The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 02.02.2021
The overall market volatility that we have been seeing for the past couple of days seems to have died down, but it’s far from over. Bitcoin is still looking for ways to move back higher as it faces against its current resistance level at $35,000, breaking above it would mean additional bullish momentum. Meanwhile, EURUSD continues to fall as new hopes of a stimulus package are drawn, while the currency waits to see how the European GDP has fared for the fourth quarter of 2020. All the while, gold continues to battle against its resistance levels, against the $1,870, this time.
With that said, let’s find out how the markets are doing on February 2nd, 2021.
Consolidation seems to have taken hold of Bitcoin. The Cryptocurrency continues to trade within the range of $34,800 and $32,000 as resistance and support respectively. The instrument hasn’t moved past this range for the last couple of days, as we can notice the Bollinger Band Squeeze and RSI (Relative Strength Index) are printing close to the 50 level which shows indecision. The Bollinger Band Squeeze usually means the lack of volatility and the promise that there will be a huge move in the near future.
The common currency continues to trek lower as the bearish pressure has forced it back towards the 1.2050 support level. This has been a crucial level in the past, keeping Bears at bay while acting as a springboard for Bulls to stage a comeback. However, with RSI printing at the 40 level it shows that there is still room for a downward move as the mentioned level might be facing another attempt to break through it. With the current structure of Resistances and Supports, the path of least resistance does seem to be to the downside.
Gold seemed to be attempting to break higher yesterday, as it moved towards the $1,870 resistance level once more. However, the current strength of this level has held any kind of meaningful gains at bay and forced the yellow metal to retreat for the time being. Currently, the precious metal is trading above the 100-SMA (Simple Moving Average) on the 4-hour chart, but the overall trajectory does seem focused to the downside.
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Bitcoin Stuck Below $35,000
Bitcoin couldn’t hold onto the strong surge as it ended up trimming whatever gains it managed to do and settled below $35,000. BTC even spiked below the $34,000 support level and the 100-SMA. A low is formed near $32,178 and the price is currently correcting higher. Bitcoin is now holding the key $33,000 support level and seems to be trading above the mentioned SMA.
It seems like there is a key contracting triangle forming with resistance near $34,500, with the next major resistance above the triangle is near the $34,850 level. If there is a clear break above the triangle resistance and $34,850, the price could clear the $35,000 barrier. The next key resistance is near the $35,380 level. A successful break above the $35,000 resistance level with a follow up move above $35,380 could open the doors for a larger increase in the coming sessions. The next major resistance for Bitcoin sits at $36,150.
If Bitcoin fails to clear the $34,500 resistance zone, there is a risk of a fresh bearish wave. An initial support is near the $33,000 level and the triangle lower trend line. A downside break below the triangle support trend line could push the price towards the $32,150 and $32,000 support levels. Any more losses could lead the price towards the $31,000 support zone.
Current Market Sentiment:Neutral.
EURUSD Eyes Eurozone GDP
EUR/USD is clinging onto the recovery gains under 1.2100, as the Bears take a breather following Monday’s sell-off while awaiting the Eurozone Q4 Preliminary GDP release. The USD is attempting a bounce from the Asian drop induced by the upbeat market mood, courtesy of the renewed US-China optimism and US stimulus hopes. President Joe Biden had a substantive and productive discussion with a group of the Republican senators late Monday, which lifted expectations of a likely fiscal stimulus deal alongside the risk sentiment.
On Monday, the currency pair almost tested two-month lows at 1.2054 after the USD rallied on the back of the renewed optimism over the strength of the US economic recovery. Upbeat US ISM Manufacturing PMI data supported the upside in the buck. Meanwhile, the euro Bulls failed to find comfort from the improvement in the Euro area manufacturing sector activity. Attention now turns to the fundamentals, with the Eurozone GDP report next of note, as investors digest the recent retail-trading frenzy. However, the broad market sentiment and the USD price action could emerge as the main market drivers.
Even so, the latest recovery move may eye for the 1.2100 round-figure during further upside but the key SMA area near 1.2150-60 will be a tough nut to break for EUR/USD Bulls. Meanwhile, a downside break of 1.2055 will direct the EUR/USD Bears towards a 100-day SMA level of 1.1962. Though, the 1.2000 threshold can offer an intermediate halt during the fall.
Current Market Sentiment: Bearish.
Gold Looks at $1,870 for Further Upside
Gold is poised to extend Monday’s advance, as markets cheer the renewed hopes of a likely US fiscal stimulus deal that has diminished the haven demand for the US dollar. US President, Joe Biden, said that he had a ‘substantive and productive discussion' with the Republican senators on COVID relief. Further, investors digest the recent retail-trading craze seen in both the commodities and equity markets. Gold’s upside, however, could be limited by growing optimism over the US economic recovery and coronavirus vaccine developments.
Indicators are currently showing that Gold’s immediate moves higher are capped by the confluence of many technical indicators which point at $1864. The next stop for the Bulls is seen at $1870, the XAU buyers need to crack the aforementioned barrier to test the previous day high at $1872. Further up, the previous week high of $1875 would be in play. The 100 Day SMA resistance at $1877 could offer strong resistance to the metal.
On the flip side, the immediate downside is likely to be restricted by $1860, below which the critical resistance now at $1857 could get tested. The Bears could then counter a dense cluster of support levels around $1850/ $1848, which is the intersection of various moving averages. The next relevant support for the XAU Bulls awaits at $1840.
Current Market Sentiment: Bullish.
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