The World Bank warned of a possible global recession in 2023. In a press release on September 15, the bank said the current pace of interest rate hikes and policy decisions is unlikely to be sufficient to bring inflation down to pre-pandemic levels.
If rates were to rise to about 4.5% in the US, Ray Dalio, the billionaire founder of Bridgewater Associates, said in a blog post on Sept.
The negative outlook on the stock markets does not bode well for the cryptocurrency markets as both are closely related in 2022.
Daily cryptocurrency market performance. Source: Coin360
Macroeconomic developments appear to be worrying crypto investors who sent 236,000 Bitcoin (BTC) to major cryptocurrency exchanges on September 14, according to Glassnode data. It was the highest flow since March 2020.
Let’s study the charts of the S&P 500, the US Dollar Index (DXY) and the major cryptocurrencies to identify key levels that can signal the beginning of a trend movement.
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Standard & Poor’s 500
The S&P 500 (SPX) attempted to bounce off its rising trend line on September 14th, but the weak bounce showed that there was no urgency to defend the level. Sellers took advantage of this situation and dragged the price below the ascending trend line on September 15th.
SPX daily chart. Source: TradingView
The 3886 level from where the index rebounded on September 6 also failed to provide any support, indicating that traders are in a hurry to sell their positions. Usually, a breakdown from the level tends to be retested.
In this case, the price may rise to the uptrend line. If the price drops from this level, it will indicate that the bears have turned the uptrend line into resistance. That could increase the probability of a drop to 3700.
The 20-day sloping exponential moving average (EMA) (4,006) and the RSI below 37 indicate that the bears are in control.
If the price rises and rises above the ascending trend line, this will indicate that the crash on September 15th may be a bear trap. It can push this indicator to a downtrend line.
DXY is in a strong uptrend. Bears attempted to pull the price below the moving averages but the bulls strongly defended the 50-day simple moving average (SMA (107) on September 13th.
DXY daily chart. Source: TradingView
Both the moving averages and the RSI are sloping up in the positive zone indicating the buyers advantage. The bulls will then attempt to push the price above the general resistance at 110.78. This is an important level to watch because if the price continues above this level, the rally could extend to 115.
If the price drops from the current level or general resistance and breaks below the 20-day EMA (109), this will indicate a consolidation in the near term. The price can then range between 107.58 and 110.78 for a few days. A possible trend change can be indicated if the bears cut the price below 107.58.
BTC / USDT
Bitcoin formed a Doji candlestick pattern on September 14, which indicates indecision among the bulls and the bears. The uncertainty was resolved to the downside on September 15th, but the bears failed to take advantage of this advantage. This indicates that selling pressure is declining at lower levels.
BTC/USDT daily chart. Source: TradingView
Buyers will attempt to salvage the situation by pushing the price above the 20-day moving average ($20,529). If that happens, the BTC/USDT pair could rise to the general resistance level at $22,799. Bears may defend this level aggressively but if the bulls push the price above it, the pair could rise to $25211.
Conversely, if the price drops from the current level or the 20-day moving average, it will indicate that sentiment is still negative and traders are looking at the rallies as a selling opportunity. This could plunge the pair into the strong support level at $18.510. The area between $18.510 and $17,622 could see strong bulls buying as a failure to defend this area could start the next phase of the downtrend.
ETH / USDT
Ether (ETH) bounced off the support line on September 14, but the bulls’ joy was short-lived. The price dropped sharply from the 20-day EMA ($1609) and broke below the support line on September 15th.
ETH/USDT daily chart. Source: TradingView
The 20-day moving average has started to decline and the RSI has fallen below 39, indicating bears in control. Sellers pulled the price to $1,422 and if this support breaks, ETH/USDT could drop to $1,280.
If the price rises from the current level, the pair may recover to the moving averages, which may act as a strong resistance. The bulls will have to cross this hurdle to indicate that selling pressure may be easing.
BNB / USDT
Bears pulled BNB below the $275 billion immediate support