Unemployment Data:
- Unemployment data reveals the number of individuals actively seeking employment. High unemployment rates signal a weakened economy, and sometimes, in the context of financial markets, high employment data is perceived as positive.
- The Federal Reserve is engaged in a battle against inflation, striving to bring it down to 2%. To achieve this, the Fed is increasing interest rates, withdrawing funds from consumers’ pockets and diminishing their purchasing power.
- Unemployment is closely tied to consumer spending; a high unemployment rate implies reduced consumer spending, which aids in curbing inflation. The projected unemployment rate was 3.5%, but it came in at 3.8%, indicating increased job seekers. This indicator will be considered before deciding on interest rate hikes. The market desires a 25-basis-point interest rate pause or decrease, but if the Fed opts for an increase, it could lead to market turmoil.
- Due to the high unemployment rate, the previous week was positive for the markets, resulting in an upswing.
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SPX:
- Last week, the SPX increased by 2.5%, marking a significant move.
- The SPX reached a resistance point from the previous trendline formed by connecting last year’s pivot highs. Currently, the SPX is in a precarious position, encountering three simultaneous resistances: a horizontal resistance, resistance from the previous all-time high, and a recent high set by the SPX, as well as resistance formed by connecting the pivotal highs of its current run.
- Both the MACD and RSI indicators exhibit strength, with MACD in a bullish mode and RSI above 50. The upcoming week holds importance for the SPX as it must determine its trajectory. To favor a bullish path, a weekly close above $4600 is crucial.
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NASDAQ:
- Last week was highly favorable for NASDAQ, recording a 3.7% increase.
- Similar to the SPX, NASDAQ faces a critical juncture with three resistances: one formed by connecting the all-time high from the previous year and the recent high, a horizontal resistance, and resistance established by joining the lows of its ongoing upward movement. While MACD and RSI indicate potential positive momentum, the presence of these resistances suggests potential rejection. To confirm its bullish stance, NASDAQ must close the upcoming week above $15900.
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GOLD:
- Gold recently rebounded from support and now confronts three additional resistances. Notably, there was a slight pullback on the last day.
- Despite all technical indicators showing momentum, overcoming these resistances is pivotal. A weekly closing above $1960 is required to confirm and sustain the uptrend.
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DXY:
- DXY, which had been trading within a parallel channel, has broken below the channel and retested the support line. It currently faces resistance at the 104.5 level.
- As DXY moves inversely to traditional markets, an increase in DXY could lead to declines in NASDAQ, SPX, DJ, and RUSSELL 2000.
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Total Coin Market Cap:
- The total cryptocurrency market cap stands at $1.028 trillion, hovering at a critical support level. A breach of this support could potentially bring it down to $980 billion, resulting in over $20 billion exiting the market.
- Technical indicators currently lack significant momentum, and a bearish crossover in MACD suggests impending negative sentiments.
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Without BTC:
- Excluding BTC from the coin market cap analysis, a symmetric triangle pattern was evident. However, due to a prior market slump, it broke below a key support level and is now establishing it as a resistance. The next support level lies around $500 billion, and a decline could result in a $20 billion loss in market value.
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Without BTC and ETH:
- Removing both BTC and ETH from the market cap assessment, we find ourselves at the support level of $323 billion, with resistance at $340 billion and support at $307 billion. Bearish sentiment prevails due to recent market downturns, suggesting a potential further decline in cryptocurrency prices.
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Conclusion:
Last week, traditional markets like NASDAQ, SPX, and RUSSELL 2000 saw positive movements in response to unemployment rate data. Gold also experienced an uptick due to these figures. While technical indicators currently favor the stock market, it’s crucial to note that significant resistance lies ahead. As an analyst, it’s highly likely that the upcoming week may involve sideways movement or a pullback in the stock market. Weekly closings above the mentioned levels could pave the way for a stock market rally. In addition, the Federal Reserve is set to decide on interest rates in 16 days, which could impact the market.
Turning to cryptocurrencies, a downturn in stock and gold prices from key resistance levels could lead to a cryptocurrency market decline. Presently, crypto sentiments are unfavorable, and retail investors appear hesitant to engage in buying. Fundamental news may sway prices, but without positive fundamentals, a price decline seems imminent in the near future.
Chart From TradingVIew:
