The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 05.03.2021
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Powell’s comments yesterday only served to increase the strength of the USD against all the markets. Bitcoin continued to fall below the support and reached the $46,000 and the 100-SMA (Simple Moving Average). EURUSD and gold were not spared from Powell’s comments and continued to move even lower, breaking through their respective levels, now they focus their attention to the Non-Farm Payroll figures out of the U.S. later on today.
With that said, let’s find out how the markets are doing on March 5th, 2021.
Market Recap
Bitcoin continues to bleed out as the rejection of the $52,670 caused a massive downward pressure to be released. The instrument fell below the 100-SMA (Simple Moving Average) on the 4-hour chart and even continued below the 50-SMA, reaching the support at $47,500 there was a chance of enough bullish presence to start the move higher, but it wasn’t enough as Bitcoin fell below that level and even reached the $46,000, which happens to be at the 200-SMA on the 4-hour chart.
The negative pressure on EURUSD continues to push the instrument ever lower breaking below the 1.2000 reaching the same level at which the February move higher began. However, since the 1.1950 was such a strong support previously, the odds are that we’d be seeing another move higher on EURUSD. In addition to that, this thesis is also supported by the RSI (Relative Strength Index) which has fallen below the 30-level and indicates that the instrument has fallen into oversold territory which might give the Bulls some ability to move the instrument higher.
Gold has fallen below the $1,700 support level as the negative pressure was too overwhelming to keep it in check. The lower move reached a new low at $1,685 before correcting slightly as the instrument trades around the $1,695.
These technical indicators on the instrument are showing that it has entered into oversold territory as the RSI prints below the 30-level. Nevertheless, the economic backdrop isn’t helping the instrument either as it continues to show optimistic scenarios as vaccinations begin to put a hold on all safe-havens.
So what’s the strategy you’re going to use when it comes to trading these markets? Will the markets be able to recover from this most recent drop? Or will this only serve to add an insult to injury?
Whatever you choose to believe, you can react to it all on CryptoAltum. Go ahead and register a trading account right here if you don’t already have one.
Bitcoin to Test $45,000
Bitcoin has fallen almost 7% yesterday after signs that the Bull investors as well as trading volumes could no longer be sustained, and have become exhausted. After its drop below the $44,000 last Sunday, in a momentary dip, Bitcoin was able to bounce to it’s all-time high above $52,000 but faced enough bearish pressure that it fell right back down to its current levels. The drought in trading volumes shows that Bulls are no longer able to keep the prices so high, and to add insult to injury, institutional demand has also dried up.
When the divergence between the price action and the volume are found, this usually signals that there aren't enough participants in the market. Nevertheless, this needs to change in the coming days or it’s likely to see the price of Bitcoin to revert back lower to meet the level of demand.
This reversion could very well be like the 26% drop which happened back in January, after which a whole month was needed for the instrument to bottom out.
From a technical point of view, Bitcoin must stay above the $46,500, as this would allow the Bulls to gain the needed momentum to attempt another move towards the top. The instrument is going to be facing strong resistances around the $48,000 which also corresponds to the current level of the 50-SMA, breaking above that could set BTC on a collision course with the 100-SMA and the $50,4000 level.
Current Market Sentiment: Consolidation.
EURUSD Remains Pressured
The movement on EURUSD has been tracked by multiple indicators, and the most important one is the Fibonacci support around the 1.1945. This Fibo support was tested during the Asian session and now it looks like its leveling out as the European one kicks off.
Four weeks ago, selling pressure on the EURUSD ran out at that level which in turn allowed the Bulls to stage a comeback above the 1.2200 level. Yet, the mentioned support could be broken with the recent comments from Powell.
Yesterday, Chair of the Federal Reserve Jerome Powell expressed some concerns about the rising bond yields, allowing the bond market to ‘find the right level.’ This right level which Powell was talking about could be much higher than the 1.58%, as the copper-gold ratio continues to rise. This ratio is a barometer of global growth which gives hope that the future will be a bit brighter.
Basically, this yield-led risk-off in the stock market could lead to higher demand for the USD and deeper losses for the EURUSD.
Today, the main target is going to shift to the US NFP (Non-Farm Payroll), thus investors will look heavily at the figure that is going to come, a big miss on the expectations can help the EURUSD by allowing it to set a floor to the downside, while also stoppin yields from continuing in this upward fashion. Otherwise, the 1.1945 could be easily broken by the time NFP rolls out.
Current Market Sentiment: Bearish.
Gold Continues Downward Trend
The next level of support that gold seems to be targeting lies at the $1,671 which happens to be the June 2020 low. Bears continue to apply the pressure on the precious metal, after Powell’s speech downplayed the recent commotion in the bond market as he said that the current movements have ‘caught his attention.’
The fact that it disappointed a lot of traders and gave the USD a new lease to keep the pressure on all other instruments. Gold was the main recipient of this pressure.
Meanwhile, gold’s pain will only continue to increase as the $1.9 trillion stimulus package is mere steps away from getting approved by the Senate, all the while yields continue to increase which adds to the already negative pressure that this precious metal is experiencing. Gold traders will focus on today’s NFP release as it could be shaping gold’s trading journey for the week ahead.
By looking at the resistance and support structure of the instrument, we can notice that gold’s path of least resistance lies to the downside, with the first level of support seen at $1,691. Below which, Bulls will most likely at the $1,683 as a short term bounce, any lower and the instrument will face against the powerful support at $1,672.
Current Market Sentiment: Bearish.
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