The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 04.08.2021
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The entire market seems to be trading sideways for the time being ahead of some important economic events from the US and EU. The ADP Non-Farm Payroll (NFP) as well as the actual NFP, from the US, will be playing the most integral part in the coming days as it would set the tone for the rest of the month. Should the FED find that employment is still going up, their hawkish rhetoric will be all over the place and push everything against the USD lower, that means EUR, XAU, and even possibly BTC.
With that said, let’s find out how the markets are doing on August 4th, 2021.
Bitcoin Continues the Struggle
The overall bearishness in the market pushed Bitcoin price even lower. The instrument continued to fall below the $39,200 support level, and the $39,000 support. The bearish carnage didn’t stop there as BTC even broke the $38,500 mark and has officially entered the bearish zone. The price fell below the $38,000 support level and was well below the 100-hour simple moving average. It formed near US$37,660, and the price is now trying to correct upwards.
By breaking below the $38,000 support level, the instrument has eradicated all measures of bullishness. In addition, the hourly BTC/USD pair has broken through the key downtrend line, and the resistance is near $38,200. The instrument is now facing an important resistance near $38,800. This is close to the 23.6% Fibonacci retracement of the key decline from a high of $42,630 to a low of $37,660. The next major resistance is near the $39,500 level. A lot of resistance has been established near the $40,000 mark and the 100-hour SMA.
This is approximately 50% of the Fibonacci retracement of the key decline from the high of $42,630 to the low of $37,660. If Bitcoin was able to regain some ounce of bullishness and push higher above the $38,800 and $40,000 levels, then the instrument would be re-entering the bullish zone. The next big upside resistance is near the $41,450 area. Unless Bitcoin rises above the $38,800 and $40,000 resistance levels, it can continue to fall. The initial downside support is around $38,000. The first major support is now around $37,800. A break below the $37,800 support level may bring with it extra negativity that may lead the instrument towards $37,000.
Current Market Sentiment:Consolidation
EURUSD Jumps Back Towards 1.1900
EUR/USD has managed to hit the brakes on the bearish move and reverse it’s weekly losses, hitting a daily high of 1.1875 before Wednesday's European session. At the same time, the U.S. dollar was generally weak before the release of key data in the Eurozone and the United States. The major currency pair was able to overcome three consecutive days of decline and rose by 0.10% intraday.
The U.S. dollar seems to be preparing for a long and difficult economic route because it has consolidated recent losses, even the returns on stock futures and government bonds represent market reluctance. The current woes of the COVID Delta strain in the US and the deadlock over Biden’s infrastructure plan continued to sour the risk appetite in markets. Also in the line were the hawkish Fed rhetoric following the stronger-than-expected US Factory Orders.
In addition, geopolitical concerns about Iran and China and Beijing's suppression of technology stocks have also weighed on market sentiment. However, it should be pointed out that today’s combined PMI of July and June retail sales in Germany and the EU will indicate the direct direction of the EUR/USD price trend. It should be noted that risk catalysts may continue to drive the short-term trend of the euro/dollar, mainly before Friday's non-farm payrolls (NFP) data is released.
Current Market Sentiment:Sideways Trading
Gold Trades Sideways
The price of gold rose on Wednesday and hit a new daily high of around $1,816. A combination of factors has caused the precious metals to hover within the closing range of $20 in the past three trading days. The U.S. dollar index is still off the recent high, but with the higher valuation has stimulated near-low levels of buying interest. Investors gained some buying interest in Gold as they are afraid of the rapid spread of delta options and its impact on the global economic recovery. The escalating geopolitical tension in the middle east between Iran and Israel, especially after Iran was accused of an attack on an Israeli-managed tanker.
The U.S. dollar has been struggling to cope with currencies that are considered risk-off, including the Japanese yen and Swiss francs, because issues related to the slowdown in US economic growth and the COVID19 delta variant have challenged risk appetite. The divergence between central banks has been a support for the greenback in recent months and a headwind for gold. This makes Nonfarm Payrolls data key.
The event could seal the deal for dollar bulls if the data comes in hot and enough to persuade the markets into a buying spree in expectation of a tapering announcement as soon as the Jackson Hole Symposium which is expected to take place between August 26 and 28. The event and US data leading up to it will be critical for both the US dollar and precious metal prices.
Current Market Sentiment:Sideways Trading
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