As investors waited for US employment data for guidance on interest rate views, the recent decline in the US dollar index (DXY) stopped halfway through. At the same time, Bitcoin (Bitcoin) Is the opposite of the U.S. dollar.
The US dollar index rose to an intraday high of 92.195 on Wednesday, up 0.45% from Friday’s low of 91.782. The upward exercise of the index returns to 92.001 above the 200-day exponential moving average (200-day EMA; pink tide in the chart below).
This wave helped protect the index from the sharp drop in June and played a supporting role. At the same time, breaking through the 200-day moving average also prompted traders to test DXY’s downward trend line resistance. Since then, DXY has been fluctuating between the two levels.
The downtrend line is part of the reverse head and shoulders pattern, just like Cointelegraph Report Mid-July. As shown in the figure above, after a successful upward breakthrough, this setting predicts DXY to be 97 or higher.
Analysts interpret the reverse head and shoulders pattern as a bullish pattern. In detail, when prices form three troughs in a row, they will appear, the middle one (head) is larger than the other two (shoulders). At the same time, the trough is hung near the price ceiling, called the neckline.
Successfully breaking the neckline will often move the profit target to a distance equal to the gap between the neckline and the bottom of the head. So far, DXY has checked all the boxes and it seems to be looking for a breakthrough move towards 97.
The latest rebound in the value of the dollar comes before the key U.S. employment data.
Specifically, in the past two weeks, the exchange rate of the U.S. dollar against the legal tender against the U.S. dollar has fallen. This is due to the warning of Fed Chairman Jerome Powell.
Central bank governor Said last weekAfter the end of the two-day Federal Open Market Committee meeting, the Fed may need to maintain its stimulus plan due to uncertainty in the job market.
The tone of the upcoming ADP employment Polls Therefore, Wednesday seems critical. First, the summary provides a preview of employment growth in the private sector. It is estimated that the U.S. economy will add about 695,000 jobs in July, an increase of about 0.43% from June.
If the forecast is accurate, it may prompt the Fed to implement cuts earlier than expected, which may boost the value of the U.S. dollar because famous In the Institute of Supply Management survey earlier this week.
The ADP report will follow up on Friday’s non-agricultural employment data.
Bitcoin (Bitcoin) On Tuesday, it closed down for the fourth consecutive day, as investors were more willing to wait and see the rebound of the US dollar before the release of the above-mentioned US employment data.
On Wednesday, the BTC/USD exchange rate hit a seven-day low of 37,509 U.S. dollars, down 1.11% during the intraday session and 11.96% from the intraday high of 42,605 U.S. dollars.
As regulators tried to strengthen scrutiny of the entire crypto industry, the currency pair fell. Including Gary Gensler, Chairman of the U.S. Securities and Exchange Commission Make a request to Congress Legislators granted his agency “extra powers” to protect investors from the “Wild West” crypto market.
“There is a lot of hype and rotation about how crypto assets work,” Gensler said at the Aspen Security Forum on Tuesday.
“In many cases, investors cannot obtain strict, balanced and complete information… If we do not solve these problems, I am worried that many people will be harmed.”
These statements were issued after Congress proposed to raise $30 billion a year by taxing the regional cryptocurrency industry.
-Squawk Box (@SquawkCNBC) August 2, 2021
But the short-term shock did not prevent analysts from sharing Bitcoin’s bold upside prospects.
Willy Woo, an on-chain data researcher, predicts that in the next trading day, the price of the benchmark cryptocurrency will be between US$50,000 and US$65,000, and pointed out that all investor groups, large and small, have been increasing their holdings during the recent decline. .From his communication:
“Strong investors have been buying the accumulation zone for two months. At present, they are taking the opportunity to buy in large quantities below $42,000, and the price trend is temporarily blocked by the technical resistance zone.”
In addition, Anthony Pompliano of Pomp Investments is consistent with the bullish tone of Woo’s analysis, and pointed out that Bitcoin’s “sound monetary principle” is contrary to the Fed’s inflationary monetary policy, making it a better hedge for technology-savvy investors than gold. tool.
Pompliano wrote in a report: “It is too early to say that this statement is actually dead, but my outlier expectation for the 2020s is that as investors move away from the digital version of the analog value store, The market value of gold will shrink significantly.” notes To customers.
The views and opinions expressed here only represent the views of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading action involves risk, and you should conduct your own research when making a decision.