The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 08.02.2021
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The start of the week shows us some corrections taking place in the markets. After managing to break above several resistance levels, Bitcoin found itself correcting lower as the instrument struggles with maintaining the bullish momentum. EURUSD finds itself battling against its own resistance levels after it had reached the bottom of the range at 1.1950. Gold seems to be mimicking the movement of EURUSD as the yellow metal bounces from $1,785 and attempts to break above $1,820.
With that said, let’s find out how the markets are doing on February 8th, 2021.
Market Recap
Bitcoin continued to exhibit increased bullish pressure as the Cryptocurrency rose higher above the $40,000 resistance barrier and reached $41,000 before encountering heavy resistance and falling back below $40,000. However, the bullish momentum hasn’t been affected terribly as the RSI (Relative Strength Index) still manages to print above the 50 level indicating that while the instrument did fall, the correction lower was healthy due to the overbought conditions.
Ever since the EURUSD reached the bottom of the range at 1.1950, it has managed to produce a move back higher, breaking above the 1.2000 for the time being. The corrective move higher was to be expected due to the RSI printing below the 30 level and showing intense signs of oversoldness. The move higher did face an important resistance at 1.2050, which the pair was unable to break above the seems to be consolidation just below it.
The precious metal finds itself within the same boat as EURUSD as the yellow metal fell towards the end of last week. Gold reached the bottom of the range at $1,785 before it found enough bullish momentum to send it back above the $1,800. It was to be expected however as the RSI was printing well below the 30 level showing intense oversoldness. This allowed the instrument to reach $1,820 through a corrective move, but couldn’t quite break above the mentioned resistance and is currently consolidating around that level.
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Bitcoin’s Troubled Move Higher
Even though Bitcoin managed to break above the $40,000, it couldn’t quite extend the gains it made. BTC traded close to $41,000 and recently started a fresh decline. The decline was too much for the Cryptocurrency to handle as it broke below the $40,000 and $39,200 support levels, and currently trades around $39,100. The price even spiked below the $38,600 support level reaching the $37,200 at one point, however that didn’t last long.
A low is formed near the $37,200 level and the price is currently recovering. As it managed to break above the $39,000 barrier and continued higher towards $39,100 but seems unable to quite break above the $39,200. If there is an upside break above the mentioned level, the price could start a decent recovery towards $40,000. Conversely, Bitcoin might resume its slide below $38,000. The next key support is near the $37,200 level, below which the price could dive towards the $36,000 support zone.
If Bitcoin manages to stay above $39,000, it could start a fresh increase. An initial resistance is near the $39,200 zone. A clear break above the mentioned resistance, and then a follow up move above $40,000 may possibly start a steady increase in the coming sessions.
Current Market Sentiment:Bullish.
EURUSD Vulnerable to “Sell the Fact”
EUR/USD carved out a bullish candlestick pattern on Friday, signaling a reversal higher. However, the rally may remain elusive if the global stock markets witness a wave of profit-taking on well-flagged US fiscal stimulus, putting a bid under the anti-risk US dollar.
The US Nonfarm Payrolls data released Friday showed the economy added just 49,000 jobs in January, missing expectations for 105,000 additions and bolstering the case for US fiscal stimulus. President Joe Biden said on Friday that the data warranted an aggressive fiscal response. US Treasury Secretary Janet Yellen said on Sunday that the White House's proposed $1.9 trillion relief package should include stimulus cheques for workers earning $60,000 per year.
With the US stimulus approaching, stocks could witness a sell the fact trade, helping the battered US dollar gain ground. Besides, the growing economic divergence between the US and the Eurozone favors dollar strength. While the US economic recovery may be slowing, the Eurozone economy is facing another quarterly contraction, courtesy of continued coronavirus-induced lockdown measures.
Current Market Sentiment: Consolidation with Bearish Bias.
Gold Lacks Bullish Conviction
Gold is building on Friday’s rebound above $1,800, as the US dollar remains pressured amid mixed US employment data. Democrats going ahead with President Biden’s $1.9 trillion stimulus package, in what’s called a reconciliation procedure, favor the Bulls. However, the rally in the US rates, driven by the reduced demand for Treasuries amid reflation trades, could cap the recovery in the metal from two-month lows of $1,785.
Technical indicators are showing that there is some resistance for the instrument around the $1,816. If the buyers find a foothold above that level, the next powerful hurdle at $1,820 could be put to test. Further up, the $1,823 level would come into play and may challenge the bullish commitments, above which would open doors towards $1,827. A break above the latter could test the $1,829.
Alternatively, immediate support is aligned at $1,810, should that fail to keep things in check, sellers would then target strong support at $1,807. The previous month low at $1,803 could lend some support, below which the $1,800 would be in play once again.
Current Market Sentiment: Bearish.
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