DXY has begun the week strongly after confirming the head and shoulders bottom. Ideally, this should imply a flight to safety and the week started off like that. However, despite the strength in the dollar for 3 days this week, risk assets have made a turnaround and the most prominent is Bitcoin.
The yield on 10 year US treasuries has also risen.
However, the US 10 year yield may face resistance near term at 200 DMA. We might be witnessing a retest of 200 DMA and then there could be a short-term fall in yields. News media is full of stories that the world is scared of rising cases of the Delta variant of COVID. However, looking at the scenario in India, the virus variant is not one that escapes immune response. Therefore, fundamentally too, the fear of delta variant may be short-lived as vaccines are effective against this variant.
Brent Crude fell sharply on Monday after news of OPEC+ agreeing to output increase.
However, Brent is back in the green after 2 red candles on the chart. This is despite DXY strength. Seems like markets are expecting a further economic recovery. Near-term, crude could witness some resistance at 50 DMA and may find it tough to head to $80 per barrel. Range bound crude is what I expect going forward.
Gold is back in the downward trending channel.
Gold is trading as a safe haven asset now. It is down as the Dollar strengthens and risk-taking increases in the markets. The inflation protection bet seems to be going in Bitcoin's favor for now.
Surprisingly, Bitcoin did not break $30k on Monday, as all hell broke in the equity space.
Equities fell sharply on Monday and have recovered in the last 2 days. 50 DMA acted as support once again and should be in an upward trending market. New ATHs soon? I think so.
Bitcoin followed the risk-off and risk-on in markets. $30k was broken yesterday and today BTC is back above $31k. Bitcoin is of course not out of the woods till $35k-$36k is broken. Then, of course, it has to pass 200 DMA. Alts have also risen with Bitcoin. However, Bitcoin of all risk assets has a lot more hard work to do before it can scale new highs.