This week, major cryptocurrencies reversed course after rallying, stocks struggled to sustain growth, and the stronger dollar may continue to pressure BTC’s price.
Between May 23 and May 27, equity markets posted impressive gains, with the NASDAQ (NASDAQ: QQQ) high-tech ETF up over 7% and the S&P 500 (NYSE: SPY) up over 6.50%. However, this week’s price spikes have been occurring throughout the week and while the J trading session is not over, the weekly candles are pointing to a close near last week’s open.
Weekly QQQ Chart (NYSE). Source: Trade View
All major indices are currently facing significant technical resistance above their current trading levels. Added to this are growing economic uncertainty and fears of recession; Recoil can be limited.
Cryptocurrencies have fallen again
The crypto market could end relatively flat but down a week, extending its losing streak to an all-time high of nine straight weekly losses. A few altcoins have been in the green this week, such as Cardano (ADA) and Stellar (XLM), but both have lost between 50% and 70% of those gains.
A weekly chart of the total market cap of a cryptocurrency. Source: Trade View
The total market cap of the cryptocurrency market is just above the $1.20 trillion level, which is uncomfortably close to the $1 trillion critical zone.
Oil keeps rising
Light Oil (NYMEX: CL) futures continue to rise and could close their expected close near 14-year highs, levels not seen since late July 2008. From April 11th to June 3rd oil has already gained more than 20% and remains just below the $120 level.
Weekly Oil Futures Chart (NYMEX). Source: Trade View
The weekly Crude Oil Inventory data for June 1st showed a much larger drop of -5 million barrels from an estimated -1.35 million barrels. Even OPEC+’s recent agreement to nearly double production failed to halt the rise in oil prices.
Wheat futures (CBOT:ZW) and corn futures (CBOT:ZC) are down -10% and -6% respectively this week. However, the drop in these markets is most likely due to heavy overbought that led to a technical pullback. This market continues to be plagued by global fears and uncertainties related to food security and shortages.
Weekly Wheat Futures Chart (CBOT). Source: Trade View
The dollar recovery can begin
Like wheat and corn, the dollar is retreating from a technical pullback on persistent overbought. As a result, the US Dollar Index (TVC:DXY) has an implied weekly close higher with a marginal gain of 0.3% under the Ichimoku-Kinko-Hyo system.
A strong technical rebound in the weekly Tenkan-Sen sent the DXY up more than +1%, but much of that gain was lost. The DXY could break below the critical 100 near the weekly Kijun-Sen, but a hidden bullish divergence between the chart and the composite index could prevent further downward pressure.
For crypto traders and investors, DXY is sometimes viewed as an uncorrelated market. In other words, when DXY goes up, Bitcoin (BTC) and altcoins move down.
This is not always the case, but DXY should be considered flying to safety. When money flows into the dollar, market participants are assumed to be fearful and uncertain.
Combined with the ongoing economic uncertainty and some volatility in the labor market, DXY could continue its robust growth.
Important economic data to keep an eye on next week
June 7: Canadian Trade Balance and Ivey PMI data. Change in US API Crude Oil Inventories.
9 June: Interest rate decision by the Central Bank of the European Union. Initial jobless claims in the United States.
June 10: Canadian Unemployment Rate. US Core Inflation (MoM), Real Inflation Rate, Core Inflation (YoY) and Michigan Consumer Sentiment.