the bulls bought the dip near 104 and began a rally on December 5.
However, the move higher failed to even reach the 20-day EMA (106), which suggests that the bears are aggressively selling every minor rally. The bears will try to resume the downtrend by pulling the price below 104. If this level is broken, the next stop could be 102 and then the psychological level of 100.
If the bulls want to avoid this dip, they will have to quickly push the price above the 20 day EMA. The index could then rally to the overhead resistance of 108.
BTC/USDT
Bitcoin has been stuck between $16,678 and $17,424 for the past few days. This indicates that the bears are protecting the overhead resistance at $17.622 and the bulls are buying the minor dips.
Typically, tight ranges are followed by increased volatility, but it is difficult to predict the direction of the breakout. Therefore, it is better to wait for the price to break above resistance or below support before placing directional bets.
The advantage could shift in favor of the buyers if the price breaks out and closes above the 50-day SMA ($17,911). That could clear the way for a potential rally towards the downtrend line.
Conversely, if the price turns down and falls below $16,678, several buyers may be forced to close their positions. That could take the BTC/USDT pair to $15,476.
ETH/USDT
Ether (ETH) has been oscillating near the 20-day EMA ($1,255) for the past few days. This indicates indecision between the bulls and the bears.
Flat moving averages and the RSI near the midpoint do not give a clear advantage to either the bulls or the bears. The ETH/USDT pair can trade between $1,218 and $1,309 for longer.
The first sign of strength will be a break and close above the 50-day SMA ($1,326). That could open the doors for a possible rally towards the resistance line of the descending channel.
Instead, if the price falls below $1,218, the pair could drop to $1,151 and then retest the important support at $1,073.
BNB/USDT
The bulls repeatedly failed to push and sustain the BNB (BNB) price above the 20-day EMA ($288) in the past few days. The bears seized on this opportunity and are trying to drive the price down.
The 20 day EMA has started to turn down and the RSI has dipped below 42, indicating that the bears are in command.
There is minor support at $275, but if that level gives way, the BNB/USDT pair could fall to the vital support at $250. Buyers are expected to defend this level and hold the pair in a range of $250-$300 for more time.
The bulls will have to push and hold the price above $300 to gain an advantage. The pair could then attempt a rally to $338.
XRP/USDT
XRP (XRP) has been trading below the 20-day EMA ($0.39) since December 2, indicating that the bears are protecting the level vigorously. The price fell to the immediate support of $0.37 on Dec. 12.
The 20 day EMA started to turn down gradually and the RSI slid near 42, which suggests that the bears have the upper hand. If the $0.37 support gives way, the selling could intensify and the XRP/USDT pair could drop to $0.33.
Another possibility is that the price bounces off the $0.37 support. If that happens, the pair could rally to the 20 day EMA. If the price turns back below this resistance, the probability of a break below $0.37 increases, but if the 20-day EMA is scaled, the pair could rally to $0.41.
DOGE/USDT
Dogecoin (DOGE) turned down and broke below the 50-day SMA ($0.09) on Dec. 11, suggesting that the bulls may be losing control.
The DOGE/USDT pair could drop to $0.08, which could act as minor support. If the price bounces off this level but fails to break above the 20-day EMA, it will improve the prospects for a drop to the crucial support at $0.07.
On the upside, the buyers will have to push the price above the psychological $0.10 level to gain an advantage. The pair could then rally to $0.11. If the buyers clear this hurdle, the pair could pick up momentum and rally to the 61.8% Fibonacci retracement level of $0.13.
ADA/USDT
Cardano (ADA) has continued its move lower and is close to vital support at $0.29. Although the RSI is showing positive divergence, the bulls have failed to push the price above the 20-day EMA ($0.31). This suggests that sentiment remains negative and the bears are unwilling to let go of their advantage.
If the price breaks below the $0.29 support, the ADA/USDT pair could start the next leg of the downtrend. The pair could then drop to the support line, which is likely to attract buyers as the price has rallied from this level on two previous occasions.
Contrary to this assumption, if the price bounces off $0.29, the bulls will try to push the pair above the 20-day EMA and the overhead resistance at $0.33. If they can pull it off, the pair could rally to the downtrend line.
MATIC/USDT
Polygon (MATIC) slid below the 20-day EMA ($0.90) on Dec. 11 and reached the uptrend line on Dec. 12. Buyers will try to stop the pullback at this level and start a relief rally.
If the price bounces off the current level, the bulls will once again try to catapult the MATIC/USDT pair above the overhead resistance at $0.97. If they can pull that off, the pair could rally to $1.05 where the bears can mount a strong defense.
Conversely, if the price breaks below the uptrend line, the pair could drop to $0.80, and then $0.76. That could keep the pair between the important $0.69 and $1.05 levels for a while longer.
DOT/USDT
Polkadot (DOT) rallied from the uptrend line on Dec. 7, but the bulls were unable to push the price above the 20-day EMA ($5.40). This indicates that sentiment remains negative and traders are selling rallies.
The price turned lower and broke below the uptrend line on December 11. The bears tried to sink the DOT/USDT pair below the critical support of $5 on Dec. 12, but the long tail of the candlestick shows that the bulls are trying to defend the level.
If the relief rally rises above the 20-day EMA, the rally could accelerate and the pair could test the 50-day SMA ($5.82). On the other hand, if the price turns down from the 20-day EMA, the odds of a break below $5 increase. The pair could then drop to $4.
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