The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 26.02.2021
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With the $1.9 trillion stimulus package on the line in today’s U.S. House vote, markets seem to be a bit wary of the outcome. Bitcoin is facing increased bearish pressure the $45,000 support level threatens to be broken and with that establish a downward trend. EURUSD and Gold battle against a strong USD as well as an increase in the U.S. Treasury yields ahead of important economic news out of the U.S. as well as the results of the vote.
With that said, let’s find out how the markets are doing on February 26th, 2021.
Market Recap
Bitcoin has been able to recover from the negative pressure it witnessed after failing to continue the bullish pressure that led to the $58,400 All-Time high. Bitcoin found enough support at $45,000 to attempt another move higher as it was able to break above the 100-SMA (Simple Moving Average) on the 4-hour chart, however, for the bullish momentum to return to this instrument, it had to break above $52,500. Failing to do so has allowed the Bears to push the instrument lower, and that’s what happened as BTC trades around the $45,700 level.
Massive bullish pressure was witnessed on the EURUSD as the instrument managed to break above important resistances at 1.2190 and 1.2200. The bullish momentum continued higher reaching the 1.2250 level, but it wasn’t able to sustain the move higher reaching a high of 1.2242 before starting to correct lower. The movement is now settling back at the starting point around 1.2150. The spike in the bullish momentum was supposed to allow the instrument to continue on this track, but the RSI (Relative Strength Index) entered the overbought territory, and the Bears were quick to take hold of the confusion and forced the instrument back down.
Bears continue to have a tight grip on the precious metal forcing it below the support at $1,790. The break below that level increased the boldness of Bears and the momentum drove gold towards the $1,760 support. All indicators are showing that the negative momentum is very strong with the RSI printing below the 30-level indicating that the instrument has entered into oversold territory, so might be seeing a bit of a correction.
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Bitcoin at Risk of Dropping Below $45,000
After the movement below the 100-SMA and the testing of the important support at $45,000, the instrument managed to rise back above the 100-SMA and test the resistance formed at $54,500. Unfortunately, the bullish momentum that accompanied Bitcoin all this time seemed to have lost a lot and that resulted in the inability to properly break above the mentioned resistance. Failure to do so caused the Bears to take their shot and forced BTC towards the mentioned support.
There’s an increasing bearish pressure mounting on the instrument as the RSI and MACD (Moving Average Convergence Divergence) are both printing in negative territories. The RSI is printing close to the 30-level indicating that the Bears are here to stay for the time being, and we’ve noted before how the MACD is still showing negative pressure with the moving averages below the midline. The main focus for Bulls is a bounce off of the $45,000 support to at least above $50,000 to get some breathing room, while Bears will be on the lookout break below the support with a target at the 200-SMA followed closely by $42,000.
The main resistance zone for the Bulls to beat, for the momentum to return into their grasp is located at $50,000 which also is the current location of the 100-SMA. If the Bulls can pull this off, the next target comes at the $52,500 resistance level and that would be a tough level to beat. However, as mentioned earlier, the failure of the Bulls to establish any kind of bullish move will result in the Bears taking hold and driving the instrument towards the $42,000 support.
Current Market Sentiment: Bearish.
EURUSD Settles Back in Familiar Range
EURUSD had a massive move to the top side as it managed to break above the 1.2190 and 1.2200 resistance levels as mentioned at the beginning of this brief. The move higher comes on the back of decreased U.S. Treasury Yields which dropped more than 1.50%, allowing EURUSD to establish a strong move higher, however, it was met with strong resistance at 1.2250 forcing it to drop back towards familiar ranges at 1.2150. The global growth indicator copper-to-gold ratio is showing that the yields still have room to grow indicating that EURUSD pain might still not be over.
The movement in U.S. Treasury Yields might continue to bring lots of pain to U.S. stocks as well as the EURUSD, but that depends on whether or not the PCE (Personal Consumption Expenditure) Index manages to beat estimates later on during the American session. On the other hand, if rates continue to be so low, the USD will have a tough time keeping its hold of the gains it managed to make. The reason comes from the divergence in yields between the long-term, which added nearly 50% just this year, and the short-term, which only added 4 basis points, and those are much more sensitive to changes in rates and inflation.
Technically, the instrument might be facing an impending severe sell-off. This comes after the EURUSD faced a massive rejection at 1.2243 and ended the trading day with a Gravestone Doji on the daily chart, which usually means that there’s more downward pressure mounting. Combine that with the current structure of the U.S. Treasury yields and strength in the USD, and you have yourself a massive downward move on EURUSD, one that can lead it below the 1.2000.
Current Market Sentiment: Bearish.
Gold Eyes Two Strong Supports
The precious metal has faced increased bearish pressure after the disastrous auction in U.S. Treasury Yields. The move comes on the back of a strong USD forcing the instrument to fall below the $1,790 support and land at the previous strong support of $1,760. Other than that, there wasn’t much happening in the market that could explain what exactly happened to gold as traders focus on the PCE index scheduled to be released later on today as well as the U.S. House vote on the $1.9 trillion stimulus package.
The path of least resistance appears to be the downside as per the technical indicators. Currently, the Bears are eyeing the low of $1,760, after the Bulls were unable to properly defend the previous support at $1,765 and the previous strong support at $1,790. Should Bears break below the $1,760, they will come in contact with the $1,753 which should offer somewhat of a challenge before looking at the $1,741. From there the $1,726 will come into play and the Bulls will be hard-pressed to keep that level from breaking.
If the Bulls were able to establish a solid momentum, then the first line of resistance will be around the $1,777 hurdle. This level will be critical to reviving any semblance of a bullish move. Above which the $1,782 will come into play, however, with the $1,787 right above it, there might be some kind of resistance zone that will give Bulls a run for their money. The ultimate level for Bulls to beat rests at $1,790, as breaking above that level would give a question on where the Bears will be able to continue their downward move.
Current Market Sentiment: Bearish.
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