The collapse overnight in Bitcoin has taken it through and below the first pivotal support area at $89,329. It is a long way to the end of the week BUT a weekly close below this level, if seen, would complete a clear double top that would target the low $70k area.
This would take us to triple converged resistance in the $73.6-$74.6k range.
This is the hugely pivotal support are and in particular the 55-Week MA at $73,632.
XBT has been above this level on a weekly close basis for just under 2-years. Price was very stretched to this MA at the high (and still is) and a weekly close below would suggest a target of the rising 200-Week MA which is presently at $44,538.
That does not necessarily suggest this is the target level, as it is rising. At the present trajectory that MA will be close to $50k by end of Q2 which seems like a very reasonable extended target
In the last Decade+ it has had this 55-200 Week MA setup 3 times and it has so far, a 100% track record of getting to the 200-Week MA IF it gets a weekly close below the 55-Week MA
All of this could be quite important as Bitcoin has clearly been a Risk/Trump trade certainly since last November. Moves of this magnitude, if seen, would look to be a harbinger of risk off.
In particular it is worth looking at the overlay of Bitcoin to the most concerning looking Equity market chart out there the SOX (Philadelphia Semiconductor index)
The technical picture on the SOX itself is on the verge of developing a very negative outlook
It is the standout Equity chart but not the only one looking susceptible.
We also need to watch the SPX on a weekly close basis where there is a potential for triple negative divergence on the weekly chart (One of my favourite indicators)
In addition, it also has 2 potential double tops. One at 5,923 and another at 5,773 which If completed would target at least a move towards 5,400
What else is interesting?
Yields
I continue to expect yields to move lower and as per my weekend pieces believe that the medium-term high is in across the curve and much lower yields are possible.
In the near term:
The US 10-year yield has moved below pivotal support at 3.38-4.39% and the next level of support is 4.29%. Levels below there are 4.20%, 4.13%, 4.06% and 3.88% and I think it is possible that some if not all these levels can be tested
the US 30-year yield is pushing support at 4.60% and levels below are 4.57%, 4.45%, 4.31% and 4.15%
The US 2-year yield may be the most intriguing because it is so tied to expected fed policy.
Barring some big (risk) event there is little chance that the Fed is moving in March. But what about May? If the Fed is not moving, then it should be difficult to sustain much below 4.25% or above 4.50% except in episodic trading.
However, IF we see a weekly close under 4.075% that would be a clear double top that would suggest a move as low as 3.70 to 3.75%. That is not happening unless a more aggressive Fed is priced in and if it was to happen soon likely much more aggressive May pricing.
FX
All of this is pressurising the USD and creating the potential for monthly reversals. However, that potential is now looking less on the Commodity currencies (CAD,AUD and NZD) as the broad commodity base comes under pressure. Both Oil and Copper remain under pressure and look i danger of seeing even lower levels in the weeks ahead with the mid $60's in WTI still looking a valid target.
The main ones to watch here remain the BBDXY Index (Below 1,292), USDCNH (Below 7.2346) and EURUSD (Above 1.0533)
However, one of the best FX charts now is USDCHF which has a 55-200 day MA setup and double top that suggest a move to at least .8828 (200 Day MA) and possibly .8730 (Double top target)
Other FX charts of note
USDJPY is far too high in this yield/risk backdrop and should be a lot closer to 148 than 150
USDBRL pretty much met its 200-Day MA target and is now bouncing as is USDMXN as this becomes more a risk trade and not just a lower yield move
