The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 25.01.2021
The markets have come out of the weekend, into a week full of economic events which will definitely have an impact on the markets. Bitcoin seems to have gotten back some of its mojo as the Bulls get a good grip on the markets allowing the Cryptocurrency to move higher. EURUSD is focused on today’s German IFO reading in order to continue the bullish move, but a miss could result in another move lower. All the while Gold will have one hell of week with several economic events that are bound to make things more exciting.
With that said, let’s find out how the markets are doing on January 25th, 2021.
Even though the bearish pressure has shown its presence on Bitcoin, it still couldn’t keep control over the Cryptocurrency. Bitcoin reached a low of $28,730 on Friday of last week, but since then, it hasn’t been able to move back higher as it currently attempts to move past the $34,000 resistance. Overall, the instrument is in consolidation between the mentioned levels since breaking through one of them could set the course for the next move.
The bullish momentum on EURUSD continues to push the common currency higher and higher as it reaches the 1.2180 resistance level and it seems that the currency is having a tough time breaking higher. Several times over the past Friday, EURUSD attempted to break above the mentioned resistance and several times it has been rejected. Currently, the instrument is attempting to break higher again, and there seems to be the chance of an actual break, however, 100-SMA (Simple Moving Average) on the 4-hour chart seems to be waiting for the break.
After Gold encountered the heavy resistance on the 100-SMA on the 4-hour chart, it began to fall back as it broke below the $1,855 support level and even reached the $1,835 before starting a push higher. However, the push higher was short lived as the $1,855 turned into a resistance and kept things in check. It seems that the bearish pressure is gripping the instrument hard for the time being as the RSI (Relative Strength Index) is showing some consolidation but with an obvious downward bias.
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Bitcoin Looks Higher
After reaching $28,730, Bitcoin was able to bounce higher, establishing a base above $30,000 and continued to push higher. The Cryptocurrency even managed to clear the $31,200 and $31,500 resistance levels to move into a short-term positive zone. It is now trading just below $34,000 which seems to be the next target for the instrument.
To move into a positive zone and start a steady increase, the Bulls need to gain strength above $34,000 and $34,500 in the near term. The next major resistance is near the $35,800 level, where the Bulls might take a stand. Examining the RSI on the instrument, the indicator seems to be showing the mentioned positive tone as it prints above the 50 level and seems to have enough room for more upward pressure.
The Bears could regain control if Bitcoin fails to recover above $33,500 and $34,000. An initial support on the downside is near the $32,000 level. The first major support is near the $31,250 and $31,200 levels. A downside break below $31,200 and a follow up move below $31,000 may possibly start a strong decline towards $28,500 in the coming sessions. It seems like the price might consolidate in a range below the $34,000 resistance level before it makes the next major move.
Current Market Sentiment:Neutral with Bullish Bias.
EURUSD Looks To German IFO Figure
EUR/USD's recovery rally will likely gather steam if a forward-looking German data beats estimates, overshadowing bearish macro factors. The German IFO Expectations index is seen rising to 93.2 in January from December's 92.8. The IFO Expectations released by the CESifo Group is an early indicator of current conditions and business expectations for the next six months.
The coronavirus pandemic is showing no signs of slowing down. As per Reuters, investors are becoming skeptical about US President Joe Biden's ability to muster Republican support to deliver the proposed $1.9 trillion fiscal package. In addition to all of that, the Italian-German 10-year bond yield spread is rising and could have a bearing on the single currency. These factors could dent risk sentiment, strengthening the haven demand for the anti-risk dollar. As such, the Bulls need the IFO data to beat expectations.
Apart from the German IFO, speech by European Central Bank's President Christine Lagarde and policymaker Weidmann could also inject volatility into the euro markets. At press time, EUR/USD is trading largely unchanged on the day near 1.2180.
Current Market Sentiment: Depends on Data.
Gold's Big Week
Gold prices fell slightly on Monday, extending a three-day decline after pulling back from key resistance at $1,870 last week. The DXY (U.S. Dollar Index) edged lower alongside a broad “risk-on” rally in Asia-Pacific equities, but this apparently failed to inspire gold traders to take risk for now. Nonetheless, a packed economic calendar towards the latter part of this week may hint at heightened volatility in currency and commodity trading: the FOMC meeting on January 27th, US Q4 GDP on 28th and Core PCE inflation data on 29th.
Wednesday’s FOMC meeting will reveal the Federal Reserve’s interest rate decision (expected to be on hold) and more importantly an update from Jerome Powell about the central bank’s view of the economic outlook as well as clues about future tapering. Although fiscal stimulus may help cushion some of the pandemic’s economic impact, a still-fragile recovery may warrant a dovish Fed in the near future. This may pave the way for further dollar weakness and underpin gold.
Technically, gold prices have hit an immediate resistance level at $1,870 and have since entered a consolidation. Prices broke below the “Ascending Channel” in early January, indicating strong near-term selling pressure. The overall trend remains bearish-biased as suggested by the downward-sloped moving average lines. Immediate support and resistance levels can be found at $1,807 (previous low) and $1,870 (76.4% Fibonacci retracement) respectively.
Current Market Sentiment: Bearish.
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