Possibilities for Bitcoin and Oil this Week
As a result, there weren’t any significant movements for most instruments at the start of the week. The focus for the moment remains on the Fed’s greater hawkishness after comments from senior members of the FOMC last week. These haven’t led to a clear gain by the dollar index, but yields of 30-year Treasuries moved up to about 3.8%, suggesting that rates could indeed go higher than had been expected around this time last month.
President Biden made a surprise visit to Kiev on Monday and pledged more military support for Ukraine. While this has the potential to increase geopolitical tension between Russia and countries supporting Ukraine, markets seem to be ignoring the war for the moment and concentrating more on economic conditions.
This is a fairly unimportant week of data for most instruments, but the main event is the FOMC’s minutes on Wednesday night. These might give some clues on the likelihood of a peak for the funds rate above 5.25%. The situation of low unemployment and high inflation together is ambiguous: many participants in markets seem to be reluctant to commit to ‘risk on’.
The absence of clear new drivers this week unless there’s a notable surprise in the FOMC’s minutes or from personal consumption expenditure on Friday means that technical action is likely to dominate for many instruments. However, bitcoin has been an exception: the ambiguity in most markets has driven a shift of focus into crypto.
Bitcoin Has Gained Nearly $9,000 in 2023 So Far
Bitcoin has been one of the main beneficiaries so far of competing narratives in markets, partially because losses late last year seem to have been excessive. Although institutional involvement here is lower than around the same time last year, the reaction to plans by the SEC to tighten regulation of cryptocurrencies has been positive so far.
The upward movement on the daily chart is strong technically with a triangle having formed since about 15 February. A break of this to the upside might signal more gains, while $21,500 seems to be a key support from which a bounce might be observed if tested.
Oil Lacks Direction Amid Lower Volatility
The narrative of upcoming recession has moved somewhat out of view in recent weeks amid strong job data, so an imminent recession in most major economies looks unlikely. However, as noted above many participants in markets are reluctant to make big moves in the context. OPEC+ seems to be determined to keep prices high although production in the USA seems to have peaked in December last year and has declined slightly since.
Although the general situation for oil seems to be optimistic, the same can’t be said for the chart. The price of Brent is below all of the 50, 100 and 200 moving averages, the slow stochastic is close to neutral and ATR has reached a new low. ATR in the context of the chart might signal a buy in this situation – eventually volatility can’t go any lower and has to pick up – but the lack of reaction to reasonably positive news in the last few weeks would suggest weaker sentiment.
$80 doesn’t seem to be an important support, but December’s low slightly above $75 could be an area of demand on the chart. To the upside, the 100 SMA around $86.50 is a likely resistance. This week traders will monitor stock data and Baker Hughes’ rig count from the USA as usual and consider the news of President Biden in Ukraine, China’s economy and the American Strategic Petroleum Reserve.
The opinions in this article are personal to the writer. They do not reflect those of Exness or FX Empire.