The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 04.03.2021
The market sentiment is heading toward the upside as the risk in assets increases, which reveals optimism in the market. Bitcoin’s inability to properly break above the $50,000 forced it to move back lower, but there seems to be enough momentum to attempt to break above that level. Both, EURUSD and Gold, are facing an increase in the U.S. Treasury yields as they wait for Powell’s speech later on today to decide which way they will be trading.
With that said, let’s find out how the markets are doing on March 4th, 2021.
Bitcoin has managed to find the necessary bullish momentum to move past the 100-SMA (Simple Moving Average) and even past the $50,000 resistance level. It proceeded higher to reach a high of $52,670, however, this bullish momentum didn’t have enough strength to establish a foothold that’s capable of adding more upsides. The result was another drop back below the $50,000 and below the 100-SMA. The technical indicators are still showing bullish signs, but with the current structure of Bitcoin, it isn’t certain there’ll be a massive rally higher.
The bullish move on EURUSD was very impressive, as it broke through important resistances and gained momentum despite the bad economic data that has been coming out of the Eurozone. However, the economic data has finally caught up adequately, when the currency pair was attempting to break above the SMA cluster that we’ve talked about in our previous brief.
On top of that, finding strong and unruly resistance levels caused the instrument to take stock and found itself back on the lower end trying it’s best to stay above the 1.2040 support.
The gold market continues to move towards downside with increased speculation that the $1,707 won’t have enough power to keep the downside from pushing through. The mentioned support has kept things in check for the time being, however, how long will this level keep the downward pressure from overwhelming the instrument?
Technical indicators show that the bearish pressure is still in the market, but the momentum it possesses won’t do any major damage to the instrument.
What’s the strategy you’re going to use when it comes to trading these markets? Will markets continue to move with the same negative momentum? Or will we see a jump from current supports?
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Bitcoin Falls Below $50,000
Bitcoin showed enough bullish momentum to break above the $50,000 after testing multiple times during the up move. It gained enough strength to continue the move higher reaching a high of $52,670 before succumbing to the selling pressure of Bears. This sudden slow pace forced the instrument to fall back below the $50,000 as it tries to keep any move lower in check, however, in order to keep the negative pressure from overwhelming the instrument, Bitcoin must break above the $50,000 and the 100-SMA, or else we might see another move towards the downside.
For now the Bulls seem to be looking at the $49,500 along with the $47,500 and the 50-SMA, as the support zones at which they could gather their strength and attempt another move to the upside. However, when you look at the movement of Bitcoin over a larger time frame, you’d be able to notice that the movement is very reminiscent of a consolidation between the $42,500 on the lower end and $52,000 on the upside. The RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence) are also showing the same type of consolidation, however on a more chaotic basis.
Bitcoin’s risk lies in more downside in case the upside potential isn’t satisfied. The current resistance levels lie at the $52,000 and the $52,500, breaking above those would be the main target of Bulls. If the Bulls are unable to manifest their intent into the market, we could see the instrument falling back towards the $47,500 and the 50-SMA. Anything lower could lead the instrument to test the 200-SMA and the $45,000 support level.
Current Market Sentiment: Cautious.
EURUSD Remains Pressured Around 1.2050
After the drop in the U.S. Treasury yields, the EURUSD was able to move higher, however, it remained a bit under pressure below the 1.2100.
Moreover, the inability of the instrument to properly break above the 1.2100 and the cluster of moving averages, which we’ve warned about, paved the way to a more downside movement which was aggravated, because of the sudden rise in the Treasury yields that we’ve mentioned in multiple previous briefs. Certain speakers from the Federal Reserve were able to bolster the USD as he explained that higher yields meant economic optimism.
Despite all of this, the risk sentiment in the market remains relatively calm as the risks of reflation are keeping investors wary of any kind of surge in global yields. This in turn will keep the USD pressured to the downside allowing the instrument to find some bullish momentum. Moreover, PMI indicators from Eurozone and Germany failed to exceed expectations and added more downward risk for the EURUSD. Looking for the day ahead, the main risk lies with Fed Powell’s speech for any hints on monetary policy, especially in the current yield climate.
EURUSD Bears are looking for a confirmation of the momentum by staging a steady decrease below the 1.2000. Breaking through that level would add more short positions on the instrument that the 1.1950 previous support below which the 1.1920 will have it’s time in the limelight. On the bright side, the 1.2100 will be the level to beat for Bulls if they want to keep any semblance of the upside movements.
Current Market Sentiment: Cautious.
Gold Sees Modest Gains
As the European market kicks off, the precious metal gold seems to be enjoying some modest gains after it was able to stay above the $1,707 support level. This allowed a move above the $1,717, meaning a 0.1% increase for the day. Being able to stay above the $1,700 means a tremendous victory for the Bulls as the instrument was able to regain some positive traction to start the day.
Furthermore, This movement was helped along with the decrease in the equity markets, which was a direct result of the sell-off that occurred in the U.S. bond market as investors feared it might extend to other areas of the market.
The prospect of an upbeat economic recovery has put a lid on any kind of gains that the instrument might be facing. This optimism in the market is related to the progress of COVID-19 vaccinations, as we come closer to a complete reopening of the economy. For this reason, it would be very prudent to wait for any kind of strong follow-through in buying before we can say for sure that gold has reached the bottom and the only way left is up.
Despite everything, gold traders are waiting for more signs and confirmation about the state of the economy, as they wait for Powell’s speech later on today. His comments on the fast increase in the long-term borrowing costs will play the most important role in deciding which way gold will trade and will allow investors to determine the next leg of the journey for the instrument.
Current Market Sentiment: Cautious.
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