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Technical Analysis for Bitcoin, Euro vs U.S. dollar, and Gold for 27th January 2021

The Daily Cryptomenon

This analysis was written at 9:00 am GMT +3, on 26.01.2021

The markets are all waiting for the FOMC today. This is the single most important economic news in the entire world as trades will be focusing heavily on the news announcements from this Central Bank. Bitcoin is currently stuck in consolidation, however, there seems to be some downward bias. While both, EURUSD and Gold, are holding onto their positions ahead of the news release later on today.

With that said, let’s find out how the markets are doing on January 27th, 2021.


Market Recap

The Cryptocurrency has continued its consolidation trading as no clear direction has yet to emerge and provide enough volatility and momentum to get out of the current range. Bitcoin is obviously waiting for the big break in either direction in order to have some freedom of movement, however, things remain stagnant for the time being. Looking at the RSI (Relative Strength Index) on the 4-hour chart, we can notice that the indicator is stuck between the 50 and 40 level, indicating some bearish bias.

Strong resistances and strong supports are the main idea of the EURUSD at the current moment. The instrument has failed to break above 1.2180 as highlighted yesterday, however, it would seem that it also failed to break below 1.2120. This indicates that there is a lot of buying and selling pressure built-up in those levels that it’s going to be hard to select a direction and stick to it. This consolidation between the mentioned levels is probably going to continue for the day as the FOMC (Federal Open Market Committee) releases its interest rate decision.

More consolidation on the precious metal, but there does seem to be some berish pressure mounting. The RSI on the 4-hour chart indicates that there is some downward momentum building. Honestly speaking, we doubt we will see anything major happening prior to the FOMC release today. Gold continues its trading between $1,870 and $1,835 as it sits and waits for the decision, that’s when we are bound to see some major movement in the instrument.

What’s the strategy you’re going to use when it comes to trading these markets? Will the FOMC continue to push these markets lower? Or will there be a bounce? 

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 Faces Strong Resistance

After a failed attempt to clear the $35,000 resistance, Bitcoin faced enough bearish pressure to drop back down towards the $33,000. However, the bearish pressure did not stop there as BTC even broke the $32,500 level and settled near the $31,700. There was a spike below the $31,000 level, but it remained stable above $30,800. A low is formed near $30,823 and the price is currently recovering higher.

Bitcoin’s price is currently facing resistance near $33,000 and the 100 4-hour SMA (Simple Moving Average) which seems to be converging with $34,800. At the outset, it seems like there is a short-term ascending channel or a bear flag forming with support near $31,900.  To continue higher, the Bulls need to gain strength above $32,500, $32,800, in order to take on the 100 4-hour SMA.

 


If Bitcoin fails to clear the $32,800 resistance or $33,500, it could start a fresh decline. An initial support is near the channel support at $31,900. A clear break below the channel support could open the doors for a larger decline towards the $30,800 support. Any more losses may possibly call for a downside break below the $30,000 support zone.

Current Market Sentiment:Neutral with Bearish Bias.


EURUSD Eyes Fed Decision

EUR/USD trades flat, marking a weak follow-through to Tuesday's bounce from crucial support, as investors await more clues from the Federal Reserve (Fed) on the timing of potential tapering or gradual reversing of monetary stimulus. The currency pair is trading largely unchanged on the day near 1.2160 at press time, having defended the 1.2120 support and gained 0.28% on Tuesday.

The U.S. Central Bank is set to leave the interest rate unchanged near zero and maintain its bond-buying plan at around $120 billion per month. However, Fed's chairman Jerome Powell's comments on potential changes in the central bank's bond-buying program could inject volatility into the markets. Any hint of the Fed considering an early scaling back of stimulus to curb speculative bubbles in the financial markets will likely send stocks lower, drawing haven demand for the greenback. 



Ahead of the Fed rate decision, the pair could take cues from the forward-looking German Gfk Consumer Confidence, the US Durable Goods Orders data, and the Italian bond yields.  

Current Market Sentiment: Waiting on News..


Gold Takes Cues From FOMC

Today’s FOMC meeting is probably the most important macro event for traders around the world. Market participants are eyeing an update from Jerome Powell about the central bank’s view of the economic outlook, fiscal stimulus as well as clues about future tapering. In view of deteriorating labor market conditions and viral waves in winter, the Fed’s monetary policy is likely to remain accommodative, which could help to cushion the downside for gold prices.

The Fed has made it clear in the December FOMC press release that the Committee expects to maintain an accommodative stance of monetary policy until maximum employment and long-term inflation of 2 percent are achieved. With that said, the central bank is likely to hold its policy rate unchanged until 2023, as well as continue to increase its holdings of Treasury securities by at least $80 billion per month and of mortgage-backed securities by at least $40 billion per month for the foreseeable future.

 


Technically, gold prices hit an immediate resistance level at $1,870 and have since entered 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 respectively.

Current Market Sentiment: Waiting on News, Bearish Bias


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