The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 05.08.2021
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Volatility made itself known in the market after the ADP Non-Farm Payroll (NFP) data showed worse-than-expected figures. This is usually a precursor of the more accurate NFP from the US, the NFP figures could be showing the same negativity as the ADP NFP, leading to a weaker Dollar. This of course will affect the entire market from the EUR to Gold and might even have a ripple effect that reaches Bitcoin.
With that said, let’s find out how the markets are doing on August 5th, 2021.
Bitcoin Continues the Struggle
Bitcoin price continued to fall below the $38,200 and $38,000 support levels, even testing the $37,500 area, where long positions awaited. That’s when the Bulls decided to strike, pushing the instrument back higher, at approximately $37,500. On the hourly chart of the BTC/USD currency pair, the resistance translates at the trend line near $38,250.
Currently, BTC/USD is well above the resistance levels of $38,000 and $38,500. As Bitcoin broke through the 23.6% Fibonacci retracement level of the sharp drop, falling from a high of $42,630 to a low of $37,533. Now, it’s struggling near the $40,000 area and the 100-hour simple moving average. And as the 50% Fibonacci of the same range was also close to $40,000, a close break above the 100 hourly SMA and $40,000 might trigger a steady increase. Meaning that the next major resistance is around the $41,500 level, and further gains may lay the foundation for a move towards the $42,500 resistance zone in the short-run.
BTC is deemed to fall again, starting a downward correction, unless it breaks through the resistance levels of $40,000 and $40,200. The initial support for the downside was around $39,000, yet the first major support is now near the $38,750 area, and a break below the $38,750 support level may trigger a sharp decline. Hence, the next major support at the $38,000 mark is around $37,500.
Current Market Sentiment:Bullish
EURUSD Faces Stronger USD
The buying sentiment denominated in USD puts the instrument on the verge of daily loss. Ever since the start of the week, the currency pair has been bearish after hitting a high of 1.1910 on July 30th. The US dollar exchange rate was at 1.1835, suggesting a drop of 0.01% on that day. On Wednesday, Fed Vice Chairman Richard Clarida hinted that he will raise interest rates in 2023, given the surprising pace of economic recovery from the coronavirus pandemic.
Federal Reserve Chair Mary Daley reiterated the possibility of reducing the bulk asset purchase program at the end of this year, or early next year. On the other hand, the single currency is boosted by the upbeat economic data. The Eurozone Retail Sales jumped 1.5% in June, in comparison with market expectations of a 1.7% increase. Due to concerns about the highly contagious variant of delta transmission and its impact on the fragile economic recovery, investors have given up riskier assets and therefore limited returns.
From a technical point of view, the instrument has been showing increased signs of volatility. The recent bout of this volatility came in view with the rise of the instrument past the 1.1880 resistance towards the 1.1900, before quickly falling back past the 200- and 50-SMAs (Simple Moving Averages) on the 4-hour chart. The momentum indicators also turned negative, as the RSI (Relative Strength Index) broke below the 50 midline and is currently printing at the 40 level.
Current Market Sentiment:Bearish
Gold Shows Signs of Negativity
This week, gold returned to the low end of the range, and held the key daily moving average (DMA) support at $1,811 when the U.S. dollar strengthened. In addition, increasing concerns about the spread of Covid Delta variants in Asia and the United States affected market sentiment and increased the attractiveness of the U.S. dollar as a safe haven. As the focus shifts to Friday's Non-Farm Payroll (NFP) Data, the update will add new momentum to trading.
Gold (XAU/USD) couldn’t continue Wednesday's rebound as the US dollar gained strength, forcing the instrument to fall back towards $1,810. Due to concerns about lay-offs and Delta Covid ahead of this week's major events, namely the Bank of England (BOE) Monetary Policy Conference and the US NFP, traders were cautious in deciding to stay out of the market until more concrete data is generated.
In July, ADP's position change fell from the expected 695k to 330k. The revision of the last figure to a lower level of 680k also had an effect on the market, namely on stocks. However, the ISM Service Purchasing Managers Index jumped from 60.4 to 64.1 in July, challenging market shorts. Looking ahead, gold traders will pay close attention to the macro data as tensions escalate. But any good news is taken into consideration with a pinch of salt, since the bearish momentum is increasing.
Current Market Sentiment:Sideways with Bearish Bias
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