The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 20.01.2021
The markets continued to trade in their respective ranges without much change, well except for EURUSD which had a great boost with the USD getting underpinned after Janet Yellen’s testimony. The USD seems to be losing some steam as President-Elect Joe Biden gets inaugurated later on today and we can expect to see some volatility during that time.
With that said, let’s find out how the markets are doing on January 20th, 2021.
Bitcoin continued to trade in a confined range. The consolidation has taken hold of the instrument as it trades between the $38,000 as a resistance and the $33,850 as a support. Not much can be said is happening with the instrument, which is kind of suspicious since we’ve grown accustomed to the big movements it has been doing lately. With that said, looking closely at the RSI (Relative Strength Index), we can notice that there’s a strong bearish presence making itself known.
Yesterday, we highlighted how there was some bullish pressure mounting on the EURUSD. This pressure made itself known when the instrument was able to break above the $1.2110 resistance level, and is currently battling against the 1.2150. This is an important level as it intersects with the 100-SMA (Simple Moving Average) on the 2-hour chart. This convergence proves to be very useful for the Bears as they would be looking to continue the downward movement, while Bulls will want to break above and continue higher.
Gold seems to be showing its bullish side as it currently attempts to break above the 100-SMA on the 2-hour chart which corresponds to the $1,850. The current situation in the market suggests that the yellow metal will continue to move higher, as for the most part, it has been moving in range with consolidation on it’s mind. There has been some bearish pressure after the break below the support at $1,820, but it seems to have bounced back from that level.
What’s the strategy you’re going to use when it comes to trading these markets? Will the current pressure move markets? Or will there be more consolidation for the day?
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Bitcoin To Correct Lower
Bitcoin continues to trade between $38,000 and $33,850 as consolidation seems to be the name of the game. It had attempted to break above the $38,000, but with that failure, Bears took advantage of the lack of momentum and forced the instrument to fall. It broke the $37,000 and $36,800 support levels. More importantly, there was a break below a major contracting triangle with support near $36,500. The price is now trading just above $35,500 as bearish pressure seems to be mounting.
An initial support on the downside is near the $35,000 level. If Bitcoin’s price fails to stay above the $35,000 support, it could continue to move down towards $33,850. The next major support is near the $33,200 level, below which the price is likely to decline towards the $33,000 support zone in the coming sessions.
If Bitcoin starts a fresh upward move, an initial resistance is near the $36,350 level and the 100-SMA on the 2-hour chart. The first major resistance is near the $36,800 level (the recent breakdown zone). The main resistance on the upside is still above the $37,000 zone at $37,500 and $37,800. A successful close above the $37,000 resistance and then a follow up move above the $37,500 could open the doors for a larger increase in the near term.
Current Market Sentiment:Neutral with Bearish Bias.
EURUSD Continues with Bulls
The U.S. Treasury Secretary nominee Janet Yellen advocated for a large fiscal relief package on Tuesday, stating that the benefits of increased spending are greater than the costs associated with a higher debt burden. Yellen's comments put a bid under the U.S. stocks, lifting major indices higher. The risk-on has hit the Asian shores, pushing stock markets to record highs. As such, the anti-risk dollar is losing ground against the EUR and other major currencies.
A better-than-expected German Zew survey released Tuesday could be adding to bullish pressures around EURUSD apart from Yellen's comments. However, please note that the Eurozone inflation expectations are considerably lower than in the U.S, and this could complicate the EURUSD's recovery from Monday's low of 1.2054.
Should the EURUSD climb past the 1.2100, it needs to continue higher and the falling wedge’s resistance line, at 1.2116 now. EURUSD buyers are eyeing to refresh the multi-month high above 1.2349. On the other hand, the pair’s U-turn from present levels will have strong support around the 1.2045/40 area including the pattern’s lower line and December 02 trough.
Current Market Sentiment: Bullish.
Gold Showing Bullishness
Gold prices climbed for a third day as the USD fell alongside Treasury yields, alleviating pressure on precious metal prices. Last night, U.S. Treasury Secretary nominee Janet Yellen boosted market confidence by showing her support for Biden’s US $ 1.9 trillion stimulus package in the Senate confirmation hearing. Yellen’s comments revitalized hopes for reflation and brightened the prospects for economic recovery, sending risk assets broadly higher alongside gold and crude oil prices.
Nonetheless, a large fiscal spending package also points to a higher inflation outlook, which will likely lead to lower real yields and underpin gold prices. Precious metals are perceived as a good inflation hedge and store of value, and their prices tend to rise alongside inflation expectations and the amount of quantitative easing. Looking ahead, gold traders are eyeing President-elect Joe Biden’s inauguration later today for clues about his agenda priorities in the first 100 days in the White House, while intense security measures were put in place to prevent political violence.
Technically, gold prices rebounded from the ceiling of the “Descending Channel” after suffering severe selling in the previous two weeks. The overall trend remains bearish-biased however, as suggested by the RSI indicator. Immediate support and resistance levels can be found at $1,807 and $1,855 respectively.
Current Market Sentiment: Bullish.
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