DAX, US Dollar Index, USD/CAD, and Bitcoin All in Focus Today

DAX – German Stocks Struggle

Over the last couple of days, during which I have been bringing out what I’m watching for our viewers here at FX Empire, I’ve had a keen eye on DAX. The DAX in Germany was setting up for a nice pullback to the breakout point and bounce.

However, it seems to be really slipping at this point and that does make sense because if there is a trade dispute between the United States and Germany, it is going to have a massive influence on German exporters. However, we also have to think about this through the prism of whether or not it’s just an overreaction.

I am still inclined to buy this index, but I have not had the proper signal. The daily candlestick was a hammer from yesterday, something that I had talked about being a potential signal, but we had no follow-through. In fact, at the open just gapped lower and kept dropping.

So, with that, I think you’re still somewhat in a wait-and-see area. Maybe 24,000 euros might be a nice buying area. We’ll just have to wait and see. If we turn around and go positive for the trading session, that might be a signal as well. Remember, President Trump is speaking at Davos today in front of the World Economic Forum, and that could move world markets quite rapidly as everybody is waiting to figure out what’s going to happen with Greenland.

US Dollar – USD Trying to Stabilize

The US Dollar Index is a little bit softer during the trading session, but I would emphasize the word little. It’s really not falling apart anymore, and it does look like it’s starting to stabilize. You can see in multiple currency pairs, such as the Euro and the Pound, that the Euro is slightly positive, but the Pound actually was negative last time I looked at it. So that tells you that the US dollar is starting to at least push back a little bit.

Whether or not it becomes a buy-and-hold type of situation, I don’t know about that, but I will be watching the US Dollar Index. We’re right back to the 98.5 level, an area that I had mentioned a while back as support. We’ll see if it holds; if it does, then that’s good news for the dollar.

USD/CAD – Looking for a Bounce Here

The US dollar against the Canadian dollar looks like it is going to try to find the 1.3750 level. This is an area that’s been important multiple times, and I think could cause a bit of a bounce. A lot of this will come down to the US dollar in general. If we get to the 1.3750 level and bounce a bit, and we’re seeing the Pound and Euro fall, then I think that’s your buy signal.

Bitcoin – The Sentiment is Horrible

Finally, I’m looking at Bitcoin. Bitcoin is going to be an interesting market because of all of the negativity that we see in crypto and risk-off behavior, but we have previously seen Bitcoin rally to overtake $95,000. I think you’ve got a situation where if we get any good news whatsoever, Bitcoin might be one of the secret winners. So, for example, maybe Trump’s speech at Davos isn’t overly fiery.

The line in the sand for me, though, is down here at 84,000. If that breaks, Bitcoin is falling probably pretty significantly, maybe 60,000. I will say this about Bitcoin: The sentiment is horrible. But it’s not like the kind of bad sentiment that you get before a massive rally. I’m starting to see people who are true believers in Bitcoin asking what Bitcoin is being used for.

If we get risk on coming out of the Davos meetings or something to that effect, that should send Bitcoin higher. I think it’s a trade. I don’t think it’s a long-term buy-and-hold. I think eventually this year we find $107,000, but that could be six months from now. A pop here probably makes a run towards the 50-day EMA and the $95,000 level.