US stock markets have been very low for most of the year. The S&P 500 and Nasdaq Composite are down for three consecutive quarters, for the first time since 2009. There has been no respite in September sales, and the Dow Jones Industrial Average is on track for a September record high since 2002. That’s in the stock market .
Compared to these disappointing numbers, Bitcoin (BTC) and some altcoins didn’t lose much ground in September. This is the first sign that the selling may dry up at lower levels and long-term investors may start to catch the bottom.
Daily indicators in the cryptocurrency market. Source: Coin360
In the last quarter of the year, investors will continue to focus on inflation data. Any signs of inflation peaking could drive up risky assets, but if inflation remains consistently high, a sell-off may follow.
Let’s examine the charts of the S&P 500, the US Dollar Index (DXY), and the major cryptocurrencies to determine if there is a chance of recovery.
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The S&P 500 (SPX) has come under strong seller pressure in recent days, but the bulls held their positions. This indicates that the bulls are buying on the dips around $3,636.
SPX daily chart. Source: Trading View
The first resistance to the upside is $3737. If the bulls push the price above this level, the index may rise to the 20-day exponential moving average (EMA) ($3,818). In a downtrend, this is an important level to watch because a breakout and a close above it would indicate that the bears might lose their grip.
Heavy falls are usually followed by strong rises. It may take this indicator to a downtrend line and then to the 50-day simple moving average (SMA) ($4012).
The bears may have other plans. They will try to continue the downtrend by lowering the price and continuing below $3,636. If they manage to do so, the index could drop to $3,500 and then $3,325.
The US Dollar Index rose to $114.77 on September 28, pushing the Relative Strength Index (RSI) into the deep overbought territory. This may attract profit-taking by short-term traders, who have brought the price closer to the 20-day moving average (111).
DXY daily chart. Source: Trading View
The bears will need to move the price below the 20-day moving average to indicate that the bullish momentum may be weakening. This may pave the way for a possible drop to the 50-day SMA (108).
The area between the 50-day SMA and the rising trend line is likely to see strong buying from the bulls because if they fail to defend the area, it will signal that the indicator may have peaked.
On the other hand, if the price moves above the current level or falls back from the 20 day EMA, this means that the bulls continue to buy on the dip. Buyers will then attempt to push the price above $114.77 and resume the rally. The next upside target is $118.
Bitcoin / US Dollar
Bitcoin returned to a strong support at $18,626 on September 28, indicating that the bulls continue to defend this level aggressively. The long tail of the candle for the past two days shows that the bulls are buying the dips during the day.
BTC/USDT daily chart. Source: Trading View
The bulls pushed the price above the 20-day moving average ($19,602) on September 30th but are struggling to hold onto the higher levels. This indicates that the bears are selling near the 50-day simple moving average ($20,621).
If the bulls do not allow the price to fall below the 20 day EMA, the probability of a rise to the downtrend line increases. The bears are expected to offer strong resistance at this level, but if the bulls overcome this hurdle, the BTC/USDT pair could signal a short-term trend change. The pair could then rise to $22,799.
Contrary to this assumption, if the price breaks the current level or the 50-day simple moving average ($20,625), the pair may fall back to the $18,626-$17,622 support area.
ETH / USDT
Ether (ETH) is falling in a bearish channel pattern for the past few days. In the short term, the price remains stuck between $1,250 and $1,410, which indicates lower demand levels, but selling is close to resistance.
ETH/USDT daily chart. Source: Trading View
Price movement within a range is usually random and choppy. Therefore, it is difficult to predict the direction of the outbreak with certainty.
If the price is above $1,410, this means that the bulls swallowed the bid. This may cause the price to reach the channel resistance line. Bulls need to break this barrier to anticipate a possible trend reversal.