Equities Strengthen as Dollar Firms and Oil Weakens
Stocks increased on Monday, 20 October, as implied volatility levels dropped sharply ahead of VIX options expiry on Wednesday morning, which helped boost the stock market.
Stocks increased on Monday, 20 October, as implied volatility levels dropped sharply ahead of VIX options expiry on Wednesday morning, which helped boost the stock market. Meanwhile, the dollar strengthened modestly, while assets like Bitcoin and gold continued to rise. Oil, however, extended its fall, suggesting there may still be further declines ahead.
Stocks Rally
The S&P 500 rallied by more than 1%, with the index gapping higher to start the day before rising back towards a resistance area around 6,740. That’s where the index fell sharply on 10 October, so it’s not unusual for large, straight-line declines to be treated almost like a gap, leading the index to retrace back to those levels.
It’s worth noting that today’s gap higher, following the weak close on Friday, suggests today’s trading pattern is unstable, and the S&P 500 could relinquish its gains fairly quickly. We observed a similar pattern on 14–15 October, and again on 13 October, when the index lost all its gains by the morning of the 14th. Additionally, the index reached a 100% extension from the lows on 15 October.
(Source: TradingView)
(Past performance is not a reliable indicator of future results)
So, it’s still worth exercising caution at this stage with the S&P 500. There are plenty of signs indicating that the coast is not yet clear. From a bullish perspective, the index did manage to gap above the 20-day moving average today, the first time it has traded above that level since it initially fell below it on 10 October. This is a positive development, suggesting the trend may be beginning to turn. However, a single day doesn’t confirm a change in trend; the index would likely need to stay above the 20-day moving average for two or three consecutive days to confirm it.
(Source: TradingView)
(Past performance is not a reliable indicator of future results)
Bitcoin
Bitcoin also managed to rally today, gaining nearly 2%. However, it stalled at the 10-day exponential moving average, which acted as resistance. The cryptocurrency just barely moved above the 111,000 level — a key resistance area on the chart. This level marks previous highs dating back to late 2024 and early 2025, as well as a few minor bottoms formed in August and late September.
If Bitcoin fails to convincingly break above the 111,000 level, it could lead to a potential support break around 109,000. Conversely, if it manages to move above the 10-day exponential moving average and break through resistance at 115,300, that could open the door for a return to, and possibly beyond, 126,000.
(Source: TradingView)
(Past performance is not a reliable indicator of future results)
Gold
Gold also increased today, rising more than 2%. It reached approximately 4,365, approaching the highs last seen on 16 October near 4,378. The current question is whether gold has enough momentum to surpass those previous highs. It’s quite likely that gold could face strong resistance around the 4,378 level — the same region where selling pressure appeared due to the option-expiration-driven decline on 17 October.
(Source: TradingView)
(Past performance is not a reliable indicator of future results)
Oil
WTI crude oil also declined today, falling to approximately $57. This movement risks breaking support levels. If that support were to fail, prices could decrease further towards the next significant support zone around $52.
Furthermore, the RSI seems to have broken a minor uptrend. Although it is approaching oversold levels, it is currently around 32 — indicating that oil prices might keep falling, as they haven't yet reached fully oversold levels.
(Source: TradingView)
(Past performance is not a reliable indicator of future results)
Dollar Index
The dollar index continues to show bullish tendencies despite slipping last week. The RSI remains on an upward trend, and the index has managed to hold support around the 98.60 level. If the dollar index is to sustain its uptrend, it will likely need to break above the 99.40 level, which could pave the way towards 100.
Such a move would suggest that an upward trend has indeed formed in the dollar index — a development that would naturally be bearish for major currencies such as the euro, yen, Swiss franc, and British pound.
(Source: TradingView)
(Past performance is not a reliable indicator of future results)