10/28 Confirmed yearly bull flag.

28 oct

Overview:

The SPY closed the week lower, breaking a six-week winning streak that had started just before the first rate cut. QQQ managed to stay green, hovering near an all-time high. Last week, the Fed reported 738,000 new home sales and 3.84 million existing home sales. Notably, while existing home sales are declining in a descending triangle pattern, new home sales have been forming an ascending triangle—signaling diverging trends in housing demand.

The job market showed resilience, with jobless claims lower than the last two readings, indicating improvement. However, this job strength could complicate rate cuts since the Fed targets stable inflation around 2%. This week brings major data releases: Tuesday’s job openings, Wednesday’s Q3 GDP, and Thursday’s and Friday’s PCE, Core PCE, and the U.S. unemployment rate. Expect a quieter start to the week but brace for potential volatility in the latter half.

According to the CME tool, the likelihood of no rate cut has dipped to 1.1%. This rate cut probability has fluctuated widely over the past two weeks, from 13% to 1%, making it crucial to understand how the CME calculates this metric:
1.Market Data: Fed Funds futures prices reflect market expectations for Fed rate changes.
2.Probability Calculation: The tool derives implied rate change probabilities from the difference between current rates and futures prices.
3.Assigning Probabilities: Each possible outcome—rate cut, hike, or no change—is assigned a probability based on the futures data.

CME Group holds a key position in financial markets, having formed from the merger of major exchanges: the Chicago Mercantile Exchange (CME), Chicago Board of Trade (CBOT), New York Mercantile Exchange (NYMEX), and Commodity Exchange, Inc. (COMEX). This vast network underscores why CME’s Fed tool is a pivotal reference for understanding rate expectations.

In the crypto world, ETFs, especially those from BlackRock, have been on a BTC buying spree, significantly outpacing their usual purchase amounts four out of five trading days last week—continuing a pattern that began on October 14. Since then, BTC has climbed from the key level of 62.8k to around 69k, although other institutional players remain less active. This is reminiscent of BlackRock’s February buying spree, which saw BTC rise from $52 k to 61k in just two weeks, with BlackRock averaging $600 million in BTC purchases daily. We’re watching this as a potential signal, though no one’s showing similar interest in ETH ETFs, not even BlackRock, who seems to have stopped DCAing into it.

BTC TA:

W: The week ended with a small red candle, a relatively calm finish considering BTC is nearing 70k. Could this set us up for a breakout ahead of election results and potential rate cuts?
D: Volatility hit hard last week, as anticipated. After a rally to 69k, Friday saw a dip, but big players defended the 66.5k level. Zooming out, BTC’s price rejected the upper bound of a year-long bullish flag, confirming the breakout on October 16 and reducing fake-out risks. However, there are currently no bullish divergences across MACD, RSI, CVD, or OBV.
4h: The recent triple divergence has been cleared, with no new divergences appearing.
1h: Overbought RSI and a shooting star at Monday's open signal a short-term correction, with support at 68.2k and 67.7k.

Alts Relative to BTC: ETH remains in a consolidation phase, still far from breaking all-time highs like BTC. SOL has been tracking BTC's moves more closely, while NEAR
is close to its yearly low of $3.8. Meanwhile, SUI, APT, and TAO saw 20%-30% corrections last week.

Bull Case: We’re breaking out of a year-long bull flag, potentially en route to 100k, with BlackRock leading the charge. Trump appears likely to win, the CME tool shows only a 1% chance of no rate cut, and gold is on the rise. Unless gold crashes, BTC might hold steady.

Bear Case: Is this just another bull trap set by market makers?

Fear and Greed Index: 54 – Neutral. We may see a shift to greed if BTC breaks above 73k.