Equity markets extended their decline, but Bitcoin and selected altcoins did not give up much ground, leading some traders to believe a bottom had been reached.
US stock markets have been under firm bearish control for much of the year. The S&P 500 and the Nasdaq Composite have both fallen for three consecutive quarters, for the first time since 2009. There was no break in the September selloff and the Dow Jones Industrial Average is on track for its worst September since 2002. The kind of carnage that exists in the stock market.
Compared to these disappointing numbers, Bitcoin
and selected altcoins did not give up much ground in September. This is the first sign that the selling could run out at lower levels and long-term investors may have started fishing.
Cryptocurrency market daily performance. Source: Coin360
In the last quarter of the year, investors will continue to focus on the inflation data. Any hint that inflation is outperforming could spark a strong rally in risk assets, but if inflation remains stubbornly high, a round of sell-offs could follow.
Let’s study the charts of the S&P 500 Index, the US Dollar Index (DXY), and major cryptocurrencies to determine if a rally is on the cards.
Delivery EVERY MONDAY
the Market Outlook Bulletin
By subscribing, you accept us
The S&P 500 Index (SPX) has been under intense selling pressure for the past few days, but the bulls have held their ground. This shows that the bulls are buying the dips to $3,636.
SPX daily chart. Source: TradingView
The first resistance on the upside is at $3,737. If the bulls push the price above this level, the index could rally to the 20-day EMA ($3,818). In a downtrend, this is the important level to watch as a breakout to the upside will suggest that the bears are losing control.
Sharp declines are often followed by sharp rallies. That could take the index to the downtrend line and then to the 50-day simple moving average (SMA) ($4,012).
The Bears probably have other plans. They will try to extend the downtrend by holding and holding the price below $3,636. If they are successful, the index could drop to $3,500 and then to $3,325.
The US Dollar Index rose to $114.77 on September 28, pushing the RSI into deeply overbought territory. This may have attracted profit booking by short-term traders who pushed the price closer to the 20-day EMA (111).
DXY daily chart. Source: TradingView
The bears need to drag the price below the 20-day EMA to suggest that the bullish momentum might be weakening. That could clear the way for a possible pullback to the 50-day SMA (108).
The zone between the 50-day SMA and the uptrend line is likely to see aggressive buying by the bulls, because if they fail to defend the zone, it will signal that the index is going higher.
On the other hand, if the price turns up from the current level or goes back to the 20-day EMA, it will indicate that the bulls will continue to buy the dips. Afterwards, the buyers will try to push the price above $114.77 again and resume the uptrend. The next target on the upside is $118.
Bitcoin reached the strong support of $18,626 on September 28. The long tail on the last two days candle indicates that the bulls are buying the intraday dips.
BTC/USDT daily chart. Source: TradingView
The bulls pushed the price above the 20-day EMA ($19,602) on Sep 30, but are struggling to sustain the higher levels. This indicates that the bears are selling near the 50-day SMA ($20,621).
If the bulls do not allow the price to drop below the 20-day EMA, the probability of a rally towards the downtrend line increases. The bears are expected to mount a strong resistance at this level, but if the bulls break through this hurdle, the BTC/USDT pair may change a short-term trend. The pair could then rally to $22,799.
Contrary to this assumption, if the price turns down from the current level or the 50-day SMA ($20,625), the pair could go back to the $18,626-$17,622 support zone.
it has been moving down in a descending channel pattern for the past few days. In the short term, the price has stalled between $1,250 and $1,410, indicating that demand is at lower levels, but selling close to