The upcoming monetary policy statement from the Federal Reserve may soon affect all financial markets, including the crypto market, so we’re taking another quick look at a few crypto setups that could be on the move this week.
We last looked at LUNA/USD at the beginning of September, debating on whether a pullback was in the cards for this pair after a massive Summer rally. Well, it looks like that was the case as the pair dropped not once, but TWICE, in the month of September, but each time the bulls held the $27.00 major support area as expected.
As mentioned in the intro, the Federal Reserve will be giving its latest monetary policy statement, which has the potential to spark volatility across the financial markets. Any surprises from this event would likely get the U.S. dollar moving, and when the world reserve currency moves, then EVERYTHING moves.
So in the short-term, this retest of the $27.00 should probably be viewed as a news trading straddle setup, but in the longer term, it should be viewed as a potential support area for what could be a bigger bullish catalyst in the form of the Columbus-5 Terra network update coming in a few days. This update will accelerate the removal of LUNA tokens from supply, enable insurance for protocols built on Terra, and enable inter-chain communication between other blockchains.
Last week, Cyclopip pointed out potential support areas on SOL/USD as the pair started to descend from its all-time high of around $216. Since then, SOL/USD fell another $40 to test the August high and 61% Fibonacci retracement level yesterday, where it currently looks like the bulls are holding for now.
Against, the Fed event could be the next catalyst that sends SOL/USD one way or another, and if it’s to the upside, a long setup at these levels makes for a strong potential return-on-risk if using yesterday’s low as a stop guide while targeting the previous all-time highs and beyond (roughly a 4:1 R: R at these levels).
Of course, if the Fed surprises the markets with an announcement of a strong tightening policy ahead, then we could see a spike higher in the Greenback and a spike lower in risk assets like crypto in the short term.
What do you all think? Will the Fed event have a strong influence on crypto assets? Are these pullbacks in LUNA and SOL big buying opportunities? Let me know in the comments section below!