The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 25.02.2021
The markets are starting to show some increase in the risk-on sentiment with the vaccine fueled optimism making the rounds around markets. Bitcoin is consolidating for the time being, but there seems to be enough bullish pressure mounting that will allow it to attempt another break higher. EURUSD is also benefiting on the expense of the USD which falls as safe-haven assets get offered. Same goes for Gold, which continues to fall as investments in riskier assets are making things harder for the precious metal.
With that said, let’s find out how the markets are doing on February 25th, 2021.
We had expressed yesterday the bearish pressure that Bitcoin had found itself under and if it broke below certain levels, we could have expected more downside movements. Well, these levels remained intact for the most part and the instrument is currently consolidating around the $50,100 level, which also seems to be a converging point between the 50- and 100-SMA (Simple Moving Average) on the 4-hour chart. The overall feel of this instrument seems to be consolidation as it tries to decide which way it wants to go.
Powell’s secondary testimony that was scheduled yesterday confirmed the dovish behaviour of the Fed for the time being and that gave the EURUSD a bit more boost to the top side. It had previously broken below the 50-SMA on the 4-hour chart, but the 200-SMa was there to stay any kind of extensive move downwards. Since then, the instrument has been rising back up reaching above the 1.2180 level with eyes on the 1.2190 level. However, the bullish momentum surrounding the instrument does not seem to be able to move that much higher as the technical indicators are showing.
Gold’s progression to the topside was met with some serious resistance at the 100-SMA as it was forced back down towards the first line of support at $1,790. There were some attempts to rise back higher above the $1,800 level, but they failed to stick as the instrument is currently trading below the 50-SMA on the 4-hour chart and seems unable to find the needed momentum to stage another move higher. The bearish pressure seems to have taken over the instrument as the focus for Bears rests in breaking below $1,790.
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Bitcoin Consolidates Above $50,000
After the rise in Bitcoin and the subsequent crash that took it all the way down towards the $45,000 level, it was just a matter of time before consolidation took the instrument into its clutches and kept it steady. Currently the instrument is consolidating in a very tight range, especially for Bitcoin, between the 20- and 100-SMA situated at $50,870 and $49,950 respectively. It would seem that the consolidation between these two levels is needed in order for the instrument to find enough momentum to try and set another record.
The technical indicators in the form of RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence) are adding to that idea of consolidation. The RSI is showing itself trading around the 45 level indicating that there is in fact some consolidation taking place and we can expect this to continue to be the case. MACD shows that some bearish pressure is still available on this instrument as the moving averages are below the midline, but that bearish pressure doesn’t have enough momentum to go anywhere as the histogram is right at the midline.
The current price structure of Bitcoin suggests that there is a way for the Bulls to regain control of the instrument. They need to break above the $51,500 and $52,000 resistance zone, once they have that zone cleared, they will be able to establish another move upwards. However, if this fails to be the case, more downside pressure or consolidation would be taking over. The $45,000 is currently acting as the major support for the instrument, however, there seems to be enough strong levels between here and there.
Current Market Sentiment:Neutral.
EURUSD Sits at Monthly Highs
As the European session kicks off, we see that the EURUSD is actually trying to keep the bullish momentum going with it attempting to break above the 1.2180 resistance level. It briefly managed to do so, recording 1.2182, but there wasn’t any strong presence of buyers to keep that level steady. However, Bulls are focused on a different level which is the 1.2200, and it seems quite achievable especially with the weak USD that we are currently seeing.
The USD remains in a very tough position as multiple factors come into play extending its weakness. The first comes in the form of the $1.9 trillion stimulus package that President Biden wants to release, alongside the vaccine driven optimism in the market regarding quick economic recovery. The latter one is spurring investors to be seeking riskier assets at the expense of the USD. On the other hand, the EUR remains facing extensive bearish pressure as the rise in the U.S. Treasury Yields continues to be a thorn in the side of the common currency.
For the time being, the EURUSD needs to break above the 1.2175 resistance level in order to establish a clear vision higher, however, it would seem that alone will not be enough. There seems to be multiple levels to the top side that are making EURUSD’s movement to 1.2200 all that more difficult. The pair will be eyeing the Eurozone Consumer and Business sentiment along with a speech by ECB’s (European Central Bank) Philip Lane.
Current Market Sentiment: Consolidating.
Gold Faces More Downside
The precious metal seems to be eyeing a deeper slide to the downside as the U.S Treasury Yields continue to play a major part in the technical structure of the instrument. The increase in the yields will have a negative impact on gold. Inspite all of this, the European session still has not properly started yet. Yesterday, there was a move reaching higher than the $1,800 resistance level, but the Bears are firmly in control for the most part. From a technical angle, there seems to be a symmetrical triangle breakdown on the 1-hour chart which adds more fuel to the Bear fire.
Breaking below the lower bound of the triangle, led the instrument to visit the $1,790 as downside pressure increases. If this level fails to keep things in check, the Bears will be looking at the $1,784 as the first target, followed closely by the $1,770, as breaking below the latter level would cement the bearish view of Gold for some time.
The RSI and MACD on the 4-hour chart are signaling that there is more downside to be expected. The RSI is showing some increase in the downside momentum as it prints around the 45-level indicating that there are more movements towards the support levels. MACD is showing the same thing, with the moving averages turning from the positive to the negative and the histogram showing that there might be a slight increase in the momentum.
Current Market Sentiment: Bearish.
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