The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 10.02.2021
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The weak USD continues to be the focal point in the markets at this point in time. Bitcoin finds the bullish momentum it needs to continue moving higher, however the $48,200 resistance level seems to be in the way. EURUSD finds the needed momentum to continue higher, despite the abysmal vaccination rollout in Europe. Both Britain and the United States are well beyond them when it comes to immunizing the country. Gold continues to struggle with the lack of inflation and investors deciding to forgo the unyielding instrument.
With that said, let’s find out how the markets are doing on February 10th, 2021.
Market Recap
After the massive rally higher, it was only normal for Bitcoin to find some resistance level to pull back from. Bitcoin’s bullish momentum was strong enough to break through several levels and even register a new all-time high at $48,200 before correcting lower. The instrument is currently consolidating its gains around $46,300, with the RSI (Relative Strength Index) still printing in the overbought zone giving the instrument a great deal of pause before deciding the next course of action.
The bullish momentum on EURUSD continues to take hold of the currency pair as it breaks above the 100-SMA (Simple Moving Average) on the 4-hour chart indicating just how weak the USD has gotten. The trajectory has clearly switched to the topside with the RSI printing above the 70 level and in the overbought zone. This might give the instrument some pause as it consolidates the gains it managed to make and decide on its next move.
Gold couldn’t quite mimic the strong bullish momentum of the EURUSD. The precious metal hit the barrier at the 100-SMA on the 4-hour chart and couldn’t break above that line. This caused some consolidation around the mentioned moving average as Gold tries to figure out its next move. The RSI is printing around the 60 level which gives much strength to the bullish scenario, however, as long as the instrument is unable to break above the 100-SMA, the momentum will remain to the downside.
What’s the strategy you’re going to use when it comes to trading these markets? Will the Bullish scenario outweigh the Bearish? Or will it be the other way around?
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Bitcoin Could Continue Higher
Bitcoin’s rally higher was a nasty endeavour as it broke above several resistance levels. The momentum that was exhibited on the Cryptocurrency carried well above the $47,000 level and traded at a new all-time high at $48,200. However, what goes up, must come down, eventually, and Bitcoin encountered heavy resistance at $48,200, sending it all the way below the $46,000 level, but it remained stable above $45,000. A low was formed near $45,020 before the price recovered above $46,500.
Bitcoin’s recovery sent it back towards the $46,500 level where it currently consolidates the gains it made. There is also a new contracting triangle pattern forming with resistance near $47,050. If there is a clear break above the mentioned resistance, a move towards the $47,500 might be in the cards. The next major resistance is near the $48,000 level. Any more gains could open the doors for a push towards the $50,000 level.
If Bitcoin fails to continue higher, it could correct lower towards the $46,000 level. The next major support is near the $45,800 level and the triangle lower trend line. A downside break below the triangle support could push the price towards the $45,000 support level. Any more losses below the mentioned level may possibly lead the price towards the $43,200 support level in the near term.
Current Market Sentiment:Cautious but Bullish.
EURUSD Higher Despite Slow Vaccine
EUR/USD has crossed above a crucial technical resistance as the markets continue to offer USD despite concerns Eurozone's economic recovery could lag behind the US due to slow vaccine rollout. The pair closed above 1.2100 on Tuesday, marking a breakout above the 38.2% Fibonacci retracement of the decline from 1.2349 to 1.1952. At press time, the pair is trading near 1.2125, the highest level since Feb. 1.
Average daily vaccination rates across major European Union economies stand at just 0.12% of the population. That's four times lower than in Britain and the United States. Besides that, major European economies are still negotiating which projects will get funding from a 750 billion-euro joint recovery fund. Even so, EUR/USD is gaining ground. Two of the previous three daily candles have very small or no wicks, a sign of strong bullish sentiment.
Investors look to sell the USD, as hopes of more US fiscal stimulus mounts. Friday's Nonfarm Payrolls missed estimates by a big margin, reviving concerns about the economic recovery and crystalizing support for President Joe Biden's $1.9 trillion stimulus plan. However, the USD may draw haven bids if stock markets drop on a continued rise in bond yields.
Current Market Sentiment: Bullish.
Gold Bounce Higher. Believable?
Gold prices lost key technical support last week, but Bulls aren’t ready to throw in the towel just yet. With US President Joe Biden’s $1.9 trillion fiscal stimulus plan moving closer to fruition, precious metals have been bid higher as the entrenched regime of low interest rates and climbing deficits and debts doesn’t appear to be going anywhere. But even as gold prices have rallied sharply in the past few days, bullion is not in the clear just yet.
The longer-term fiscal stimulus impulse in the context of a low interest rate environment should be beneficial for gold prices (akin to the 2009-2011 period) – it’s that simple from my point of view. With US President Joe Biden pushing for his full $1.9 trillion fiscal stimulus package, and Senate Democrats having the ability to pass significant portions of his plan into law through budget reconciliation, the fiscal impulse that helped gold prices in 2020 may soon return in 2021.
Gold prices are back to a familiar area, as it trades around $1,850. But this time is different from the last visit at the end of January: instead of support, this area is now a resistance. Likewise, gold prices are finding former support in the form of the rising trendline from the March and November 2020 lows as resistance. Gold is currently attempting to break above the 100-SMA on the 4-hour chart, and if it fails to do so, downward momentum might find itself in the driver's seat.
Current Market Sentiment: Cautious Bullishness.
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