The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 22.02.2021
The markets are starting the new week with bullish behaviour as we see most of the markets rise up. Bitcoin has managed to break yet another All-Time high as it settles above the $56,000 after reaching $58,400. EURUSD also manages to rise higher, attempting to break above the 200-SMA (Simple Moving Average), however, it seems that it’s correcting the gains it made. Meanwhile, Gold seems caught between two ranges as it decides to take a Wait-and-See Approach ahead of Powell’s testimony.
With that said, let’s find out how the markets are doing on February 22nd, 2021.
The never-ending bullish pressure that Bitcoin is exhibiting was cute as first, recording new highs and giving people a sense of value. However, with the current technical structure and the over-exhausted movement, things are beginning to look a bit shaky. The movement in Bitcoin has been nothing short of extraordinary, ever since it managed to break above the resistance levels around $47,000. However, concerns are beginning to emerge on the sustainability of such a move and what it means to Bitcoin once it can’t record new All-Time highs. Speaking of, the new one is around $58,400.
We spoke on Friday about the EURUSD’s current show of bullishness and how it has managed to break above the 50- and 100-SMA (Simple Moving Average) on the 4-hour chart. We also mentioned the fact that the 200-SMA on the same chart will be acting as a major resistance in case the current bullish behaviour continues. It would seem that the bullishness was strong enough for the instrument to break above the 200-SMA and 1.2120, however, the momentum was not strong enough to keep it above. Since then, the instrument has been trading around the 200-SMA and the mentioned resistance level, waiting for some clear directions from the economic data.
The bearish behaviour that we’ve been seeing on the precious metal, seems to be finally abating. After reaching the $1,760 support level, the instrument has been able to establish a solid bounce higher managing to break above the 50-SMA. This move higher has also allowed the RSI (Relative Strength Index) to correct itself to fit with the current price structure as now things have become relatively in sync. However, that doesn’t mean that the bearish pressure is done as a break above the $1,800 resistance level is needed in order to correctly presume the decrease in bearish pressure.
What’s the strategy you’re going to use when it comes to trading these markets? Will corrections continue to play an important part in the markets today? Or will they be just a blip in an otherwise smooth trend?
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Bitcoin Aims at $60,000
It seems that Bitcoin will never be satisfied with the current price structure, or rather, Bulls will continue to push the instrument way beyond the limits until they can’t push anymore. The current movement in Bitcoin is something to be careful of, not to say that it’s bad, but the ever over-extended rise in the instrument does give out some alarm. The instrument has managed to break above the many important resistance levels before settling above $58,000 and around $58,400. Since then, the instrument has corrected lower below $57,000.
We’ve expressed this before, the current 50-SMA on the 4-hour chart is acting as a major support for Bitcoin. With each rise higher, the moving average has been there to stop any kind of major move downwards as well as provide enough of a bounce to help Bitcoin reach new highs. The current price structure shows this happening as the instrument currently trades right at the mentioned SMA, but will it be enough to actually help the instrument move higher again? Previous experience seems to be on its side.
However, what kind of bounce is needed to keep things relatively interesting for the instrument? Well, the obvious target is the newly established All-Time high at $58,400, so breaking above that level would indicate that the Bulls still have much left in the tank, enough to attempt a move to their original target, $60,000. However, if the bounce fails to properly break above $58,000, we could see a correction take place, that sees it moving towards $55,000 or possibly lower.
Current Market Sentiment:Cautiously bullish.
EURUSD Erases Gains
The EURUSD has been moving in a quite bullish fashion towards the end of the trading week on Friday as the instrument managed to break above the 200-SMA and 1.2120 resistance levels. However, as the U.S. Treasury yields began to increase, the EURUSD began to correct lower, unable to sustain the movement higher. Combined with the negative pressure that is coming from the stock market, the anti-risk USD found itself being bid once again, which is negative for the common currency.
Analysts have been talking about the increase in the U.S. Treasury, mentioning that it’s not the increase in the yields, but rather the speed at which those yields are increasing. When combined with the fact that the stock market in the U.S. and around the have more demand for the dollar than it can do, it will increase against all other currencies.
Looking at the economic calendar for today, investor focus will on the German IFO reads. When this figure comes in a shape better than expected, then we‘d see EURUSD back on the rise with a target towards the 1.2150. However, looking at the technical aspect of this trade, both the RSI and MACD (Moving Average Convergence Divergence) are looking like the bullish momentum is fading out. The RSI is printing right at the 60-level with somewhat of a peak forming, while the MACD is actually showing more of a losing momentum, so technical signs are actually showing more downside than up.
Current Market Sentiment: Cautiously bearish.
Gold Remains Trapped
Despite the current bullish move in Gold, the instrument remains under pressure as U.S. Treasury Yields continue to surge all across the curve. You add to that the reflation trades that have come into play due to the optimism that’s surrounding the current COVID-19 vaccination moves. The instrument has managed to break above the 50-SMA which has been acting as a major resistance for the instrument, however it doesn’t seem that the instrument might be able to make all the way towards the $1,800 resistance level.
The focus for this week will shift towards the Chair of the Federal Reserve, Mr. Jerome Powell, as he makes his first testimony of the year in front of Congress. This will have a major impact on the precious metal, as he will surely address the current strength of the economy as well as the current surge in inflation. However, the bias of the instrument remains to the downside as Gold attempts to gain enough momentum to keep the slate balanced.
The RSI and MACD are both showing an increase in the bullish momentum, with the former breaking above the midline at 50, indicating that the Bulls still have a chance of turning the bearish pressure around. Same goes for the MACD as the histogram turns green, and the moving averages around pointing higher. With that said, Gold is still not out of the woods as it’s bounce will most likely be affected with whatever Powell decides to say.
Current Market Sentiment: Neutral.
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