The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 26.01.2021
It seems that the markets have continued to exert bearish pressure on the instruments. Bitcoin seems to be on the verge of a deeper correction as the bounce higher doesn’t have the full force of the Bulls behind it. It’s not alone, as EURUSD is also facing bearish pressure after the German IFO failed to meet expectations and even contracted. All the while, Gold consolidates ahead of tomorrow when the FED conclude their two-day meeting.
With that said, let’s find out how the markets are doing on January 26th, 2021.
The Cryptocurrency was able to break above the $34,000 minor resistance level, however, it quickly encountered a stronger one at $34,800 which forced it to move back lower. The current structure of the instrument reveals that there might be some consolidation in the future of this Cryptocurrency as it trades between $34,800 and $28,730. Moreover, the 100-SMA (Simple Moving Average) on the 4-hour chart provides additional resistance, skewing the expectations to the downside.
As expressed yesterday, the 1.2180 is too strong for the current bout of bullish momentum on the EURUSD. After attempting several times to break above the mentioned level, the Bears seized the opportunity of weak momentum to take hold of the instrument and bring it down. EURUSD fell below the 1.2150, reaching a low of 1.2116, however the Bears are still in control and there is still plenty of room to the downside. Currently, the instrument is trading around the 1.2125 which corresponds to the 40 level on the RSI (Relative Strength Index) which should give some positive momentum.
The precious metal has decided to consolidate after the volatile trading that we’ve witnessed over the past couple of weeks. The instrument is confined between $1,870 and $1,835, both of which are important levels. Moreover, the presence of the 100-SMA on the 4-hour chart near the upper bound gives the mentioned level some strength and skews the projection to the downside. There is also the RSI which is printing right at the 50 level, also collaborating the consolidation expectation.
What’s the strategy you’re going to use when it comes to trading these markets? Will the markets complete their original move? Or will there be more of the same correction?
Whatever you choose to believe, you can react to it all on CryptoAltum. Go ahead and register a trading account right here if you don’t already have one.
Bitcoin at Risk of Fresh Drop
Even though there was a recovery in the price of Bitcoin that allowed it to shoot above the $34,000, and reach the $34,800 resistance, the Bulls struggled to gain strength above the later level and the price dropped heavily as it reached $31,450. Since there, the instrument managed to climb back a bit higher towards the $31,800, however, the bearish pressure is in control, for the time being.
At the moment, the risk is a break below $31,000, and in case that level is reached, another fresh decline could be triggered which could lead Bitcoin even further lower. In the stated case, the price is likely to continue lower towards the $30,800 support or even $30,000.
If Bitcoin manages to reclaim $32,000 and $32,400 resistance levels, it could start a fresh increase. An initial resistance on the upside is near the $33,000 level. The first major resistance is near the $33,800 level. The main resistance is still near the $34,500 and $35,000 levels, above which the price is likely to accelerate higher in the near term.
Current Market Sentiment:Bearish.
EURUSD Ends Bounce
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.
A close under 1.2117 would confirm a reversal lower and pave the way for a re-test of 1.2077-1.2055. Both the Eurozone and the US data calendar are light on Tuesday, which leaves the pair at the mercy of the broader market sentiment.
Current Market Sentiment: Bearish.
Gold Consolidates Before Big Move
In an otherwise choppy trading session to start the week, gold has leveled off around the $1860 mark which roughly coincides with the midpoint of a potential descending channel. The possible formation is drawn from the August high and low to the November trough and January peak and could continue to guide the precious metal lower in the weeks to come. With that in mind, nearby technical levels could help traders position should the gradual bleed lower persist.
There’s a multitude of resistance overhead that could provide potential entry points for bearish exposure in the weeks ahead - barring a concrete change in the fundamental landscape – with levels of invalidation set above the $1956 area. Wednesday’s Federal Open Market Committee meeting possesses the gravity required to spark such a change, however, and should be monitored closely as a result. Any indication from the central bank that they will tweak their current operations could have significant implications for XAU/USD.
Should gold decline in the wake of the FOMC meeting, support likely resides along $1838 with subsequent levels near $1800 and $1764. A break beneath the latter would constitute a considerable technical development that could open the door to a deeper retracement.
Current Market Sentiment: Consolidation.
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