- SPX and NASDAQ had significant drop this week, check out what is coming in the next week.
- SPX, NASDAQ, and DXY chart patterns breakdown.
SPX:
In the weekly timeframe, the SPX is trading within a parallel upward channel marked by higher highs and higher lows. Recently, the SPX reached the upper boundary of this channel, which has acted as resistance, causing a subsequent decline. The most recent low for the SPX was at $4,336. As long as the SPX remains above this level, we maintain a bullish outlook and anticipate further upward movement.
On the weekly timeframe, the technical indicator Moving Average Convergence Divergence (MACD) is in bearish territory, while the Relative Strength Index (RSI) remains above 50. A scenario where the RSI continues to stay above 50 and the MACD turns bullish would be favorable for the market.
For the current week, the SPX has experienced a decline of more than 1.3%, a move that was previously discussed in a sentiment analysis article accessible here.
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In the previous sentiment analysis, it was noted that the SPX was within a zone of three resistances, and a downward movement was expected. The SPX has not yet reached its support, so it is expected that in the coming week, we may witness a modest drop in the SPX, potentially down to $4,407 and possibly as low as $4,360 to test the support region.
The MACD is currently in positive territory, but due to the lack of momentum in the market, it may turn bearish. Additionally, the RSI is currently below 50.
Looking ahead, on the 19th of September, there will be an announcement regarding new interest rate numbers. It is expected that interest rates will not be raised, which would be favorable for the market. However, if the Federal Reserve (FED) decides to increase interest rates by 25 or 50 basis points, we could witness a market downturn. In such a scenario, the SPX might drop to the $4,292 level, touching both its horizontal and upward trendline support.
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NASDAQ:
The NASDAQ’s price action closely mirrors that of the SPX, with NASDAQ also trading within a parallel channel characterized by higher highs and higher lows. Following rejection from the upper boundary of the channel and resistance from top pivot points, NASDAQ touched the lower boundary of the channel and then experienced an upward movement.
Recently, NASDAQ established a higher low at $14,551, and as long as it remains above this level, we can consider NASDAQ to be in a bullish phase. However, a breach of this level would signal a change in the market structure, indicating a potential downward movement.
The MACD is currently in negative territory, while the RSI stands at 61.
During the current week, NASDAQ has experienced a 1.4% decline, a move that was predicted in the sentiment analysis article linked above. To sustain its bullish momentum, it’s crucial for NASDAQ to transform pivot highs resistance into support and achieve a weekly closing above this resistance level.
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On the daily level, NASDAQ is on the verge of breaking its critical horizontal support. Maintaining this level is essential, and in the event of a breakdown, there is a trendline support at approximately $15,000, which has been supporting NASDAQ’s price since the start of 2023. An expectation exists for NASDAQ to touch this support line and subsequently move upward, potentially seeing a drop of $250 points in NASDAQ in the next week, followed by an impulsive upward movement.
The daily MACD is in bullish territory, which bodes well for NASDAQ.
As mentioned earlier in the SPX section, the FED will announce new interest rates in the next 11 days, and these rates will significantly influence the market’s trend direction. If the FED adopts a hawkish stance by increasing interest rates to combat inflation, we could witness a market decline. Conversely, if the FED decides not to raise interest rates or offers relief by reducing them, we may observe a substantial upward movement.
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DXY:
DXY is experiencing robust bullish momentum, which contributed to this week’s market sell-off. DXY has gained 0.8% during the week, and further upside is anticipated.
DXY could potentially rise to the level of 105.65, where a resistance point is located. Since DXY and the markets tend to move in opposite directions, an increase in DXY could coincide with a market decline.
Technical indicators for DXY also indicate strong momentum.
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Bitcoin:
Bitcoin currently finds itself at a critical juncture, resting on the pivotal support level within its ongoing cycle. The cryptocurrency is adhering to a pattern of Higher Highs and Higher Lows, and it’s now in proximity to its previous Higher Low. A crucial level to watch closely is $24,756, as a breach of this level could trigger a significant sell-off in Bitcoin. Conversely, $25,000 stands as a robust support level, historically responsible for propelling Bitcoin’s price to $31,800.
Notably, there has been a discernible surge in selling pressure, erasing the gains Bitcoin made following positive news from Grayscale. Within a mere two days, those gains were nullified. Presently, it’s reasonable to anticipate a period of sideways price movement in the upcoming week, with exchanges potentially manipulating the market to liquidate traders.
On the technical side, the Moving Average Convergence Divergence (MACD) indicator is indicating a bullish trend, and the Relative Strength Index (RSI) is also on the rise. An important observation is the emergence of a bullish divergence on the daily time frame, which could play a pivotal role in driving Bitcoin’s price higher.
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Conclusion:
The current market dynamics for both the SPX and NASDAQ suggest a cautious approach. While they continue to trade within their respective upward channels, recent signs of resistance and potential downward movements warrant attention. The upcoming announcement of interest rate decisions by the Federal Reserve holds significant sway over market direction, and its outcome will be closely watched by investors.
For the SPX, maintaining support at $4,336 remains pivotal, while NASDAQ’s ability to transform resistance into support will be a key indicator of its future trajectory. Both indices have exhibited sensitivity to these technical levels. DXY, on the other hand, has displayed a strong bullish trend, causing market fluctuations in the opposite direction. It’s essential to monitor DXY’s journey towards its resistance level at 105.65, as it could further influence market movements.
As Bitcoin navigates this critical support level and market dynamics continue to evolve, it’s advisable for traders and investors to closely monitor developments and exercise prudent risk management strategies. The cryptocurrency landscape is as dynamic as ever, and caution coupled with vigilance remains key in such an environment.
As we approach the forthcoming interest rate announcement, staying informed and adaptable in response to potential market shifts is prudent. Keep a close eye on these developments and consider risk management strategies to navigate these uncertain times effectively.
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