(Kitco News) – Cryptocurrencies were firing on all cylinders early on Monday while stocks were mixed and gold saw a slight decline as investors focused on earnings season, with reports from Goldman Sachs, Citi, and Bank of America set to be released on Tuesday, while Morgan Stanley is due Wednesday.
“At the end of last week, the Dow and S&P 500 made fresh record highs, with the former closing in on 43,000 while the latter broke above 5,800 for the first time ever,” noted David Morrison, Senior Market Analyst at Trade Nation. “It also proved to be a positive week with all the majors posting gains of around 1%, and the Dow recording its fifth successive week of advances.”
“Overall, the stock market is displaying significant resilience,” he added. “This is often a difficult time of year for equities, yet investors continue to increase their exposure. At the same time, volatility is on the rise, with the front-month VIX back above 20, indicating that investors are also adding hedges in the form of S&P put options. Bond yields are also holding at higher levels with the yield on the key 10-year Treasury note hovering around 4.10%, well above the 3.60% from this time last month.”
“The third quarter earnings season has got off to a good start with positive reports from JP Morgan, Wells Fargo, the Bank of New York Mellon and Domino’s Pizza,” Morrison highlighted. “So far, only Delta Air Lines has disappointed. There are no reports due out today and the US bond market is closed for Columbus Day. But this week’s big earnings updates include Goldman Sachs, Citigroup, Bank of America, Morgan Stanley, United Health and Netflix.”
As for the source of rising volatility, Morrison noted that “Last week’s inflation data was a mixed bag as Core CPI ticked up in the wrong direction. The market still expects the Fed to cut rates by 25 basis points in three weeks’ time. But the probabilities of a pause in the rate cutting cycle can’t be ruled out should there be further evidence that the downside trend in inflation has stalled, or should employment data strengthen significantly.”
The CME FedWatch Tool currently shows the odds of the Fed holding rates steady at their November meeting stand at 16%.
Bitcoin (BTC) climbed back above $66,000 for the first time since September 30, hitting a high of $66,321 at the time of writing as bulls prepare for a fierce battle at the key resistance level.
BTC/USD Chart by TradingView
“The crypto market is sitting at $2.23 trillion, roughly back to levels of a week earlier, with two legs of growth—at the end of the day on Thursday and the start of trading on Monday,” noted Alex Kuptsikevich, senior market analyst at FxPro. “Sentiment has returned from fear to neutral territory (48), while sentiment in US stock indices is close to extreme greed.”
“Bitcoin broke above the $64K mark on Monday morning, accelerating intraday gains after breaking through its 200-day MA,” he added. “This is a repeat of the momentum from a week earlier when the price failed to consolidate above that line. Looking back at the optimism in equities and the strong rally in BTC on the dip under $60K, we give more chances for growth development and a new test of $65K at the intersection of the round level and the upper boundary of the downward channel from March.”
“Ethereum (ETH) climbed to $2,500, accelerating gains at the intersection of its 50-day MA on Monday,” Kuptsikevich said. “But this was not such a difficult task as this curve was pointing downwards. Should positive sentiment develop, the target for the bulls looks to be the $2,700 area—the highs at the end of September.”
ETH/USD Chart by TradingView
According to TradingView analyst Xanrox, “Bitcoin is almost ready to start a new and last huge wave to the upside!”
He gave a target of $130,000 but warned that the onset of a crypto winter will eventually see King Crypto return to a price of $60,000, and traders would be wise to cash out when it’s peaking.
“We all know that Bitcoin is extremely volatile, and during its bearish cycles, a 70% - 80% is standard,” he noted. “We can definitely expect a crash from 130k to 60k in the next bearish cycle to retest the current bullish flag (that you can see on the chart). That's why it's very important for you to take profit and potentially enter a long-term short position on futures!”
“Why is 130K important?” he questioned. “First, we have the 0.618 Fibonacci extension measured from wave 1+3 -> wave 4. Also, we have the long-term trendline of this bullish cycle, which is [an] even stronger dynamic resistance level!”
“From the Elliott Wave perspective, we need to complete this impulse wave and make the last wave 5!” Xanrox said. “This wave 5 already started at 49k in August. On the chart, we can see two major consolidation periods marked as wave 2 and wave 4.”
“The best plan on Bitcoin is to buy it and sell around 130k, then enter a short position on futures to make money in the next bearish cycle,” he concluded. “You will also get funding fees for holding your short position!”
At the time of writing, Bitcoin trades at $66,103, an increase of 5.78% on the 24-hour chart.
