Crypto and SPY/SPX Deep Charts (The Market, .SPX, BTC, .DXY, ETH, MATIC, GOLD) (Bitcoin Rally Setup?)
Date: 1/16/2024
Deep Dive Counter: 9
Introduction
Good morning everyone, and welcome to The Market! Your source of pre-market analysis that I spend too much time writing hahaha. Today's edition is a bit different as you can see. We will be Deep Diving into the charts and explaining what they mean and my take on the direction of markets. This is the first Deep Chart's analysis and I hope to deliver a quality article where investors and traders of all levels can understand. As with all of my predictions, I could be entirley wrong. It is important for you to do your own research and take trades according to your personal finances and consult your financial advisor before taking a position of any kind. None of what I say should be taken as financial advice. This is my interpretation of the market, current trends, fundamentals, and more. Although I try to get The Market out before market open,
Let's not waste any time and get the show on the road!
Background
If you are new here, welcome! My name is AkLi and it is a pleasure to have you here. The Market and Deep Dive's are usually two seperate articles that I personally write. They take a long time to complete, so any support and/or feedback is greatly appreciated!
What is today's article about?
As mentioned, today's article is a bit different. Instead of Diving into a stock or event, we will be going over the charts and my ideas about the market in respect to Bitcoin and Crypto, the USD Index, and Gold.
(For reference, I will be mentioning "the market" as either the S&P, SPX, .SPX, or SPY. I will also be referencing Bitcoin as Bitcoin or BTC, the USD Index as USD Index or DXY or the Dollar, Ethereum as Ethereum or ETH, Polygon as Polygon or MATIC, and Gold as Gold or GLD. The word cryptocurrency will be used either to reference the current cryptocurrency I am talking about, or cryptocurrency as a whole and may use the word crypto or coin instead.)
Part 1: What to know
Alrighty, so before we get into the charts we need to go over briefly about what each of the financial instruments mean and how they will play a roll in todays discussion.
Bitcoin
-We know about Bitcoin and the new ETF now. If you want to read more about Bitcoin and the Bitcoin ETF you can check out this article:
USD Index
-The DXY tacks the USD and has been inversing the market for a long time. Because of that, we will be comparing the dollar to cryptocurrency, Gold and the SPX as it will help us understand what might be on the markets mind.
Gold
-Since the history of the stock market, Gold has always been used as a hedge against difficult times in the economy and stock market. Gold is normally percieved as a safe haven investment against bear markets and recessionary fears. This is because the demand for Gold increases significantly as the market trends lower. The demand aspect, and tendancy to inverse the SPX is why I have chosen to relate it to BTC and other crypto.
Ethereum and Polygon
-These two instruments are both cryptocurrencies. Etherum, or ETH, is the second largest cryptocurrency by market cap after bitcoin and Polygon is an Ethereum token that powers the Polygon network. We will discuss more why I chose to chart Polygon, or MATIC, later on in the article. They tend to follow eachother, and Bitcoin, however there are times where ETH outperforms BTC on the day, but overall they are worth talking about when we look at their performance.
Part 2: The Charts
Now that we have an understanding of why I chose to to talk about these different assets, let's waste no time and talk about their charts and correlations in the market.
I. Monthly Overview
.SPX
SPY
BTC
.DXY
Gold
ETH
MATIC
From the monthly charts, it is clear to see that each of them are in an uptrend overall, however don't tet that mislead you. Looking closer, Gold, .SPX, SPX and BTC are all approaching or at a key significant zone. We call those zones support and resistance. We wil talk about MATIC and ETH later on. But for now, let's take a closer look at BTC, Gold, SPX and SPY.
II. BTC x Gold Daily
Both Bitcoin and Gold look like they have potential to breakout to the upside. Yes, upside. Although trending lower and at resistance, I can see them rallying one more time. In fact, in order for my setup to work, BTC will need to rally. When / if it will do so will be determined later with an educated estimate.
III. BTC x .SPX (SPY) Daily
IV. .SPX x Gold Daily
Again, it would appear that all of them are in an uptrend. However, this would signal market ineffeciency. One of the other is going to have to move in a significant direction before we see a larger move.
That's where the DXY comes into play.
V. The Dollar Daily
On the charts, I have includes a vertical line to show the date which the BTC ETF was approved.
.SPX x USD
BTC x USD
GOLD x USD
So what's happening and how is this significant?
Well, looking at the charts, it would seem like the SPX is about to trend lower to the trendline while BTC and GOLD have already revisited their respective trendlines and are rejecting. That's okay for now, but I don't think it holds too much weight due to the market ineffeciency on the day. Looking at the candles prior, we are right in a "anything can happen zone". I came up with that name because its the only way to describe what we are headed into lol.
Whether they all rally, or none of them do, we need to see some signs that they are inversly correlating the overall SPX/SPY. If they don't then our setup may not work.
Regardless, one of them is about to make a big move depending on the direction of BTC and DXY in the up coming trading weeks.
.SPX x USD
It's pretty evenly spaced apart. Of course its no guarentee that in the next 3-9 trading days the market and USD index will revisit / retest a more significant zone. Whether we see a move or not (even if in 9 days lol) we are right now at a really nice position where the SPX and USD are around the same distance from the trendline. Although in different directions on the day, they both are coincidentally starting to look very inverse-ish...for now.
When I say coincidentally, I say that it appears that way to me. Chances are, the next move is already priced in. Should they continue to move in this way in an inverse fashion, the Dollar might retest the higher significant zone (resistance) around the same time the SPX retests the upwards trendline. If that happens, we will need to pay close attention to the days that follow to see if the dollar will rip and the market will start looking weak. This could occur anytime between now and March I think.
However, from the charts, it would appear that the market is still bullish. Although at the time of writing, the dollar is moving to the upside, I don't think it is sustainable. The market may want to hit ATH before a larger move, and that has occured historically. If that occurs, our setup will be invalidated, or I will feel less confident in my idea. In order for our strategie to play out, the market must rally second.
Remember, this is not a 100% indicator of where the market might go, but it gives us conficence in our analysis when we take a closer look at BTC.
BTC x USD
Although BTC has more room to travel, as you can tell by the candles, BTC is certainly capable of making large moves to the upside like this. They both rejected off their trendline, although in different ways, they both seem to be heading to the upside. Now this is no confirmation that they will continue to trend like this, we can see that they are both due for some sort of move. Please keep in mind that Bitcoin trades 24/7 including all holidays, which is why there are more candles for BTC on the charts. The latest candle is up to date.
In fact, it may be because of that very property that we could "see into the future'. Should Bitcoin get to the higher resistance before the dollar, it could tell us other things should the SPX begin to move to the downside, such as price entry and market sentiment.
However, for now it looks like the ladder. Where the dollar will revisit the trendline and move lower shooting up the market and sending crypto lower...for now. There is no guarentee that we will see a breakout in the SPX/SPY before BTC or the DXY, but again if the SPX/SPY does rally first, we will need to rethink our plan.
Even if our setup breaks, I think we will see one more push to the highs this month from either one. And that's because of GOLD.
Gold x USD
This chart is a bit complicating. So lets compare it to the BTC and GOLD chart.
If I was a gambling man, and I kinda am lol, I would be willing to bet that the DXY will lead the pack after the initial reaction up or down. I think that if we see the Dollar begin to break down, we will see strength in markets and reach a better entry price for BTC and Gold. Which would align with our other prediction that we may see BTC with more room to run...temporarily. It also supports our prediction that the market will rally once more. Similarly,, throughout history, after the SPX/SPY makes a new ATH, we see then begin to realize a larger downtrend in the overall market.
Think about it in this way. Since Gold is a hedge against bear markets, should the SPX realize the ATH, that would send crypto, the dollar, and gold to the downside (in theory). If we realize that move, according to history, the SPX may see some sort of reversal to the downside.
Given that the BTC ETF is now a new way to trade the movement of BTC itself, and since the price of BTC is seemingly based on sentiment (demand) similar to Gold, there is a large psobability that with this correlation being sustained, it might spark investor attention.
Although the attention might be seen as a positive, it could very well be associated as a negative contribution to the future success and investment of Gold whether in a bear market or not. If investors believe that BTC is the future, they may sell GOLD and devalue the Dollar as the dominent form of currency. That's a REALLY hot take, and is more tinfoil than anything, but if markets start considering Bitcoin as "the new gold", or "the new dollar" that might change everything forever. It would be overwhelmingly bullish for every cryptocurrency, but what would it mean for the US Economy backed by the USD and what would that mean for nations prioritizing and skewed to the value of Gold? If everyone leaves their trusty cash behind and funnels into Bitcoin instead, what does that mean for the whole world? Those are scary questions, but unlikely to happen any time soon (or at all for that matter). I am not sure if the SEC has even priced this idea in. Anyways, let's continue our analysis.
I would not put it past investors to flock to the BTC ETF's should the market start flagging the beginning of a downward move, especially with the unrealized potential of Bitcoin and high price targets from reputable funds and individuals in the economy and markets. If we do move in this way, I think that the DXY will lead the way with Gold and BTC right behind them while investors (like myself) wait for the best price to enter or begin considering long positions.
Let's take a look at the downward line segments.
.SPX x USD (Downside)
BTC x USD (Downside)
GOLD x USD (Downside)
Although these charts aren't as clear, some of them are either at or near the trendline on the day (SPX and GOLD) and the other is in the process of rejecting. This still tells me that one is going to move before the other in some way.
VI. Takeaways
I think we are about to see a big move, with the DXY leading after an initial move by BTC or the SPX/SPY.
The charts are conveniently setup for a reversal in the markets soon, but not now.
I think that we will see one more run for BTC before reversing.
I think we will see ATH on the SPX/SPY before reversing.
I think we will see all of them retest significant levels this month, whether up or down. This includes trendlines.
Part 3. Alkaline's Forecast
Investors and traders, this is it! The moment you all have been waiting for. Regardless if you actually read the above chart analysis, I appreciate you being here and taking the time out of your busy days to read my articles. You are the reason why I continue to post and work hard to deliver high quality content. So as a thank you, I will be providing my predicitions in markets and what I want to see in order to get involved in the possible rally we are about to see. Keep in mind that I encourage you to do your own research, what I say is not financial advice and I am in no way saying anything will happen the way it does or the way I think it will for certain. You may, and probably will, lose money which is why it is important for traders and investors alike to do their own due diligence. Consult your financial advisor and assess your personal finances before even thinking about taking a trade. With that being said, let's continue the analysis.
I want to see Bitcoin rally to, or close to $50,000 while the market retraces / tretests the upward trendline, regardless of what the DXY or GOLD do. This would be an ideal first step in the overall setup. Basically as BTC reaches this level, I want to see the SPX / SPY move lower to retest loading zones.
Then I want to see a shift in markets. I want to see some sellers hit BTC, while buyers load up on the possible run to the ATH on the SPY. This would send BTC much lower down to its previous loading zone aka, balancing out (we talked about BTC possibly wanting to balance sometime soon). While the market heads to the upside, this would be a good time to begin seeing GOLD and the DXY create lower highs and higher lows to their respective significant zones as well. Because we know that each time the market rallies into ATH it usually heads lower afterwards, this would allow for investors to load up on BTC and GOLD at a "fair" and "effecient" price. Beginning the rally of BTC and potentially Gold and the USD as well.
Summary:
1. BTC 50,000
2. Selloff in BTC
3. Markets hit rally to ATH
4. Gold, BTC, and DXY move lower. Dollar leading
5. Once markets hit ATH; Gold, BTC and DXY reach their significant loading zones
6. Investors and traders load into the BTC ETF's, (maybe) Gold and BTC itself
7. BTC, Gold, and DXY begin to move upwards
8. SPX / SPY flag an ATH reversal, similar to historical trends
9. The markets begin to move lower while BTC, Gold and DXY begin to rally
10. SPX / SPY retest of levels to the upside, and close below them
11. Confidence in the BTC, Gold and DXY rally is sustained
12. The next Crypto, Gold, and DXY bull market begins
Charts
SPX
BTC
GOLD
DXY
Now, these aren't the most professional charts you will ever see. However, they outline my thoughts on where I believe the markets are headed.
I probably don't have to point this out, buit the arrows and texts on the chart are in no way how the market will actually behave. It could look totally different and not inline with any of the arrows at all. But the point I am making holds true where I want to see BTC hit $50,000 first. I should also mention that the time it takes to make these moves can vary immensley as a result to unexpected turns in the market, news, data releases, and a lot of other outside influences.
Should Bitcoin even reach $50,000, I am looking to possibly take a position around $28,000 to the lower $30,000 price points.
If the market reaches ATH before Bitcoin, or along side Bitcoin's $50,000 achievment, then my setup is invalidated and I will not take any trades or look for any entry point. I am looking for the inverse correlation to begin, and hold up in the markets.
Keep in mind, February has acted as a precurser to a larger move in markets historically on the SPY. We have talked about February being a bullish month for markets as the SPY tends to come down beginning to mid January while starting off February strong; that is not always the case as we can see from the previous weeks in the market this year. This cuts the time it will take BTC to reach $50,000, if our prediction is correct, short and may take longer than just February.
Spy Monthly
More often than not, February indicates market sentiment, and has been the beginning of trends upwards or downwards on the SPY depending how and where it closes on the month.
I am still under the interpretation that we will see some lower movement throughout January on the SPY, followed by a nice bounce sometime in mid to late February. This might be the ideal time for the setup to form if BTC can reach $50,000 by that time, but it will be close.
Again, I still want to see BTC hit $50,000 independantly. For now, the relevancy of GOLD or the DXY is not entirley clear on whether they will have a say if BTC reaches our price target. What I will be looking for is the inverse correlation between them and the SPX/SPY afterwards.
I am still waiting for February to take any long term positions, as I want to see how January closes and how February opens for all of them. But if it plays out, I will be looking for positions in crypto around BTC's larger support level. Overall, I want to see the market make this sort of move over the next 2-3 months. If the setup seems to be taking form, I believe it will begin within that time frame. I could be wrong, but 2-3 months is an educated estimate after looking at the charts.
BTC Possible Entry
ETH Possible Entry
MATIC Possible Entry
The reason why I chose to also chart out ETH and MATIC is to show that although Polygon is an Ethereum token, one can out preform the other for any reason. Although that's a positive and a negative for cryptocurrency trading, I chose Polygon because of its potential in the Web3 and Etherum space. The polygon network has devoted contributors and engineers constantly developing and engaging in new projects. Personally, I think it is undervalued, but I will have to do a lot more research into MATIC alone in order to hold a long position in a "penny stock" cryptocurrency. I won't be looking at doge coin or other meme coins, however if I was to do a Deep Dive into crypto other than BTC, Matic, Solana, and Litecoin would be on the list. I might also consider Cardano, but only for a possible "squeeze" play and not a long position like I would for the others mentioned. None of my "possible entries" are financial advice, or me telling you when to buy or sell.
Conclusion
I hope I was able to make the slightest bit of sense in this article lol. I want to mention that I know I didn't go super deep into the charts, like candle stick patterns, formations, and other properties, I chose to stick to relational graphs for consistancy and legibility reasonings. We could chart out BTC and SPY/SPX completely, but it would take away from the point I am trying to make. It would also take forever to do and the consistancy of this article would almost certainly break haha.
Please remember to always do your own research, and consult your financial advisor / assess your personal finances before taking a trade. What I say and the charts I provide are strictly for educational purposes. I could be entirley wrong, so any losses or gains you realize are entirley credited towards the individual.
At the time of writing, The SPX/SPY are around $4,748.41/$474.200 respectivly, BTC is around $43,090.00 DXY is at $103.360, Gold is around $2028.75, ETH is around $2,567.80, and MATIC is around $00.8420.
Thank you for reading! I still am not on a stable schedule to do extensive research like this, but I will always try to do my best to provide high quality articles when I get around to it. Initially I mentioned this post would only be for followers, but I think this Deep Dive deserves to be public. Let me know what you think! I appreciate the support, and I hope all of you are in great helth with withdrawls ready to hit your bank accounts from your own success in the market
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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AkLi
Moo Contributor
Alkaline Analyst
All Deep Dives:
https://medium.com/@alkalinedeepdives
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