The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 05.05.2021
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Janet Yellen’s speech yesterday roiled the markets as she tried to push the narrative of higher rates in the near-term. However, Fed’s Kashkari was quickly put to an end to any ‘higher rates’ talk. The markets are now waiting on the ADP figures to be released later on in the day. Bitcoin is currently facing strong bearish pressure as the presence of sellers on the top levels, waiting to cash-out, might put a dent in the move towards $60,000.
EURUSD and gold are both facing the USD demand which is all over the place due to the interest rate talks as well as the upcoming ADP economic event. The EUR side of the equation has also some economic events that will have an impact on the way the instrument is trading. Gold, on the other hand, has well-defined battle lines as Bulls and Bears set their trades ahead of the aforementioned economic event.
With that said, let’s find out how the markets are doing on May 5th, 2021.
Bitcoin Faces More Bearishness
Bitcoin’s failed attempt at rising above $60,000 last week thwarted investor speculation. The strength of the $59,000 resistance at the top side prevented the Bulls from continuing the move higher, when coupled with investors cashing out their profits, increased the negative pressure allowing BTC to fall towards $53,000. The strength of the $55,000 as support has given the Bulls an excuse to continue moving higher and would explain the recovery from $53,000.
On the upside, the flagship cryptocurrency is looking into resistance highlighted by the 50-SMA, marginally under $56,000. Should the Bulls be able to break through the congestion of sellers around that level, would push more buyers into the market as speculation rises for gains past $60,000. However, the RSI might be showing a different story as the indicator is printing around the 40-level, and even dipped below that. For the Bulls to regain their momentum, a break above 60 on the indicator needs to happen.
To focus more on the resistance and support structure, the presence of sellers extends all the way from $54,822 to $56,462. The level of congestion between those levels is extremely high as 903,000 BTC were sold around those levels indicating that it’s going to be hard for BTC to establish a decent trend higher above the $56,000. It’s not impossible, but extremely challenging. On the downside, the presence of buyers between $53,119 and $54,759 should prove enough for the Bulls to keep a hold of the downward move as 797,000 BTC were bought between those levels.
Current Market Sentiment:Uncertain - Bearish Bias
EURUSD Seeks Bullish Moves
EUR/USD refreshes intraday high to 1.2026, as the European session kicks off on Wednesday. In doing so, the currency major pair managed to cut through the losses, as the USD stepped back on the market consolidation. The main reason behind the move in USD can be related to the investor’s cautious optimism ahead of the key US data as well as mixed signals from the US Fed and Treasury officials.
It should be noted that COVID-19 updates from Japan and Canada have been grim of late, not to forget India’s sustained run-up in infections. Alternatively, vaccine manufacturers have been flashing risk-positive signals and back hopes of faster economic recovery in the West. So, the two opposing forces here are cancelling each other and allowing investors to focus on the reset talks from Janet Yellen and Fed’s Kashkari. On Tuesday, market sentiment worsened as downbeat US data and chatter over the global tax deal joined Yellen’s initial support to the Fed rate hike while weighing on the US Treasury yields.
Moving on, Eurozone’s quarterly economic forecasts and second readings of April PMIs may offer intermediate EUR/USD moves before pushing traders to pause for the US ADP Employment Change and ISM Services PMI releases for April. While downbeat figures for ADP may keep the US dollar pressured, backing EUR/USD in turn, increasing odds of a positive surprise from ISM figures can recall the greenback buyers.
Current Market Sentiment:Waiting on Economic Data
Gold's Battle Lines Defined
Gold is on a steady recovery towards the $1800 mark, as the USD retreats across the board the risk dynamic is becoming less averse. The US tech sell-off combined with Treasury Secretary Janet Yellen’s rate hike comments rattled markets and boosted the safe-haven greenback at gold’s expense, which explains the sudden rise and drop in the markets.
Gold took a sharp U-turn after running into the $1800 technical resistance once again. Now that all eyes are on the US ADP jobs report and ISM Services PMI, the resistance and support structure would be something interesting to observe. The upside of the yellow metal might be limited by the dense cluster of resistances between $1,777 and $1,780. As of this writing, the instrument is battling against the 50-SMA on the 4-hour chart at $1,778. If the instrument is able to break above $1,782, the next level for Bulls is seen at $1,787 before attempting a move to $1,800.
On the flip side, if the 50-SMA cannot sustain any downward move, a test of the previous day's low of $1,770 cannot be ruled out. Futherdown, the sellers would be focused on $1,768. The next critical support awaits at $1,764, below which the $1,760 ultimate support would be the level which Bears would want to break in order to establish a continuous move lower.
Current Market Sentiment:Waiting on Economic Data
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