The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 04.06.2021
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The markets are in a state of lull after the better than expected ADP NFP and ISM PMI release yesterday. They currently are waiting for more information from the actual NFP, which is set to confirm the movement in the US employment market. They will also be waiting on Jerome Powel’s speech concerning tapering talks, but the main focus will be on the NFP. EURUSD and Gold have both suffered great losses and are now trading in a sideways pattern with bearish bias prior to the event risk of the day. Bitcoin, on the other hand, remains quite stable below the $40,000, but seems to be on the verge of more downside pressure, so traders will be waiting for information to decide which way to move.
With that said, let’s find out how the markets are doing on June 4th, 2021.
Bitcoin Bearish Pressure Intensifies
Bitcoin’s price started another recovery trip this week, pushing the rise from the support level of $33,000 to a high of around $39,000. Investors expected to exceed $40,000, but their rejection led to continued correction below the 100-SMA. The bearish leg will almost certainly continue to expand; therefore, the 50-SMA on the 4-hour chart should provide some needed support. The support of $36,000 has kept things from getting out of hand.
Some traders expected the price to increase to $39,000 on Thursday, however, it was difficult for the Bulls to break through the $38,000, all the while, the RSI (Relative Strength Index) on the 4-hour chart shows a strong bearish signal. This decline is after the instrument reached higher above the 70 level. The correction to the midline indicates that the Bears have become aggressive and prices are expected to face greater gravitational pressure.
A comprehensive observation of the MACD (Moving Average Convergence Divergence) shows that the Bulls are still leading, but we cannot ignore the speed at which the sellers are advancing. Therefore, when the MACD line (blue) is lower than the latter, a sell signal appears. Protecting the 50-SMA and supporting $36,000 is essential to avoid the potential loss of $33,000. On the other hand, a retracement above $38,000 will attract more buyers to enter the market and may continue to rise above $39,000 because investors may increase their bets by speculating an increase of $40,000.
Current Market Sentiment:Some Downside Pressure
EURUSD Bears Push to 1.2100
The EURUSD fell for the fourth consecutive day, hitting a three-week low of 1.2115, falling 0.11% before Friday's European session. The Bears applaud the challenge of building and strengthening the dollar, not forgetting the headlines related to secondary risks, ahead of the major US data/events. The Fed's decision to dial back the procedures it had been using for the pandemic as well as the ADP employment change that jumped to 972,000, gave the EURUSD Bears much to react to and drove the instrument lower.
In addition, the ISM service industry PMI also increased by 64.00 from the expected 63.00, while the price paid hit the second highest. The optimistic impression of the first signal indicates that the world's largest economy is heating up more than Fed lawmakers expected, which in turn may lead to a reduction in monetary policy. The aforementioned risk mitigation catalysts, coupled with US President Joe Biden's urge to increase taxes and extend Donald Trump's initial ban on 59 Chinese companies, contributed to market pessimism.
In addition, the arrest of a Hong Kong rights activist and the struggle between the European Union and the United Kingdom have provided the USD with more safe-haven demand further eroding EURUSD. Looking ahead, the euro zone’s April retail sales are expected to be 25.5%, compared to 12% previously. This will become a direct catalyst and may make EURUSD sellers uneasy before Fed Chairman Powell’s speech. They will also be waiting for the NFP trigger prior to attacking the psychological magnet of 1.2000.
Current Market Sentiment:Bearish
Gold to Decline Further
The price of gold continued to fall against the USD. Currently, the trading price of XAU/USD is US$1,861, down 0.5%. The U.S. dollar rose on Thursday due to bullish US economic data. The increase in inflation as well as the rollback of the Fed's hyper-adaptive policy came in much earlier than expected. As strong economic data suppressed the price of gold, the US 10-year benchmark interest rate rose to 1.63%.
Early signs of a surge in US employment data, especially ADP and weekly initial jobless claims, joined the ISM Service PMI and triggered the yellow metal to continue the movement lower. The fall in the Fed's portfolio sales may also exacerbate policy adjustment problems, which is one of its economic support programs during the pandemic. As the market worried about the decline in the money supply, resulting in the supply being lower than the level of US Treasury bonds and the dollar, gold continued to fall since February 26th.
There have been talks concerning President Biden’s readiness to ease the tax rate proposal amid positive COVID conditions, which may push the yellow metal even further down. In the case of an upturn in the NFP release, the situation may indicate a slight decline in the price of gold. Fed’s Powell may provide entertainment in between by advocating loose monetary policy, but gold traders will be more interested in the confirmation of NFP.
Current Market Sentiment:Bearish
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