The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 23.03.2021
After Powell’s speech yesterday, the markets gear up for another testimony by the Fed Chair as the markets wait for more information on what’s going to be said. Bitcoin’s failure to effectively break above the $58,000 resistance caused a major negative pressure on the instrument.
EURUSD’s movement is questionable as it fails to break above 1.1950, and the subsequent move lower is raising concerns for more negative pressure. On the other hand gold proceeds to trade in it’s sideways movement while waiting for a news to set it off.
With that said, let’s find out how the markets are doing on March 23rd, 2021.
Bitcoin Extends Losses
The 50-SMA on the 4-hour chart and the $58,000 resistance level were the main cause for the recent decline in Bitcoin. The instrument has been trying to break above those two levels, but when it failed to effectively close above the mentioned resistance, the Bears found the opportunity to capitalize and forced it lower.
The move lower broke through the $56,150 support as well as the 100-SMA on the 4-hour chart, reaching the $53,100 support and the 200-SMA. This support should have enough strength to prevent any further declines, but it might not provide the Bulls with the needed strength to move higher.
Any positive momentum that Bitcoin might exhibit might be short-lived and with limited upside momentum. With the presence of multiple resistances on the top side, it makes any meaningful upside move out of the question unless there is some new news in the marketplace that can help Bitcoin along. With that said, the Bulls are able to regain the upside momentum, a break above the 100-SMA and the $56,150 resistance level is needed, else we might continue to see the negative pressure mount.
If the instrument continues to trade in this way, then it’s only a matter of time before BTC breaks below the current support at $53,100, and continues on the downward trajectory towards $50,000. Breaking below the latter support, would mean a possible end to the bullish momentum for the time being as a correction of this magnitude could lead to a reversal, but it’s still a bit early to tell.
Current Market Sentiment: Bearish
EURUSD Drops to Session Lows
After the common currency was able to cover the gap of Monday, there was enough residual bullish momentum to force it higher towards the 1.1950 and the 50-SMA on the 4-hour chart. The instrument was able to move higher than the mentioned SMA, but with immense selling pressure at 1.1950, EURUSD found itself falling back towards the 1.1920 as of this writing. This selling pressure came in as the steady performance of the U.S. treasury yields gave sellers some hope of more downside awaiting the EURUSD.
While there are some good economic events today, the focus of investors will be solely on Powell's testimony on the “Coronavirus Aid, Relief, and Economic Security Act” before the House of Representatives. Traders from all over will be looking at the news coming from this testimony, as it could affect the way the USD is traded and hence affect everything else. Best keep an eye out for when that’s due later on in the day.
On the other hand, the Eurozone continues to be plagued by increased infection rates and pandemic-related lockdowns, which limit any meaningful upside in the EURUSD
EURUSD keeps the consolidative/bearish theme intact while being supported by the 1.1880 and 1.1835 levels that coincide with the 200-DMA (Daily Moving Average). Therefore, Investors are looking at how the U.S. treasury yields are fairing and the obvious performance of the U.S. economy, compared to the European one.
All of this is giving added negative pressure on the negative currency. However, the ECB (European Central Bank) might keep an eye out for any adverse movements in the EUR and step in to prevent any deep movements downwards.
Current Market Sentiment: Consolidation/Bearish
Gold Falls Amid Strong USD
Despite the consolidation theme of gold, it doesn’t keep traders away from trading the instrument in it’s tight range. The instrument has attempted to continue the bullish momentum after a bounce from the $1,731, but it wasn’t enough to keep the movement upwards. Although the directionless consolidation is currently unappealing to traders, the USD gains are keeping a tight hand around the movement of the yellow metal.
The market is fearing some geopolitical tensions that might be arising between China and Western friends including the UK, Canada, the U.S., and Europe. On the other hand, the COVID-19 vaccine problems between the European Union and London were caused by Astrazeneca. It’s also worth noting that the Fed policymakers, including Chair Powell and Governor Bowman, have been cautious in their recent statements, but Treasury Secretary Janet Yellen has been positive and is trying to keep the bond market afloat.
The main point of Bulls is to break above the 11-week-old resistance line, at $1,740 now. If that doesn’t happen and a decisive break fails to manifest itself, then there will be a recall of gold sellers, but a daily closing beneath the 10-day EMA, currently around $1,733, which becomes necessary for further downside.
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