The negative correlation between the U.S. Dollar Index (DXY) and the stock prices of the largest U.S. companies (SPX) may carry some clues for the cryptocurrency sector and Bitcoin (BTC). If the dollar ends its uptrend, both stock markets and cryptocurrencies could soon experience a recovery.

This possibility is particularly apparent when considering Bitcoin’s long-term performance against the S&P 500. Indeed, the clear signal confirming the bull market’s start in February 2023 appears intact.

It seems current that the Q3 correction, which took place in traditional markets and cryptocurrencies, may be coming to an end. If this happens and the U.S. dollar cools down, the coming months could continue the upward trend from earlier this year.

The Correction of the U.S. Dollar Index…

The weekly chart of the U.S. Dollar Index (DXY) shows an asset in a very strong uptrend. Since the bottom at 99.5, reached in July 2023, the DXY has generated 11 consecutive green bullish candles and is just closing in on 12.

Moreover, back in August, the dollar broke out of the declining resistance line (black). Then, in September, it broke through important resistance at 105.5 (red line). Both of these events are bullish signals that confirm the uptrend.

However, such a strong uptrend seems to be slowly waning. 12 consecutive green candles is a very rare event, after which a correction should be expected. The weekly RSI is slowly heading into overbought territory, and even a bearish divergence has already occurred on the daily indicator.

In addition, this week’s candle, with several hours left to close, may take the shape of an evening star or a gravestone Doji. Both formations contain long upper wicks, indicating selling pressure. Moreover, they often appear at the top of an uptrend and signal an impending correction.