The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 07.04.2021
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The markets are back in full swing as they look towards the main economic event of the day which is the FOMC meeting minutes. Bitcoin continues to struggle against $60,000 as the rectangle technical formation is providing some consolidation between $60,000 and $57,000. Traders could be benefiting from this limited range play.
EURUSD has found strength in USD weakness rather than any meaningful strength in the EUR as the economic divergence between the two continues to widen, adding some skepticism around the pairs ability to continue moving higher. Gold seems to be trading in a relatively cautious manner especially after the current rise, while investors are waiting for more information coming from the FOMC minutes later today.
With that said, let’s find out how the markets are doing on April 7th, 2021.
Bitcoin Stuck Under $60,000
For the past week or so, Bitcoin has been stuck trading below $60,000. We’ve already elaborated on the importance of this level and how crucial it is for the Bulls to break above it, if they wish to sustain the positive movement we’ve been seeing. However, the downside has also been under the protection of the 100- and 200-SMAs on the 4-hour chart, in addition to the $57,000 crucial support keeping a floor on any downward movements.
Looking at things from a technical point of view, we can ascertain that the pioneer Cryptocurrency has been caught in a rectangle formation. This is a classical technical formation that highlights the important resistances ($60,000) and supports ($57,000). Traders would either try to buy at the support and sell as the resistance makes the best of this confined situation, or they would simply wait for the break of either direction and follow the flow as it were.
It’s also worth noting that the instrument might be facing an extended period of consolidation. This is brought to light by the movement in MACD (Moving Average Convergence Divergence). The MAs on the indicator are printing at the midline alongside the histogram which means that there’s no dominant direction for the time being. That said, the 100 and 200 SMAs must hold any further declines in the instrument, as breaking below would lead BTC to a freefall towards $50,000.
Current Market Sentiment:Bearish
EURUSD Bulls Push Through
The common currency has continued to push higher against the USD as it reached the 200-DMA (Daily Moving Average) during the Asian session and seems to be pulling back for the time being. It looks as if the Bulls are just taking a breather before they continue their bullish momentum. The pause in the USD sell-off and the stabilizing U.S. Treasury yields have put a lid on any further upward gains that the instrument might have as EURUSD reached a 10-day high around 1.1878 before pulling back slightly.
All eyes today will be set on the FOMC March meeting minutes. Investors will be reassessing their focus on whether or not the FOMC will hike interest rates sooner rather than later especially with the encouraging U.S. fundamentals. This expected rise has prompted a sell-off in the U.S. Treasuries across the curve, which in turn accelerated any profit taking on USD, which gave the EURUSD the needed bullish momentum to continue past critical resistance levels.
However, all of this movement is not based on any EUR side strength, but more of USD side weakness. Nothing in terms of economic news or improving COVID-19 conditions would allow for the recent upswing in the major pair. The expectation that EURUSD will continue to move higher is relatively fishy, as the U.S. continues to surpass the Eurozone in regards to an expanding economy. It simply doesn’t stand to reason that USD weakness alone will allow the pair to move past the strong resistances.
Current Market Sentiment: Cautiously Bullish
Gold Goes on the Defensive
Gold has turned to the defensive side of things just as the U.S. Treasury yields snapped a three-day bearish movement and attempted a comeback. However, the USD is helping gold climb higher as investors are rethinking the rate hike expectations for this year. Adding to the mix, today we get the FOMC meeting minutes which will definitely add some fresh impetus and direction for the yellow metal.
Furthermore, the earnings season in the U.S. is kicking off, this is triggering a cautious reaction in the markets as they are unsure of how enterprises have fared after a full year of lockdown. This triggered a pullback in U.S. stocks after they’ve reached their respective record highs, which helped the precious metal gain some extra momentum upwards.
Looking into the resistance and support structure of Gold, we can see that the instrument has failed to sustain a breakout above $1,745, therefore Bears will more than likely focus on the support levels around $1,735. Further down, Bears will encounter another important support around $1,730, any additional movement below will lead Bears to $1,727 which will be a line in the sand for Bulls. On the flip side, the Bulls will be seeking to break above $1,745 to strengthen their commitment to the upside.
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