Search This Blog

Friday, October 28, 2022

BTC & SPX Correlation: At The Top Of The Range

BTC & SPX Correlation: At The Top Of The Range

Bitcoin / U.S. dollar BITSTAMP:BTCUSD

Here we're looking at both BTCUSD & the SPX . There's a strong correlation between the Bitcoin price and the stock market. Especially due to the current nature of the market: prices are mainly driven by fear surrounding inflation & interest rate hikes as well as a surging dollar. The thing that bothers me the most is the fact, that any big rally in the market will be suppressed by further rate hikes until we move towards 2% inflation .
There are two more hikes for November & December (both likely to be 75 BPS each) and there is still enough room for another "crash" in the crypto & stock market, which brings us to the idea you're seeing here.

I'm using a straightforward setup that consists of Volume , VRVP, and horizontal/diagonal trendlines . We can observe the price being rejected at the trendline, acting as a resistance. As long as the price is trending below the resistance area , we're still in a downward trend. The VRVP shows us further resistance at the most recent highs. Both charts also show a liquidity gap here, which came along with the relief rally a few weeks ago.
The VRVP also gives us a hint for the local bottom, which is ~$19000 for BTCUSD and 3700 for the SPX .
This is the current range we're moving in. The BTCUSD / SPX price breaking out of those areas (up or down) will result in a sudden & big move.
A lot of market participants are waiting on the sidelines, ready to take action. In other words: there's no reason to take a short-term position. At least for now.

I'm expecting the market to close with a red candle today. The following week, especially in anticipation of the FED meeting on November 2nd/3rd, will be more volatile and our local bottom might be tested again.
I will update this idea on Monday.

Feel free to share your own idea in the comments & also leave a Boost/Thumbs Up if you liked this idea.

Via TradingView Ideas

No comments: