The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 15.02.2021
The start of the new week is met with markets somewhat all over the place as the low liquidity and low volatility in the markets are causing some uneasiness. Bitcoin reached a new all-time high at $49,700, just shy of the elusive $50,000 and has dropped below $48,000 since then. EURUSD seems to be banking on the weakness of the USD as stimulus hopes continue to favor the risk sentiment which means less demand for the USD safe-haven. Gold is caught between two strong levels as they keep the instrument confined for the time being.
With that said, let’s find out how the markets are doing on February 15th, 2021.
Bitcoin has been encased in the bullish momentum for the past few weeks, as the Cryptocurrency continues to move even higher, almost reaching the $50,000. The bullishness of this instrument is quite clear as it tried to break above the mentioned level, however, it did fall short of accomplishing that goal. Bitcoin rose towards the $49,700, recording yet another All-Time High, but the momentum couldn’t quite be sustained at that level as the instrument began to retrace lower reaching below $47,000, as of this writing.
The EURUSD had attempted to break above 1.2150 last week, however, the strength of this resistance was too much for the Bulls to establish any kind of meaningful breakout. The result was a drop in the instrument towards 1.2080, breaking below the 100-SMA (Simple Moving Average) on the 4-hour chart, however, it still managed to bounce back. This downward move was evident on the RSI (Relative Strength Index), as the indicator dropped towards the 50 level, before climbing back up, giving the next leg upwards the needed push to actually break above the mentioned resistance.
The head and shoulders formation, which we expressed was having a great deal of bearish pressure on Gold, and it’s taken its toll as the instrument which reached the $1,815 support level. There was an attempted break below the mentioned support, however, there was no actual close below which gave the Bulls some hope they might be able to turn this around. After bouncing from $1,815, the precious metal seems to be encountering some resistance in the form of the 50-SMA on the 4-hour chart.
What’s the strategy you’re going to use when it comes to trading these markets? Will the markets enter into another consolidation theme? Or will there be a sudden move in the same direction?
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Bitcoin Fails at $50,000
Bitcoin nearly hit $50,000 for the first time in history during the weekend session. However, the bullish leg was rejected at $49,700, calling out to sellers to come and get their shot. A correction from the new all-time high is underway at the time of writing, which could see the bellwether Cryptocurrency tumble to $43,000. Some technical analysis is showing that there’s an ascending parallel channel, with the upper and lower boundaries acting as resistance and support, so the downside is somewhat protected.
Meanwhile, the record highs’ rejection has lost the channel’s middle-level support, which adds credence to the bearish outlook. BTC is trading at $47,050 while seeking immediate support at the 50-SMA on the 4-hour chart, which is printing around $45,300. Similarly, the RSI indicator shows that sellers have more influence. The indicators’ retreat below the 50 level indicates that the bullish momentum is at its last ropes.
If the 50-SMA support on the 4-hour chart fails to hold, the pioneer Cryptocurrency may drop further in search of another support. The ascending channel’s lower edge will play a key role in absorbing the selling pressure and perhaps restarting the uptrend. Closing the day above the 50-SMA will also be a bullish signal, while trading above the middle boundary could boost Bitcoin above $50,000.
Current Market Sentiment:Cautious with Bearish Bias.
EURUSD Gets Signs from VIX
EUR/USD is on the rise on the first trading day of the week and could challenge a crucial hurdle at 1.2150, with Wall Street's fear gauge signaling a continued rally in stocks. The pair is currently trading 0.13% higher on the day at 1.2137. It has established 1.2149 and 1.2081 as levels to beat for Bulls and Bears, respectively, in the past two weeks. A breakout looks likely, as the Cboe Volatility Index, also known as Wall Street's "fear gauge," ended below 20 on Friday to print the lowest daily close since the March 2020 crash.
Some analysts are looking at the VIX's decline as an indicator to risk-on and that could draw more systematic and quantitative investment funds to equity markets. That could lead to a more profound decline in the anti-risk US dollar. The greenback has become a preferred haven since the March crash and has taken a beating against major currencies alongside the record rally in the equities scene over the past ten months.
Also supporting the bullish case in the EUR are strengthening expectations for US fiscal stimulus. The weak U.S. Nonfarm Payrolls released on Feb. 5 crystallized support for President Joe Biden's $1.9 trillion stimulus plan, allowing EUR/USD to recover from sub-1.20 levels to above 1.21 amid the Eurozone's slower vaccine delivery. Data-wise, the focus today is on the Eurozone Industrial Production data. The market may witness below-average trading volumes on account of the President's Day holiday in the US.
Current Market Sentiment: Moderately Bullish.
Gold Caught Between Battle Lines
Gold (XAU/USD) is looking to find its feet after falling as low as $1,811 last week. Broad-based US dollar weakness on doubts over the pace of the US economic recovery continues to offer support to the XAU Bulls. Although ramping up of COVID vaccinations globally keeps the market mood underpinned, limiting gold’s advance. Markets look forward to the US stimulus updates amid holiday-thinned light trading for fresh impetus on the yellow metal.
Gold prices, however, remain in a downward trajectory as rising Treasury yields and reflation hopes dampen demand for the yellow metal. US 10-year Treasury yield climbed to an 11-month high of 1.208% on stimulus hopes and prospects of a robust economic recovery. Rising yields and an exuberant stock market rally made the non-yielding yellow metal less appealing as an investment asset.
Technical indicators are showing that Gold is looking to scale a key hurdle at $1,827, which is the convergence of the SMA10 one-day, SMA50 four-hour and the previous high four-hour, with the next relevant resistance seen at $1832. Further up, the $1,842 will be a tough nut to crack for the XAU Bulls. Any higher, the precious metal will meet a dense cluster of minor resistance levels around $1850 needs to be taken out in order to recapture the critical barrier at $1857.
Current Market Sentiment: Consolidation.
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