$DXY, BTC/USD, Technical Outlook, Edition #109 (22/09/2021)

Inflation is running HOT 🔥 Have the Talk with Q and learn about the Doves & the Hawks in tonight's edition of the Technical Outlook 🎯 Find out how to navigate the next FOMC announcement now

Price action teeters on the verge as Bears prepare for release

Markets appear poised on the brink of retests following some aggressive selling ahead of the Federal Open Market Committee (FOMC) meeting scheduled tomorrow. 

As mentioned previously, consensus expects the US Fed to send a clear signal for a tapering timeline to rein in inflation and interest rate policies by reducing monthly bond purchases - near USD 120 billion - later this year. 

A prevailing bearish momentum is rife across many asset classes. The recent rise in US Dollar Currency Index ($DXY) indicates a rising element of risk-off sentiment and uncertainty among speculators. 

US Dollar Currency Index, $DXY - Daily (D1)

Whether Fed Chair Powell is dovish or hawkish during FOMC is the predominant determinant of the $DXY flipping 93.2X points into support and moving higher to 94 - or retreating back down to 92.4X.


💡 Q's Spotlight: The Doves & Hawks 💡

The terms Dove and Hawk has a rich history in military-speak, where Doves were against armed conflict while the Hawks advocated for the use of force.

Economists have since adapted the terminology to the financial markets by referring to the different perspectives on monetary policy's influence on the economy. 

Ergo, the Doves are typically less concerned about limiting inflation and lean towards decreasing interest rates - and restricting the money supply. 

Conversely, Hawks view inflation pessimistically and argue for the increase of interest rates.

Share


Qluster analysts attempt to depict both bullish and bearish scenarios, using the above to forecast the next move for Bitcoin.

First, beginning with the bullish...

Bitcoin, BTC/USD - 4 Hour (H4)

Assume that US Fed Chair Powell is dovish and the markets continue moving higher.

In this case, Bitcoin will need to hold the mean price of this bounce at USD 41K.

In the worst-case scenario of mixed messaging, volatility and liquidity chasing is likely to increase. Bitcoin may first see a low of USD 38K - before moving upwards to USD 46.8K. 

Share

Bitcoin, BTC/USD - 4 Hour (H4)

Assume a hawkish outcome of the FOMC. 

As the $DXY rallies higher, markets will likely continue their bearish pullbacks and explore new depths. 

If Bitcoin fails to return lost ground above USD 43.8K, this retest is a precursor for a bearish continuation to USD 38K – 42K - or lower. 

Q's Conclusion

Most fitting from yesterday's technical title...

When the Fed Speaks, the USD commands and Markets obey

During times like these, allow the United States Federal Reserve to bear the onus for creating certainty.

This fussy market will accept no pacifier - except the US Fed.

See you again for the next update.

- q

Leave a comment


Follow us for more detailed analysis on all markets, including Decentralised technology. Check out the links below

Join our Facebook group and speak with likeminded traders:

https://www.facebook.com/groups/156981244915722

Like our Facebook page for future updates:

https://www.facebook.com/qlusterco

Follow us on LinkedIn for future updates:

https://www.linkedin.com/company/qluster-co/?viewAsMember=true

Keep up with us on Twitter:

https://twitter.com/QlusterC

Share Qluster Research


The information on this website is for general information purposes only. It is not intended as legal, financial and/or investment advice and should not be construed and/or relied on as such. Before making any commitment of a legal and/or financial nature you should seek advice from a qualified and registered legal practitioner and/or financial and/or investment adviser. No material contained within this website should be construed or relied upon as providing recommendations in relation to any legal and/or financial product. Qluster does not recommend and/or endorse products and does not receive remuneration based upon investment and/or other decisions