The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 04.02.2021
The markets continue to trade in their chosen direction, meaning that Bitcoin continues to move higher breaking through several resistances and even heading towards the $39,000. EURUSD seems to continue moving to the downside with additional bearish pressure making itself known. Gold seems to be in the same boat as EURUSD, but there does seem to be enough long-term bullish pressure to allow the yellow metal to move higher.
With that said, let’s find out how the markets are doing on February 4th, 2021.
The bullish momentum that we have talked about in our previous brief continues to make its presence known on Bitcoin. The instrument was able to break above the $37,000 and is currently battling against $38,000, breaking above that barrier would mean a test of the $38,700 which is the high from January 29th. Overall, Bitcoin seems to have gotten its groove back. However, with the RSI (Relative Strength Index) printing above the 70-level on the 4-hour chart, we can expect some sort of correction to ease the tension of overbought conditions.
The common currency is once again attempting to break below the 1.2010 support level, and it has, but it hasn’t been able to actually close below the mentioned level. The overall bearish pressure that we’ve been seeing hasn’t diminished as the instrument continues to feel the bullishness of the USD and moves lower. The RSI is also showing an increase in the bearish pressure as the indicator shows a continued sequence of lower moves.
The yellow metal continues to feel the downward pressure as the entire market continues to succumb to the USD’s bullishness. Breaking below the $1,825 has given gold more bearish pressure to contend with, however, with the support levels at $1,815 and $1,800, we can be seeing some bounces in the near future. The RSI is also showing increased momentum downwards, which has also entered into the oversold zone, giving signs that there might be a bounce some time soon.
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Bitcoin Revisits $38,000
Yesterday, we discussed the high chances of a move towards the resistance level of $38,000. Bitcoin did follow a bullish path above the $36,000 level and it cleared many hurdles near $37,000. It even broke the $38,000 resistance. It seems like the market sentiment improved after Ethereum traded to a new all-time high near $1,700. BTC also traded to a new monthly high at $38,360 and it is currently consolidating gains.
An initial support on the downside is near the $37,650 level. There are also two major bullish trend lines forming with support near $37,200 and $36,000 on the hourly chart of the BTC/USD pair. On the upside, the price is facing hurdles near the $38,100 and $38,200 levels. If there is a clear break above the $38,200 level and the recent higher, the Bulls are likely to aim for a test of the $40,000 level in the near term.
If Bitcoin fails to clear the $38,200 resistance zone, it could correct lower in the short term. The first major support is near the $37,200 level and the trend line. The next key support is near the $36,700 level (a multi-touch zone). Any more losses could lead the price towards the second bullish trend line at $36,000 in the near term.
Current Market Sentiment:Consolidating with Bullish Bias.
EURUSD Faces More Downward Pressure
EURUSD struggles to gather upside traction despite signs of Bear fatigue near 1.20. The Bulls remain on the sidelines, with the US data signaling economic recovery and pushing yields higher. Sellers ran out of steam near 1.20 for the second straight day on Wednesday after the pro-EU former European Central Bank (ECB) President Draghi accepted the Italian President's offer to form a government.
The US ADP Employment and ISM Non-Manufacturing bettered estimates, raising prospects of a faster recovery in the world's largest economy. The 10-year Treasury yield jumped seven basis points to 1.15% on Wednesday and is currently consolidating on yesterday's gains. Also, concerns regarding Eurozone's slow coronavirus vaccine delivery could be weighing over the euro.
The pair could drop below 1.20 unless the Eurozone Retail Sales data for December due at 10:00 GMT shows a significant rise in consumer spending. In that case, traders may put a bid under the single currency, helping EUR/USD avoid a move below 1.20.
Current Market Sentiment: Bearish.
Gold Continues to Fight Bearish Pressures
Gold prices have notably stagnated in a frustratingly tight range in recent weeks, while silver has stormed higher on the back of a Reddit-induced buying spree. Long-term technical analysis, in tandem with rising inflation expectations and falling real rates, suggests that this lull for gold prices may prove short-lived. Looking at the long term charts, the weekly timeframe to be exact, highlights the formation of a bullish Cup and Handle pattern that has been carved out over the past decade. This implies that an impulsive topside move could be on the cards.
That being said, with price continuing to track within the confines of a Descending Channel, a retest of range support at 1780 – 1800 could be on the cards. However, the trend-defining 50-week moving average at $1,810 could limit gold’s downside, given the price has failed to break below it since early 2019. Ultimately, a weekly close above the 8-week exponential moving average at $1,851 and channel resistance is needed to carve a path for buyers to challenge the 2011 high. Clearing that probably paves the way for price to retest the record high set in August of 2020 at $2,075.
Zooming into the daily chart suggests gold prices could be at risk of further declines as price slides below the sentiment-defining 200-day moving average at $1,851. With the MACD indicator and RSI tracking below 50, the path of least resistance seems skewed to the downside. However, if range support at $1,815 – $1,825 successfully stifles selling pressure, a rebound back towards channel resistance and the 100-MA at $1,874 could be on the cards. Hurdling that likely brings up the January high at $1,895 into the crosshairs.
Current Market Sentiment: Long-Term Bullish Bias.
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