The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 06.05.2021
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Markets are still being affected by yesterday's weaker-than-expected US ADP employment change. Not to mention the current geopolitical tensions between China and Australia and the most recent communications breakdown. However, bitcoin has managed to break the negative momentum and rallied higher thanks to the most recent announcement by the US banks and their inclusion of cryptocurrencies into their custodian services.
EURUSD and Gold are being affected by a slew of things, chief among them is the upcoming NFP release as the risk-off mood in the markets is allowing the USD to gain the upper hand against these instruments. The EURUSD is more of a cautious mood as the economic events for the day will play a huge role in deciding the trading dynamics. Gold, on the other hand, is close to breaking above the $1,800 resistance as the metal rally in Silver and Palladium is also affecting the yellow metal.
With that said, let’s find out how the markets are doing on May 6th, 2021.
Bitcoin Comes to US Banks
Bitcoin’s recovery mission from the lows of $53,000 has been slowly paying off as the instrument has managed to break through several important resistance levels as well as the 50, 100, and recently 200-SMAs on the 4-hour chart. However, it seems to be facing the critical seller congestion zone at $58,000, it’s very important that BTC breaks above the mentioned level, otherwise, we could be seeing another rejection and a move back lower. As of this writing, the pioneer cryptocurrency is trading around $56,800 as Bulls battle to overcome the resistance at $58,000. On the downside, immediate support has been provided by the 50-SMA at $56,000.
Holding above the mentioned short-term support is key for sustaining the uptrend, however, with US banks finally on board with introducing crypto trading and custody services, the uptrend has extra legs to stand on. On the upside, a sustained close above the 200 SMA would prove to investors that Bulls are finally in control. As speculation increases for gains beyond $60,000, buying orders are bound to rise, adding to the tailwind force.
Looking into the technicals for a bit, we can notice that the MACD line is crossing above the signal line. This is a very bullish sign as it means that the Bulls are staging for a major move higher. The histogram is also printing in the green indicating that the upward momentum is indeed increasing and we can expect a move higher. However, the RSI is printing below the 60 level, and this can be a bit disconcerting, because a failure to break above the mentioned level would stop the bullish momentum in its tracks.
Current Market Sentiment:Bullish
EURUSD In Cautious Mood
EUR/USD is pressuring the downside around 1.2000, looking to test two-week lows of 1.1986, as the US dollar has caught a fresh bid-wave amid worsening market mood. A fresh wave of risk-aversion gripped Asia after China’s state planner announced that the government has decided to put an end to the strategic alliance with Australia, as the ties deteriorate.
Despite the weaker-than-expected US ADP and ISM Services PMI, as well as the dovish expectations from the FOMC, the US economy is still expected to outpace the European economy as the race to full recovery continues to be the main issue that most traders are focusing on. This pressures the common currency much more and puts a lid on any more gains.
Despite the apparent weakness in the major, the lack of any defining price action in the US Treasury yields kept the euro Bulls somewhat hopeful heading into a data-busy day ahead. Additionally, ECB’s (European Central Bank) President Christine Lagarde’s speech will be also closely followed for fresh trading impetus. From a technical point of view, the MACD is showing a decreasing bearish vibe, despite the MAs printing below the midline, the histogram is slowly diminishing as we can expect some consolidation ahead of the economic news.
Current Market Sentiment:Cautious Mood
Gold's Focuses on $1,800
Gold has managed to counteract the pullback from intraday high while picking up the bids to $1,790, just as Thursday’s European session kicks off. In doing so, the yellow metal rises for the second consecutive day while the US Treasury yields and USD are yet to respond to the latest challenges to the risk sentiment. Among them, Beijing's dumping of the China-Australia strategic economic dialogue mechanism and pressure on the Japanese government to extend the third state of emergency beyond the May 11th deadline are the key factors that recently weigh on market sentiment.
Gold prices continue to find support from the recent surge in the precious metals complex, especially with the price of Palladium sitting at record highs above the $3,000 mark. Silver retreated from two-month highs but the undertone continued to remain bullish amid expectations of a faster global economic recovery. The MACD is showing some sort of consolidation picture with the indicator printing so close to the midline, however the RSI is showing room for more upside which gives hopes for Bulls that there’s a chance for another move higher.
The US ADP employment change showed a 742K increase against an expectation of +800K in April. Since then, markets have turned cautious ahead of the official NFP print. The ADP release is usually seen as a precursor to the US payrolls data. The US economy is likely to have added 978K last month vs. 916K seen previously. An NFP disappointment could raise doubts on the strength of the US economic recovery, which could push back the Fed’s tapering expectations, rendering gold-supportive.
Current Market Sentiment:Bullish
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