The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 05.04.2021
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The week is starting with limited liquidity as major investment institutions and banks are still on Easter holiday. The market will continue to experience some wild moves as the spectre of low liquidity looms over it. However, the markets are open with Bitcoin failing to break above $60,000 (again) which prompted another visit to $57,000.
EURUSD and Gold are both experiencing some bullish pressure from the reduced demand for the USD as a safe-haven, however with the positive economic news coming from the U.S. it’s only a matter of time before another downside move appears on those two instruments.
With that said, let’s find out how the markets are doing on April 5th, 2021.
Bitcoin Fails at $60,000
Since failing to break above $60,000, Bitcoin has continued to move downwards reaching the $57,000 strong support level. However, the Bulls weren’t going to give up that strong support so easily, as they’ve managed to stop any further declines below $56,500 and pushed the instrument back above $58,000. The damage has been done, however, as the bullish momentum couldn’t quite keep the instrument above $58,000 and forced the instrument back below it.
Looking at the technical indicators of RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence), we are able to notice the lack of positive momentum we’ve been talking about. The RSI is printing between the 50 and 40 levels indicating that the negative momentum is in charge, and there seems to be enough space for more downward pressure to manifest itself. MACD seems to be collaborating this scenario, as the MAs are printing below the midline same as the histogram which reinforces that the momentum lower is gaining strength.
With this bearish momentum taking over, it’s clear to see that the Bulls are having a very tough time dealing with this. In order for them to continue the movement higher, they would need to establish a higher base than $57,000. This level has held up to many downward attempts, but the latest break below it suggests that it might be losing any kind of strength it has, meaning that the Bulls will have to break and establish a foothold above $58,000 in order for the momentum higher to continue.
Current Market Sentiment: Cautiously Bearish
EURUSD Remains Above 1.1750
The USD has been facing an increase in bearish pressure as the market sentiment and mood continue to be elevated. This in turn has allowed the EURUSD to rise a bit, however, it does seem to remain blocked from any further upside. The market sentiment has gained it’s positive attitude from the higher-than-expected Non-Farm Payroll figures which are pointing to a faster than expected recovery in the economy. In turn, this has prompted investors to expect a sooner, rather than later, interest rate hike from the FED.
When coupled with the infrastructure spending plan laid out by President Joe Biden, the whole sentiment continues to show the positivity of the market. This has allowed the U.S. Treasury yields to move higher, especially with the short-term rates gaining an additional boost. Of course, with yields being the drive of the EURUSD market, it shouldn’t come as a surprise when we say that any additional upside in the major currency will remain limited.
Adding to the negative side of the EURUSD is the increase in COVID-19 cases in the Eurozone, which has prompted even more lockdowns to be put in place hampering any kind of economic recovery that the continent might have. Furthermore, the French government has recently decreased its 2021 growth expectations which will only push the major lower.
Looking at the economic calendar for the day, the European market will remain closed due to Easter Monday, so the EURUSD will most likely take any trading ques from the dynamics of the U.S. Treasury yields. There will also be the U.S. Services PMI which might have an impact on the trading directions of EURUSD.
Current Market Sentiment: Neutral
Gold Remains Buoyed
With the Easter holiday still in effect, don’t expect much changes to be happening in the market today. There will be little incentive to keep things trading as they normally are with banks and other major investment institutions enjoying the time off. That being said, gold is holding on to the gains it made, trading around $1,730, practically reaching the levels of the consolidation zone. However, with the NFP result, released on Friday, accompanied by the increase in the U.S. Treasury yields, the precious metal seems to have a limited upside, and much more pressured downside.
The NFP result has spurred investors’ and market participants’ economic brain, as they are expecting a much sooner interest rate hike from the FED, as they think a much faster economic recovery is underway thanks to the fast vaccination against COVID-19 allowing the economy to open up again. With this being a fresh week, investors will be looking at the U.S. Services PMI as well as the Fed Minutes later on in the week. However, with the markets still relatively closed, expect some wild swings as limited liquidity takes into effect.
Looking at the support and resistance structure of the gold market, we can see that in order for the Bulls to continue with their recovery move, a solid break above $1,730 is needed. If that was to happen, then the $1,733 will test the level of commitment that Bulls have for this move higher. Above which the $1,738 resistance will be waiting with another test.
From the support side of things, the $1,724 support level is seen as a strong level that Bears will want to break below to continue the push lower. Breaking below that level will expose the $1,715 level to more pressure, but Bulls might experience some recovery around that level. Ultimately, Bears will be looking to break below $1,709 in order to continue pushing the instrument to the downside.
Current Market Sentiment: Limited Liquidity - Caution Advised
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