As DXY bounces to 107-108 into the early part of April, it is expected that crypto and bitcoin pull back. This fits the current setup and EW counts for bitcoin, which recently broke up higher from a Cup & Handle pattern.
It would be normal and expected, following a break of the neckline around $25.2k to the upside, that bitcoin retests that level. This will likely be a wave 2 pullback, which may dip as deep (or even deeper) as $24k. This does not invalidate in any way the very bullish setup for bitcoin and it is still the expectation, that bitcoin will continue higher towards $35k at first and $45k later.
DXY declined by 0.5% this week – yet it seems like the smaller-degree c-wave of the B-wave in the correction has begun on March 23rd. A bounce in DXY seems to be coming and it may take DXY to 106.8 or even 108.2.
A bounce in DXY will be a headwind to risk assets like equities and crypto. However, the negative effects of the bounce in DXY may to some degree be offset by the liquidity which has been pouring into markets over the last couple of weeks. It is uncertain when the top of the bounce in DXY will be reached but the best guess is Mid-April.
SP500 rallied by 3.48% this week. Only 2 weeks ago, analysts seemed to believe, that equities would crash. Extreme fear in markets. That was – as we pointed out here – the contrarian signal for getting long equities. It seems to have been the bottom of wave 2 and SP500 seems to be en route towards $4400 and later the area around $4760-70 and ATH.
If this is in fact a wave 3, then the move will be rather fast and strong –
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