The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 01.02.2021
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The markets have gained some volatility as they began to move in their respective directions after some intense consolidation. Bitcoin has found the momentum it has been looking for and continued to move higher and breaking through many resistances on its way. Meanwhile, EURUSD has succumbed to the bullish pressures of the USD and found itself falling back towards previous support at 1.2010. Gold, on the other hand, does seem to be on the backfoot for the time being, but overall, there’s some consolidation.
With that said, let’s find out how the markets are doing on February 3rd, 2021.
Market Recap
After a brief consolidation, Bitcoin was able to gain the needed momentum to start moving higher. Breaking and staying above the 100-SMA (Simple Moving Average) on the 4-hour chart, gave the instrument the needed push to attempt the move higher. It was also able to break through that pesky $35,000 resistance and it even broke above the $36,000. Now it faces against the $38,000 which has been keeping the instrument under its thumb for quite some time.
EURUSD’s situation continues to worsen as it broke below the 1.2050 support level and continued lower reaching 1.2010, which is currently acting as support. The overall bearish pressure continues to apply more and more downward force on the common currency. The RSI (Relative Strength Index) indicated yesterday that there was more downside risk which proved to be correct and the indicator currently prints around the 30 level. Not quite into oversold territory, but there doesn’t seem to be enough room for more downside risk at the moment.
Gold wasn’t spared the strength of the USD as it continued to move lower reaching the support at $1,830. From there, the precious metal was able to bounce back a bit, however, the pressure remains towards the downside. The movement lower broke below the 100-SMA on the 4-hour chart, which provided additional bearish pressure, however the mentioned support is keeping things in check for the time being.
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Bitcoin Gains Traction Higher
Bitcoin was able to close above the $34,200 zone, which allowed the Cryptocurrency to start a decent increase. BTC broke the main $35,000 resistance level and settled well above the 100-SMA on the 4-hour chart. More importantly, there was a break above a major contracting triangle forming with resistance near $34,450. The pair gained bullish momentum and climbed above the $35,500 and $36,000 levels.
A high is formed near $36,341 and the price is currently consolidating gains. An initial support is near the $35,650 level. The next major support is near the $35,000 level. On the upside, the $36,500 level is a short-term resistance. A clear break above $36,500 could open the doors for a steady increase towards the $37,000 and $38,000 levels in the near term. An intermediate resistance could be $37,400.
If Bitcoin fails to clear the $36,200 resistance zone, there is a risk of a minor downside correction. The first major support is near the $35,000 level (the recent breakout zone). The next key support is near the $34,550 level, where the Bulls are likely to take a stand. If the Bulls fail to protect the $35,000 and $34,550 support levels, the price could move back towards the $33,000 support level.
Current Market Sentiment:Bullish.
EURUSD Eyes Eurozone CPI
EURUSD looks weak, having breached crucial Fibonacci (Fib) retracement support amid speculation that Eurozone's vaccine response has been slower than the US and UK. The pair closed Tuesday below 1.2064 – the 38.32% Fib retracement of the rally from 1.1602 to 1.2349. That's a significant negative signal, according to Reuters. EURUSD has also taken out the head-and-shoulders neckline support at 1.2349, confirming a bullish-to-bearish trend change.
The single currency is on the defensive, with coronavirus concerns overshadowing the risk-on action in stocks. One of the Eurozone's greatest challenges is their slow vaccine rollout, while Germany and France have vaccinated more people than the US, Eurozone's export controls and greater supply issues could create long-term problems. Investors seem worried that the ongoing economically painful lockdown restrictions could remain in place for longer, as the number of coronavirus cases continues to rise.
The dollar shorts remained extended, and the pair remains vulnerable to a sudden unwinding of bearish bets on the US dollar. The Bulls, therefore, need a big beat on the preliminary Eurozone Consumer Price Index (CPI) data to keep the pair from falling further. The data due at 10:00 GMT is expected to show the cost of living rose by 0.5% year-on-year in January following December's 0.3% decline.
Current Market Sentiment: Bearish.
Gold Traders Focus on Stimulus and Pandemic
Gold prices edged slightly higher on Wednesday as silver prices attempted to recover some lost ground after falling over 8% on Tuesday. Enthusiasm surrounding the retail trader frenzy led to heightened volatility in silver earlier this week, but the spillover effect on other precious metals wasn’t particularly obvious. While silver prices swung as much as 20% from January 28th to February 1st, gold prices moved only 1.7% during the same period.
US lawmakers are working towards approving President Joe Biden’s $1.9 trillion Covid relief aid without Republican support, as the $600 billion proposal by the Republicans was deemed “way too small”. The Democrat-led Senate started a reconciliation process, which would allow them to pass Biden’s stimulus package with a simple majority and avoid a filibuster that requires at least 10 Republican votes to support the bill.
Technically, gold prices have entered ‘range-bound’ trading conditions after breaking below the “Ascending Channel” in early January, with $1,810 and $1,870 serving as immediate support and resistance levels respectively. The overall trend appears to lack clear direction, however, the RSI is showing clear downward bias on the 4-hour chart.
Current Market Sentiment: Neutral with Bearish Bias .
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