The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 08.03.2021
Overall, the markets have been consolidating with some minor bearish bias going on as the $1.9 trillion stimulus package in the U.S. gets approval from the Senate, and now the focus shifts to the house for clearance. However, Bitcoin managed to break above the $50,000 but the bullish momentum doesn’t seem to be strong enough to continue moving higher.
EURUSD faces even more of a challenge as the negative pressure from the increase in U.S. treasury yields continues to push the instrument down, reaching the 1.1900 support before consolidating. After reaching below the $1,700 support level, gold managed to find enough bullish pressure to rise above the mentioned level, and waited for more input for the next leg of the journey.
With that said, let’s find out how the markets are doing on March 8th, 2021.
The Bitcoin market has managed to find some bullish pressure as the instrument rose above all three SMAs (Simple Moving Averages) (50, 100, 200), providing the Bulls of the market a decent foothold above the $50,000 support which allowed for more upside pressure to take place.
During the weekend session, Bitcoin was under enough bullish pressure to move closer to the $52,000 resistance level, however, the presence of sellers and the decreasing momentum, didn’t allow it to break higher as we currently see the instrument trading around $50,500 with the 50-SMA on the 4-hour chart and $50,000 acting as strong supports for the time being.
The common currency proceeds to add strong resistances to the topside, by making any kind of meaningful comeback from the recent lows that are more difficult. Furthermore, the 1.1950 support level wasn’t able to withstand the increased bearish pressure forcing the instrument below said level before finding some support at 1.1900. This drift downwards has only increased the strength of the Bears, and it will take a lot more than just a couple of simple support levels to keep the instrument in check, since we'd probably need some very negative news from the U.S. or very positive news from the EU to turn this around
Gold’s performance since the beginning of the year hasn’t been the best. In fact, it’s been worse than ever before. The yellow metal continues to fall lower, breaking below supports that should have held it, but here we are.
Currently, the instrument has been able to rise above the $1,700 minor resistance, but remains quite far enough from regaining some bullish composure. It’s currently being stopped by the $1,715 resistance and this comes after the minor jump from the lows of $1,685. Despite the current show of positivity as per technical indicators, the overwhelming negative pressure on gold still persists.
What’s the strategy you’re going to use when it comes to trading these markets? Markets continue to face exceedingly negative pressure, will there be a decent comeback, or will they continue to be led by the Bears?
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Bitcoin Above $50,000
After Bitcoin’s battle against the $48,000, and the 100-SMA on the 4-hour chart, the pioneer cryptocurrency was able to find enough bullish pressure to break higher. This move allowed BTC to break through the 100-SMA and the 50-SMA which coincides with the major resistance at $50,000. The break above this level allowed BTC to continue to move above the $51,000 and attempted to establish a decent foothold above the $52,000 level. However, with the lack of proper bullish momentum, Bitcoin found itself falling back below the $51,000, but remains above $50,000, and giving Bulls hope for another run higher.
Looking into the technical indicators of the Bitcoin, especially the RSI (Relative Strength Index) and the MACD (Moving Average Convergence Divergence), we can notice that the increase seems to let off steam. However, both of these indicators have begun to level out as the RSI prints just above the 60 level indicating. While there is some bullish pressure, it might not be enough to continue the movement higher. The MACD shows a similar story with the moving averages printing above the midline, showing positive signals, but the histogram shows that the momentum is truly lacking any meaningful move to the upside.
The main obstacle for Bitcoin at this moment is to break above the $51,000 and $51,500 which would push the Bulls into overdrive and allow them to break above the $52,000 major resistance level. If that happens, the $53,000 would be the next target for the Bulls. If they're given enough momentum, the $54,500 could be the target later on. But, if the $50,000 and 50-SMA fail to hold any kind of retracement lower, the $48,000 would be the target for Bears which lies between the 100-SMA and 200-SMA on the 4-hour chart.
Current Market Sentiment: Cautiously Bullish.
EURUSD Falls Below $1.1900
We had expressed cautiousness in our Friday brief, as the increasing bearish pressure was facing against the $1.1950 support level. Previously, that level was able to keep the Bears in check and stop the downward momentum, allowing Bulls to stage a comeback that rose above the 1.2200. However, this time around, the Bears and the downward pressure was just too much for the level to hold and it eventually broke, allowing the momentum to move the instrument towards the $1.1900 and below, briefly. However, the week started on a positive note as a weak USD manifests to be the main theme because of the $1.9 trillion stimulus plan.
Over the weekend, on Saturday to be specific, the Senate voted to push Biden’s $1.9 trillion stimulus package through as now the plan faces the house for clearance. Despite all this, the U.S. Treasury yields remained steady without much change, which in turn gave the USD enough momentum to push the EURUSD back down. Analysts are now saying that the EURUSD might face even more bearish pressure after the recent attack on the Saudi Arabian oil production facilities which may see an uptick in the USD.
However, the focus will be on the German Industrial Production, as disappointing figures will most likely give the Bears additional ammo to drive the instrument even lower.
The bearish close below 1.1950 on Friday was a direct break of the Fibonacci support which was supposed to hold any lower movement. This break coincided with the U.S. jobs report which showed an increase in the number of people employed and which came better than expected. This pointed out that the economic recovery in the U.S. is coming along much better than the Eurozone, which has been plagued with delayed COVID-19 vaccines and another round of lockdowns.
Current Market Sentiment: Bearish.
Gold Recovers to $1,715
More bearish pressure is clearly the main thorn in gold’s side as we saw the instrument fall towards the $1,685 on Friday, however the momentum exhaustion caused the movement to slow down and allowed the Bulls to capitalize on any movement higher. Currently, the precious metal is consolidating around $1,700 as opposing forces kept the instrument trading around current levels.
The $1.9 trillion stimulus package, which was approved by the Senate, gave a reason to start the movement higher as the plan now faces the House for final clearance. However, the U.S. Treasury yields rose as well, keeping a lid on any gains that the yellow metal would have made should the bullish momentum have continued. The main focus of the instrument remains with the better-than-expected jobs report out of the U.S. which gave the USD another reason to climb higher, aided by the increase in yields which in turn kept gold’s movement muted.
For the time being, the focus will remain on the performance of the Treasury yields as the week gets going.
The support and resistance structure of gold shows that the path of least resistance remains to the downside with $1,700 being the first support which Bears must overcome. Breaking below said level, would bring the support zone between $1,685 and $1,687 into view, which should allow the Bulls to stage a decent comeback. However, any break lower will have the Bears target the $1,670 which happens to be the June 2020 low.
Current Market Sentiment: Consolidating.
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