The US Dollar Index (DXY) is on the move higher today, putting risk assets like stocks and crypto under pressure.
So in today’s video, I’ll share my thoughts on the current situation, including a few opportunities that are materializing with today’s USD breakout.
Updates include DXY, SPX, BTC, and ETH.
US Dollar Index (DXY)
Idea: DXY is breaking out today after consolidating for the last couple of weeks. This is a triangle pattern that I’ve mentioned since Friday and one that opens up the 105.60 resistance area following today’s break. That will likely put pressure on stocks and crypto given that they tend to move inversely to the US dollar. The only thing that would negate that is a 4-hour close below the 104.20 area this week.
S&P 500 (SPX500)
Support: 3,770 and 3,730
Idea: SPX is sliding lower today as the DXY breaks higher. While 3,770 remains an important support for the market, the March 2020 channel support at 3,730 is a much bigger level. I would be surprised if we don’t at least see a bounce from 3,730 if tested, but a daily close below that could spell trouble for equities and open up the 3,580 area for SPX.
Support: $16,500 and $16,200
Resistance: $16,670 and $16,900
Idea: Bitcoin is hovering above the $16,500 support area today. However, it closed below the November 21st 4-hour trend line, which is now serving as resistance near $16,670. Given what we’re seeing from the DXY, I wouldn’t be surprised to see BTC edge lower in the coming days, potentially down to $16,200. Just keep in mind that a close below $16,500 is required to open up lower levels. Alternatively, a 4-hour close back above the November trend line would be bullish in the short term.
Support: $1,185 and $1,150
Idea: ETH is also resting on support today near $1,185. That’s been a pivot for Ethereum since mid-December. Resistance for ETH comes in at the short-term trend line that broke yesterday around $1,220 and extends up to $1,230.