After eight consecutive red daily candlesticks, the Bitcoin price ended the day yesterday (Sunday) with a green daily candle. The Bitcoin and crypto market is entering a week that, while not a macro blockbuster week, could still be trend-setting for the crypto market. Friday in particular could once again be the most important day of the week.
Last week, the US Dollar Index (DXY) bounced up from a historically important support level, putting significant pressure on the Bitcoin and crypto markets. Weaker-than-expected consumer expectations, waning US consumer confidence and sticky core inflation boosted the DXY, which will remain a key focus this week.
On Tuesday 16th at 8:30 am EST, the US Census Bureau will release the final figures for US Retail Sales for the month of April. The final figure for March was -0.6%, well below the forecast of -0.4%. For April, consumer sentiment is forecast to rebound by 0.7%.
Strong consumer spending is seen as supportive for the DXY and could accelerate the rally. On the other hand, if the reading falls short of the forecast, it will indicate that consumers remain reluctant to spend. Accordingly, the DXY is expected to consolidate again, providing a tailwind for Bitcoin and crypto prices.
On Wednesday the 17th at 8:30 am EST, the Census Bureau will release the preliminary figures for US building permits for April. Recently, the US stock market and subsequently the Bitcoin price reacted positively to the better-than-expected housing data.
At 1.430 million, the number of new housing permits issued in April was slightly above forecasts. If the expectation of 1.430 million permits issued is exceeded again, this could be another catalyst for the market.
A day later, on Thursday the 18th (8:30 am EST), the Philadelphia Fed will release its latest manufacturing index. The Philly Fed manufacturing index is considered a leading indicator for the all-important ISM purchasing managers index and could therefore be important for the broader financial market.
If the index comes in below forecasts of -19.0 for the fourth month in a row, the bearish reaction in the financial market is likely to repeat itself as it did last month. An above-forecast reading, on the other hand, would be bullish as it would reduce the likelihood of a recession in the near future.
Friday the 19th is the most important day of the week, as Federal Reserve Chairman Jerome Powell will step in front of the cameras at 5:00 pm EST and could provide new information on the Fed’s interest rate and monetary policy stance in the coming months. Market volatility is likely to increase. Notably, 14 Fed members are scheduled to speak this week, each with a different perspective.
You can’t make this up, here the Fed members speaking this week:
1. Bostic – Monday2. Kashkari – Monday3. Barkin – Monday4. Cook – Monday5. Mester – Tuesday6. Bostic – Tuesday7. Barr – Tuesday8. Logan – Tuesday9. Jefferson – Thursday10. Barr – Thursday11. Logan -…
— The Kobeissi Letter (@KobeissiLetter) May 14, 2023
As far as the DXY is concerned, a decision may soon be imminent. As technical analyst Gert van Lagen explains, the DXY could be due for a head-and-shoulders reversal similar to that seen in 2020/2021 – but this time it is signaling a downtrend rather than an uptrend.
#DXY – Head and Shoulders reversals:
’20-’21:1. H&S bottom under red downtrend2. Right shoulder through downtrend, above SMA 2003. Pullback (yellow circle)
’22-’23:1. H&S top above green uptrend2. Right shoulder through uptrend, below SMA 2003. Pullback (yellow circle) pic.twitter.com/KDkStTMLh3
— Gert van Lagen (@GertvanLagen) May 12, 2023
As NewsBTC chief analyst Tony Spilotro recently shared on Twitter, the reversal of the DXY in late 2020 marked the beginning of the Bitcoin bull run. Whether history repeats itself remains to be seen.
This looks like a repeat of 2020 minus a pandemic
DXY vs #Bitcoin comparison pic.twitter.com/imSzY8aVrW
— Tony “The Bull” (@tonythebullBTC) May 8, 2023
At press time, the Bitcoin price rallied to $27,500 while the DXY showed a slight pullback from 102.752 to 102.559.
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