The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 11.05.2021
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The markets continue to digest the negative news from the NFP from Friday. The USD continues to fall against almost all of its counterparties while the FED pushes forward with its ultra-dovish monetary policy. Bitcoin has succumbed to the bearish pressure falling through all three Simple Moving Averages, just as Ethereum breaks the bullish pressure.
EURUSD and Gold continue to move higher against the USD which is still showing signs of negativity as mentioned. The EURUSD moved higher, however, the 1.2180 is causing trouble as we might be seeing the instrument as a bit overextended. Gold is in the same boat showing overextension in the bullish momentum as we could be seeing a slight correction lower.
With that said, let’s find out how the markets are doing on May 11th, 2021.
Bitcoin's Technical Picture Weakens
The Bulls have been trying to break above the $60,000 psychological level ever since the movement from the lows has started. However, the momentum has not been kind to the Bulls as the lack of it is making any move higher much more difficult. It’s curious to note that the recent pullback in BTC from the highs of $60,000 to the current levels of $55,280 comes in tandem with Ethereum’s drop from the highs of $4,215 to under $3,800. However, it’s not just these two instruments but many other cryptocurrencies are shedding their gains.
The technical picture that we mentioned in the title can be attributed to the fact that all three SMAs (200, 100, 50) on the 4-hour chart have been broken. The instrument has even reached the low of $54,000 before managing to rise higher, but the negative momentum remains. The RSI is printing below the 40 level indicating that the direction is certainly to the downside. The MACD only proves this thesis as the histogram has turned red and below the midline while the MAs are also starting to dive below it.
In order for the Bulls to regain any semblance of control of this instrument, then a move above the $56,000 and 50-SMA would be the first step. If the instrument manages to break above that, then the 100- and 200-SMA will be the next level to beat, should the Bulls seek to regain the momentum to move towards $60,000. On the downside, the Bears would have full control should the instrument break below the $53,000 support level which has held against many downward movements for the past couple of weeks.
Current Market Sentiment:Bearish
EURUSD Shows More Promise Upwards
The Asian session saw the EURUSD remain poised to the topside especially with the buying interest keeping the instrument floating. Not to mention the negativity surrounding the USD which is also adding additional bullish pressure on the common currency. The spectre of Friday’s NFP still haunts the market as the FED reaffirm that their dovish stance on monetary policy, citing that their dual mandate has still not been reached.
Furthermore, the positive news concerning COVID-19 vaccinations and partial reopenings of the economy has helped improve the economic outlook of Europe. Of course, this adds more positivity to the EURUSD with hopes of it gaining more traction to continue the pace higher. However, the technical picture is starting to become a bit worrisome with the RSI and MACD both showing signs of bullish exhaustion.
Despite the correction in the RSI from the overbought zone above the 70 level, the indicator hasn’t shown any signs of accelerated depreciation in the instrument. Being able to stand above the 60-level is giving the Bulls hope that a bounce higher is not entirely out of the question. The problem, however, lies with the MACD. The indicator is showing that the momentum is diminishing as per the histogram which is decreasing.
Current Market Sentiment:Consolidating Gains
Gold's Remains Firm Above $1,835
The yellow metal continues to move higher trading above $1,835 just as the European session gets underway. This allowed gold to print a four-day winning streak, this comes just as the USD is failing to sustain any kind of meaningful move higher, weighed down by the NFP read from last week. Although the reflation fears jump back to the table, exerting downside pressure on the stock futures, the US Treasury yields remain mostly inactive, despite pausing a two-day uptrend, this is allowing gold to rise the way it did.
Also, the Fed policymakers have been flashing mixed signals over the future course of action and hence unearth the doubts over easy money policies after Friday’s US jobs report back the doves. As a result, the USD gauge defies the bounce off 10-week low amid cautious sentiment ahead of Wednesday’s US Consumer Price Index (CPI) for April, which in turn keeps a tab on gold buyers.
Looking into the technicals of XAUUSD, we can notice that the $1,845 is acting as the main line of resistance for Bulls. However, by looking at the indicators, we can notice that the movement higher has become a bit over extended, especially with the RSI trading so close to the overbought zone making it hard for any meaningful rise to break through the resistances.
Current Market Sentiment:Consolidating Gains
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