The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 23.02.2021
The markets seem to be in a cautious mood for the time being as Fed Chair Jerome Powell is set to testify before Congress. Bitcoin has finally succumbed to the bearish pressure after the Bulls couldn’t quite keep a lid on things above the 50-SMA (Simple Moving Average) on the 4-hour chart. EURUSD and Gold are both exhibiting major bullish pressure as they target higher levels, however this all depends on what Powell will say during his testimony.
With that said, let’s find out how the markets are doing on February 23rd, 2021.
After reaching a new All-Time high at $58,400, Bitcoin could no longer handle the bullish pressure that it has been subject to. The result was a massive move to the downside breaking through several important support levels. Among those levels was the 50-SMA (Simple Moving Average) which has held the instrument for quite some time. Bitcoin continued to move lower reaching a low of $46,700 before managing to correct slightly above $49,000. The movement lower was held by the 100-SMA that seems to have picked up the mantle that the 50-SMA dropped.
Breaking above the 1.2150 for the EURUSD is a major win for the Bulls as it opens up a lot of targets to the upside. The first among those targets is the 1.2190 which makes the first barrier to the resistance zone of 1.2190 and 1.2200. This move broke through the 200-SMA that was keeping a lid on any upward movement with the RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence) both showing signs of positivity.
Gold was not left in the dark after EURUSD rose, as the precious metal managed to break above the $1,800 resistance level and seems to be on course to challenge the $1,820 level which coincides with the 100-SMA on the 4-hour chart. The RSI and MACD are both showing an increase in the bullish momentum, however, there does seem to be some correction coming in with the RSI leveling up as the MACD histogram seems to be showing decreasing bullish momentum.
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Bitcoin Stays Above $49,000
After forming the top at $58,400, Bitcoin’s Bulls were exhausted and just couldn’t keep the positive momentum going enough to establish a new high. After breaking below the 50-SMA on the 4-hour chart as well as breaking below the $55,300 support, the instrument witnessed massive selling that sent it towards the $46,700 low. However, the Bulls quickly woke up from their slumber and pushed the instrument back higher. There was a chance for more upside, but failure to break above $55,300 caused more harm and forced the instrument back below the $50,000.
The movement lower was held by the 100-SMA as well as the mentioned low at $46,700. Currently the 100-SMA has taken up the mantle of moving support after the 50-SMA couldn’t hold the bearish pressure for long. The overall sentiment surrounding BTC is negative as the RSI and MACD are both showing an increase in the bearish pressure, with the former printing below the 40-level indicating that there is still some room for another drop, while the latter is showing an increase in the bearish pressure that we spoke about.
In order for the Bulls to wrestle control away from the Bears, Bitcoin must break above the $52,500 resistance level as a first step. Establishing that level as a viable support, could provide the Bulls with the needed momentum to push BTC right back towards those previous highs. On the other hand, failure to pursue a move higher, could subject the 100-SMA for more bearish pressure, and should that break the next level at which Bears will target lies at $46,700 followed by $43,600.
Current Market Sentiment:Bearish.
EURUSD Moves Higher
The bullish momentum that was displayed on EURUSD allowed it to establish a new 4-week high at 1.2180, which is the highest level since January 25 of this year. This movement higher was due to the cautious behaviour markets exhibited ahead of the Federal Reserve Chair Jerome Powell testimony before Congress later on today. The 200-SMA on the 4-hour chart, that has been capping any kind of gains, was finally broken during the Asian session today, this provided the Bulls with the needed momentum to establish a move higher, however, any further upside all depends on whether or not Powell appeals to the markets or not.
The two important aspects of the market are still in control, talking above the U.S. Treasury Yields and the U.S. stock market, which Powell is most likely going to talk about later in his testimony. Treasury Yields have been up, reaching a 12-month high at 1.39%, as the bond market seems to be already pricing a Fed tightening of its monetary policy. We can expect a lot of downplaying from Powell when it comes to the increase in inflation, as he will reiterate the need for more accommodative monetary policy for the time being.
More dovish comments from Powell could lead to more bullish performance of the EURUSD which could help it break above the current resistance at 1.2190. Aside from Powell’s testimony, the European inflation report in the form of CPI (Consumer Price Index) could influence the pair, as well as, the current development in the vaccine rollout in Europe, and comment from the ECB (European Central Bank) head Christine Lagarde may put a stop to the bullish momentum.
Current Market Sentiment: Wait-And-See Approach.
Gold Eyes $1,820
The current structure of the precious metal leads many analysts to believe that in order for more bullish momentum to be established the $1,820 resistance needs to be broken by gold. This could come in the form of the comments for Jerome Powell later on in the day when he testifies in front of the U.S. Congress. After moving higher from a multi-month low, Gold seems on the path of a decent comeback with bullish momentum building, this comes on the back of rising global inflation expectations which usually means positive movements for the yellow metal.
The current U.S. Treasury Yields are also playing a role in the increase in the price of Gold. However, any further upside all depends on what Powell has to say about the rise in inflation as well as the stock valuations that seem to be off the charts. The instrument currently faces against the $1,820 which coincides with the 100-SMA on the 4-hour chart, however, Bulls seem to be losing some of the momentum as the RSI has begun to dip lower as well as the MACD histogram. For the meantime, things remain bullish, but for how long?
Should Powell turn things more hawkish, we can expect the Gold to start moving lower with the first level of support seen at $1,803. Breaking said level would put the previous $1,790 resistance turned support into the line of fire. Anything lower, and the Bears will most likely look towards the support zone established between the $1,776 and $1760.
Current Market Sentiment: Wait-And-See Approach .
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