Beginning of Spring or continuation of Winter on the Markets?
As the first week of March has ended, till Powell's speech still few hours left let's check what's charts are showing us.
As a leading indicator of economic activity can use The Baltic Dry Index (BDI) because changes in the index reflect supply and demand for important materials used in manufacturing. This is index of average prices paid for the transport of dry bulk materials across more than 20 routes.
A change in the Baltic Dry Index can give investors insight into global supply and demand trends. Many consider a rising or contracting index to be a leading indicator of future economic growth. It's based on raw materials because the demand for them portends the future.
On the chart below upper half is a BDI, lower - S&P500, every time the index started go up, changed a trend to ascending one - S&P500 was growing also.
As you may see BDI index is right near trend line, these are weekly charts and still can be closed lower. In that case may happen scenario as in 2020 with "double bottom".
Another metric supports this theory is index VIX compare to S&P500.
The Volatility Index, or VIX, measures volatility and investor sentiment in the stock market. It’s important to point out that the VIX measures implied, or theoretical, volatility. It measures the expectation of future volatility based on a snapshot of the previous 30 days’ worth of trading activity.
There is a proverb about VIX: If the VIX is high, it's time to buy. When the VIX is low, look out below!
Based on a chart above its easy to see that correlation. Every time VIX was near Lows - S&P500 fell deeper. Ans exact situation is about to happen right now.
To understand more current situation let's compare S&P500, NAS100, US30 and BTCUSDT charts.
All of them were moving upwards within last half year, most of them is near obvious big resistance areas now.
The DXY - dollar index looking strong lately, it tracks the relative value of the U.S. dollar against a basket of important world currencies.
It has some resistance area around 105.5, still can make a new High(around 110 area), even lower one then previous before big dump.
Overall situation at Stocks Market doesn't seem look good, Crypto market is struggling as well.
Total Marketcap on 2 month time frame has a Bearish Structure with Lower lows printed and Lower Highs. Also the difference in Vertical Volume is significant, which means that Engulfing pattern (2nd and 3rd candles from the end) isn't true one.
BTCUSDT on 2 Month time frame doesn't look good either. Even BTC made a Higher High, the Vertical Volume is lower then previous Up candle has.
Daily ascending structure is still look good for BTCUSDT, but eventually may change after Powell's speech.
Applying 50MA indicator to daily chart of BTCUSD shows that the price is below it already. And every time within last few months price went down with an impulse it hasn't retest 50MA again.
Another interesting and probably mysterious indicator we can apply is Moon Phases.
Every time there was a Full Moon - within a range of few days price went higher, basically good buy opportunity.
Knowing all of that let's jump to 1D chart of BTCUSDT to look for possible scenarios of movement.
I see there is possibility of few. First - taking liquidity lower (red line with L) within green range and move up to a pink one, where may occur reversal and changing all that consolidation to downside movement.
Invalidation - if the price will consolidate above Pink range and especially the January High, which is around 24k usd. In that case road to 27-34k usd will be open.
Invalidation for all above setups is if price consolidates below Green area, this may lead to big move at least to 18k usd.
Speaking about possibilities let's move to 4 hours timeframe.
Here is Monday High and Low act like a markers of a market movement. Near Monday middle there is a Previous Week close as well. So the price might use it like a bounce points. Highly recommend to watch.
Additionally there is a Liquidations Map and the closest and biggest one is around 24k usd.
As we know the price moves on the way to Liquidity grab Liquidations.
Resume: High probability setups are forming on a Higher timeframes, and pushing the price right after liquidity grab to the opposite direction, remember that.