The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 05.02.2021
The markets have continued in their current trajectory, and hit their respective limits. Bitcoin faced off against the $38,700 resistance level but failed to break higher, leading it to consolidate around current levels. EURUSD and Gold continued to face the bullish strength of the USD as both fell into oversold conditions, which might give them the needed momentum to establish a decent correction.
With that said, let’s find out how the markets are doing on February 5th, 2021.
Bitcoin’s bullish momentum continued to carry the instrument higher reaching the previously mentioned resistance level at $38,700. This was the previous high of last month, when the sudden explosion in the price was attributed to Elon Musk changing his twitter status to simply “#bitcoin.” However, after reaching that level once again, the sellers took hold of the situation and forced the instrument back below the $38,000 where it currently consolidated its gains.
Another day, another downside move for the EURUSD. It seems as the Bears have sunked their claws deep into the EURUSD as they keep driving it lower. Breaking through several supports and even the psychological 1.2000 barrier, before resting near the 1.1950. The overall risk-averse situation that the market finds itself in continues to play a major detrimental role on the common currency. However, with the RSI (Relative Strength Index) showing extended oversold conditions, one can expect a slight bounce to correct it.
A deep downward slide in Gold had it fall below the $1,800 support level, which was supposed to be a hard level to crack. The result was a dive towards the $1,785 before a slight correction upward commenced. The RSI shows deep oversold conditions, much like EURUSD, however, Gold seems to be recovering slightly as it seeks to break back above the $1,800.
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After trading above the $38,500 level, Bitcoin started a downside correction. The Cryptocurrency failed to stay above the $38,000 level and it even broke the $37,500 support level. The price even broke the $37,000 level, but the Bulls were active above the $36,000 level. A low is formed near $36,220 and the price is currently consolidating in a range.
Bitcoin is still trading above $36,375, and there is also a major contracting triangle forming with support near $37,350 and $36,000 on the hourly chart of the BTC/USD pair. The triangle resistance is near the $37,500 level. If there is a clear break above the triangle resistance and $37,500, there are chances of a steady increase. The next major resistance is near the $38,000 level. A successful close above the $38,000 level could set the pace for a move towards the $38,800 and $39,000 levels.
If Bitcoin fails to clear the $38,000 resistance and the triangle upper trend line, it could continue to move down. The first key support is near the triangle lower trend line at $36,350. The next key support is near the $36,000 level, below which the price might test the 100 4-hour SMA. Any more losses could lead the price towards the $32,000 support in the near term.
Current Market Sentiment:Consolidating.
EURUSD Faces More Weakness
EUR/USD's options market positioning looks stacked against the single currency. According to data source Reuters, the three-month risk reversal shows an implied volatility premium for puts over calls at an eight-month high (of -0.275). In other words, the bearish bias is at its strongest since June 2020. The negative risk reversal is the result of demand for puts outstripping demand for calls. The metric flipped bearish with a drop below zero on Jan 27.
The macro factors are also biased towards the downside. The battered dollar is rising with progress in coronavirus vaccinations, the US President Joe Biden's unveiling of a $1.9 trillion fiscal stimulus, and upbeat economic data. Meanwhile, concerns about the Eurozone's slow delivery of coronavirus vaccines look to be weighing over the euro.
EUR/USD's downside will likely gather pace if the data for today shows worse results than expected. The US Nonfarm Payrolls due at 13:30 GMT is expected to show the economy added 50K jobs in January, having shed 140K jobs in December. Again, a big beat on expectations could draw stronger buying pressure for the dollar.
Current Market Sentiment: Bearish.
Gold Falls Below $1,800
Gold edged higher during the Asian session, albeit lacked any strong follow-through buying and remained below the $1800 round-figure mark. The precious metal managed to regain some positive traction on the last trading day of the week and moved away from over two-month lows, around the $1785 region touched on Thursday. The US dollar was seen consolidating its recent strong gains to over two-month tops, which, in turn, was seen as one of the key factors that extended some support to the dollar-denominated commodity.
Apart from this, the uptick could further be attributed to some repositioning trade ahead of Friday's release of the closely-watched US monthly jobs report – popularly known as NFP. With that said, the underlying bullish sentiment in the financial markets might hold the Bulls from placing any aggressive bets and keep a lid on any meaningful upside for the safe-haven XAU/USD.
Moreover, the overnight slide below the $1800 level added credence to this week's breakthrough, a short-term ascending trend-line support. Hence, any further positive move might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly near the $1817-18 horizontal zone.
Current Market Sentiment: Bearish.
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