Equity markets are seeing aggressive selling due to intensifying bearish macroeconomic factors, adding to the selling pressure on bitcoin and altcoin prices.
The World Bank has warned of a possible global recession in 2023. In its Sept. 15 press release, the bank said current growth rates and policy decisions would not be enough to bring inflation down to pre-pandemic levels.
Ray Dalio, billionaire and founder of Bridgewater Associates, said in a Sept. 13 blog post that if rates rise to about 4.5% in the US, it would “have a negative impact on share prices by about 20%.”
The negative outlook for the equity markets does not bode well for the crypto markets as the two are closely linked in 2022.
Daily indicators of the cryptocurrency market. Source: Coin360
Macroeconomic developments seem to be worrying crypto investors who have sent 236,000 bitcoins.
According to Glassnode, September 14 to major cryptocurrency exchanges. Entry reached its highest level since March 2020.
Let’s take a look at the charts of the S&P 500 Index, the US Dollar Index (DXY), and major cryptocurrencies to identify key levels that can signal the start of a trend.
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The S&P 500 (SPX) attempted to bounce off the uptrend line on September 14, but the weak rebound showed no urgency to defend the level. Sellers took advantage of this opportunity and pushed the price below the rising line on September 15th.
Daily SPX chart. Source: Trading View
The level of 3886, to which the index jumped on September 6, also did not provide support, which indicates that traders are in a hurry to sell their positions. Usually casting from a level results in it being retested.
In this case, the price may rise to the bullish line. If the price turns down from this level, it indicates that the bears have turned the bullish line into resistance. This can increase the drop chance to 3700.
A descending 20-day exponential moving average (EMA) (4.006) and a relative strength index below 37 point to bear dominance.
If the price rises and breaks the uptrend line, it would mean that the September 15th break could be a bear trap. This can push the index towards the downtrend line.
DXY is in a strong uptrend. The bears tried to push the price below the moving averages, but the bulls fiercely defended the 50-day simple moving average (SMA(107)) on September 13th.
Daily DXY chart. Source: Trading View
Both moving averages are rising and the RSI is in positive territory, indicating that buyers are in the lead. The bulls will then try to push the price above the upper resistance at 110.78. This is an important level because if the price stays above this level, the rally could extend to 115.
If the price falls from the current level or the upper resistance level and breaks the 20-day EMA (109), this will mean consolidation in the near future. The price can then fluctuate from 107.58 to 110.78 for several days. A potential change in trend could be signaled if the bears push the price below 107.58.
Bitcoin formed a Doji candlestick pattern on September 14 showing indecision between bulls and bears. Uncertainty resolved to minus on September 15, but the bears failed to develop this advantage. This indicates that selling pressure is decreasing at lower levels.
BTC/USDT daily chart. Source: Trading View
Buyers will try to rectify the situation by pushing the price above the 20-day EMA ($20,529). If this happens, the BTC/USDT pair could rise to the upper resistance level of $22,799. The bears can defend this level aggressively, but if the bulls push the price above this level, the pair could rise to $25,211.
Conversely, if the price falls from the current level or the 20-day EMA, this indicates that sentiment remains negative and traders see the rally as a selling opportunity. This could push the pair towards strong support at $18,510. The area between $18,510 and $17,622 could see aggressive buying from the bulls as failure to defend this area could start the next leg of the downtrend.
On September 14, it rebounded from the support line, but the bulls’ jubilation was short-lived. The price dropped sharply from the 20-day EMA ($1609) and broke through the support line on September 15th.
Daily ETH/USDT chart. Source: Trading View
The 20-day EMA has started to decline and the RSI has fallen below 39, indicating that the bears are in control. Sellers have raised the price to $1422 and if this support is broken