Is Dollar Strength Suppressing Crypto!? Let's Take A Look! (UUP)
Hi friends! Welcome to this update analysis on the US Dollar, via the UUP ETF. Looking at the daily chart, you can see that the UUP has been forming a strong looking inverted head and shoulders pattern, since July of 2017. The pattern is well defined, with a steep positively sloped neckline, signaling a powerful bullish formation. Today, the dollar gaped higher, causing the UUP to breakout above the inverse neckline — closing near the highs of the day. If we see some continuation tomorrow, I believe that UUP could continue to surge higher, toward the $26.16 level. Above that, we have a pivot high at $26.42, which should provide some solid resistance.
Despite the fact that we appear to be breaking out of the inverse head and shoulders pattern, there is an undeniable bearish divergence on the MACD. Furthermore, today's breakout gap was on pitiful volume. So, it wouldn't surprise me if UUP rolled back over in the near future. Yes, the inverse looks beautiful, but it isn't really supported by the underlying technicals.
The dollar strength has a lot to do with the decline in oil, gold, and other markets as well. Arguably, it could be having an effect on the suppression of the cryptocurrency markets. You know, a "stronger dollar buys more crypto, but more crypto buys less strong dollars" kind-of-thing. That may be especially true right now, given the remarkably low volatility in the cryptocurrency markets right now. With that said, I have BTC in blue on the chart. There appears to be a bit of a correlation, between the price of Bitcoin, and the price of the dollar. You can see that as the dollar has been moving higher, Bitcoin has been falling. However, there is also a period on the chart (into and after the BTC all time high) where Bitcoin appeared to be trading in tandem with the dollar. However, I think that could be chalked up to extreme volatility in BTC. Prior to that period, BTC and the dollar again were trading opposite of each other, when Bitcoin was in a low volatility period. So, perhaps we can deduce that Bitcoin and the dollar trade in tandem during high volatility crypto cycles, but trade opposite in low volatility crypto cycles. Regardless, I will be watching to see what this bad boy does, in order to gauge my trading activity in other markets. If the dollar drops from here, that could signal some bullish trades elsewhere, possibly even in crypto.
I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-JD-
Despite the fact that we appear to be breaking out of the inverse head and shoulders pattern, there is an undeniable bearish divergence on the MACD. Furthermore, today's breakout gap was on pitiful volume. So, it wouldn't surprise me if UUP rolled back over in the near future. Yes, the inverse looks beautiful, but it isn't really supported by the underlying technicals.
The dollar strength has a lot to do with the decline in oil, gold, and other markets as well. Arguably, it could be having an effect on the suppression of the cryptocurrency markets. You know, a "stronger dollar buys more crypto, but more crypto buys less strong dollars" kind-of-thing. That may be especially true right now, given the remarkably low volatility in the cryptocurrency markets right now. With that said, I have BTC in blue on the chart. There appears to be a bit of a correlation, between the price of Bitcoin, and the price of the dollar. You can see that as the dollar has been moving higher, Bitcoin has been falling. However, there is also a period on the chart (into and after the BTC all time high) where Bitcoin appeared to be trading in tandem with the dollar. However, I think that could be chalked up to extreme volatility in BTC. Prior to that period, BTC and the dollar again were trading opposite of each other, when Bitcoin was in a low volatility period. So, perhaps we can deduce that Bitcoin and the dollar trade in tandem during high volatility crypto cycles, but trade opposite in low volatility crypto cycles. Regardless, I will be watching to see what this bad boy does, in order to gauge my trading activity in other markets. If the dollar drops from here, that could signal some bullish trades elsewhere, possibly even in crypto.
I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-JD-