Markets rallied today on the back of a relatively dovish Jerome Powell. But can this rally continue or will it fade?
That’s what I explain in today’s video, including some must-hold levels to watch, and targets for the weeks ahead.
Updates include the DXY, S&P 500, TOTAL, BTC, ETH, and FTT!
US Dollar Index (DXY)
The DXY pulled back shortly after today’s FOMC began, which was somewhat expected given that the dollar index is still coming off 108.40.
As mentioned recently, the next support is around 105.60. That level hasn’t been tested just yet.
Below that is the bottom of this channel near 105, and then the multi-year breakout level at 103.
For now, it seems the DXY wants lower, which should continue to be bullish for risk assets in the short term.
S&P 500 (SPX500)
The S&P 500 had a considerable 2% gain today on the back of some relatively dovish remarks from Chair Powell.
The market also appears to have closed above 4,000, so that area should flip to support as we head into the weekend.
As I’ve mentioned for weeks now, as long as the S&P is above 3,900, my target is 4,200 or just below. That would likely have a bullish impact on the crypto market.
Alternatively, a daily close below 3,985 would be bearish and re-expose 3,900.
Total Crypto Market Cap (TOTAL)
TOTAL bounced right from the area between $940B and $960B. This is the area I’ve mentioned recently as a “must hold” for TOTAL to stay constructive.
For now, I’m seeing some bullish fakeouts out there, including the one on TOTAL.
However, this chart still needs to get above $1.05T on a daily closing basis. That’s required to flip the area to support.
Above $1.05T is $1.15T, which promises to be a huge test for markets.
Key support for TOTAL is $960B with $940B being the must-hold region, but keep an eye on $990B for a continuation of today’s rally.
Bitcoin has put in an impressive rally today, with a 7% gain as of this newsletter. Of course, most of this came following today’s FOMC.
Now, I know a lot of people are looking to short BTC at resistance, but I think that’s a mistake. As I’ve mentioned for a while now, my base case has been for a continued rally before the next leg lower.
That said, it’s also not a good time to long BTC with it trading just below $23,000 resistance. It’s going to take a daily close above that to expose $24,200.
Instead, I think it’s better to watch for a retest of the $22,000 area for a potential long opportunity. As long as that holds, I think BTC looks good for an eventual move above $23,000.
If $22,000 fails, expect lower prices like $21,600.
ETH is about to confirm that this recent selloff was a fakeout. Not only below $1,420 but also below the channel I’ve mentioned recently.
I like Ethereum higher as long as it holds channel support. However, ETH could also catch a significant bid if we see a retest of the area between $1,515 and $1,530.
I think that’s a really interesting region to keep an eye on over the next few days.
Just keep in mind that the $1,700 region promises to be a massive test for ETH on the way up, so I’d be surprised to see a break above that on the first try.
FTX Token (FTTUSDT)
FTT just became a lot more interesting with a daily close back above the late May trend line, which is also the neckline of an inverse head and shoulders.
FTT had held above this level for about a week until Monday’s close back below.
However, as I’ve mentioned several times, moves like that before a big event like FOMC can often be fakeouts. This move from FTT is no exception.
Moving forward, I would expect any retest of the $28 area to run into significant demand. Likewise, the area just above $30 is resistance.
The objective of this reversal pattern is $36. Although it’s going to depend on the S&P 500 as to whether FTT can get that high during this relief rally.