The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 17.03.2021
The markets have one thing on their minds, the FOMC decision. That’s why we might not see a lot of movement in the day ahead of the announcement.
Bitcoin has managed to stop the negative decline around the $54,000, but still trades under the 50-SMA which it needs, in order to recapture the bullish momentum. However, EURUSD and gold are facing off against the FOMC decision, meaning that there will be limited movement and a lot of consolidation ahead of that.
With that said, let’s find out how the markets are doing on March 17th, 2021.
Bitcoin Rebounds… A Bit
The sharp decline in Bitcoin, that came on the hands of India, who proposed a bill to ban, and the mining of cryptocurrencies. To top it all, this sharp decline forced the instrument to fall hard towards the $54,000 and dipped below it, before finding enough support and buying pressure from the Bulls, that gave it enough uplift to reach $56,800 and the 50-SMA, that also indeed broke down.
Managing to rise above the $56,000 is considered to be a huge win for Bulls, but the challenge is to maintain the movement higher.
It’s a bit too early to tell, but there’s an opportunity that Bitcoin might create an inverse head & shoulders pattern on the 4-hour chart. However, this means that the instrument will need to drop below the $54,000 towards the $52,150 and possibly even lower, towards $51,000.
From there, another attempt will be seen around the $56,800 or $57,000, before another drop towards the $54,000. This indicates that the only way would be higher for the instrument that might be able to establish a new all-time high.
If Bitcoin fails to correct above the $57,000 which coincides with the 50-SMA, the upward momentum might be lost and a fresh decline will ensue, and the first level of support would be seen around $55,000.
Any break below that level, would mean that the instrument will be in control of the Bears that might have it break below the $52,000 in an effort to reach the $50,000 which is the current target for Bears.
Current Market Sentiment: Cautiously Bearish
EURUSD Above 1.1900 with Focus on FOMC
The EURUSD has finally broken below the descending triangle which has been dominating the EURUSD trading sessions. The instrument was unable to effectively break above the 50-SMA on the 4-hour chart with the 1.1920 acting as the strong support, which keeps sending the instrument back higher. This fresh drop in the EURUSD, sent below the mentioned resistance towards the 1.1880, and comes on the back of an increase in USD demand.
The uptick in USD demand comes from the upbeat U.S. economic outlook as investors remain optimistic about the prospects for a relatively faster U.S. recovery, despite the recent miss in the Retail Sales figures. In fact, this miss was by a big margin and contacted quite sharply in February.
Nevertheless, the revision figures of the month before were higher which gave some buoyancy to the idea that the economy is on the right course. However, today, the focus will be on the FOMC and the talk of reflation expectations and what the Fed has to say about that.
The Fed is scheduled to announce their decision later on today, during the U.S. session. Investors are betting that the Central Bank will keep the interest rates and monetary policy settings as they are currently. Hence, markets will be more likely to focus on the speech by Chairman Jerome Powell, and the Q&A session that follows these releases.
Not to mention that with this being the end of the quarter, market participants will be also reacting to the economic projections that the Fed has put in place as well as the Dot Plot. All of these will surely have a major effect on trading today.
Current Market Sentiment: Cautious
Gold Continues to Consolidate
Not much has changed in the precious metal gold since we last left, as the instrument remains trading in a very tight range, however, it doesn’t seem to be the ever so slight upward trend. The instrument remains confined to trading around the $1,730s as the European session kicks off.
With the failure to really capitalise on the uptrend that happened after reaching the lows of $1,675, traders have fled to the sidelines as they await the FOMC decision later on today.
The reflation trade has been fueling the speculation about an increase in U.S. inflation, which in turn, has raised doubts that the Fed will intervene in the monetary policy settings they have put in. This has pushed the yield on the U.S. Treasuries over their one-year highs, which in turn kept a lid on any gains that the yellow metal might post.
The outcome of the two-day FOMC meeting will play a major role in determining where the precious metal goes from this point. As we gear up to head into the decision later on in the day, the commodity seems very likely to stay capped by the 100-SMA on the 4-hour chart, and the $1,740, which is now turning out to be the skirmish line between the Bulls and Bears.
Current Market Sentiment:Cautious
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