• The S&P 500 and Nasdaq both saw their worst performances since 2008 in 2022, while the U.S. Dollar rallied 9%, its best performance since 2015.
• Green shoots are visible for the cryptocurrency sector in 2023 as the U.S. Dollar Index may have topped out. Long-term investors may consider building a portfolio or adding positions in batches.
• Analysis of the S&P 500 index chart indicates that the bulls are trying to form a higher low.
The year 2022 saw the stock market take a major hit, with the S&P 500 index (SPX) falling 19.4% and the Nasdaq nosediving 33.1% – the worst performances since 2008. The U.S. dollar, however, was a beacon of hope, rallying nearly 9%, the best performance since 2015. While the cryptocurrency sector also had a horrendous year, with Bitcoin (BTC) falling roughly 65%, there are now signs of revival for 2023.
The U.S. Dollar Index (DXY) which usually moves in inverse correlation with Bitcoin, may have topped out, which could prove to be a boon for select cryptocurrencies. Long-term investors who believe in the crypto story may consider building a portfolio or adding positions in batches, so as to have some skin in the game and not repent when the next bull move begins.
A closer look at the S&P 500 index chart shows that the bears tried to extend the correction last week but the bulls managed to defend the 3,764 level. This indicates that the bulls are attempting to form a higher low in the index, with the 20-day exponential moving average (EMA) of 3,880 sloping down and the relative strength index (RSI) near 45.
The moving average convergence divergence (MACD) indicator is also giving bearish signals, as it has formed a bearish crossover. This suggests that the bears have the upper hand and if they can sink the index below the 3,764-3,735 support zone, the SPX could drop to 3,550.
On the other hand, if the bulls can push the index above the 20-day EMA, it will indicate strength. If the SPX rises above the downtrend line, it will suggest that the bears are losing their grip. In such a case, the index could start its journey towards the 4,000 mark.
To conclude, the DXY has turned bearish and that could prove to be a boon for SPX, cryptocurrency and Bitcoin. The analysis of the S&P 500 index chart shows that the bulls are attempting to form a higher low. If the bulls can push the index above the 20-day EMA, it will indicate strength, which could propel the SPX towards the 4,000 mark.