The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 14.07.2021
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The US CPI (Consumer Price Index) has rocked the financial market as the increase in the economic indicator has shown the hand of the Fed and how their next move will be. This has caused most of the instruments to recoil for the chance of increased chances of a hike in interest rates, however, the increased infection rates of the Delta Variant of COVID-19 has given a rise in the safe-haven department. EURUSD has fallen due to a triple whammy that forced the instrument to fall from the highs of 1.1880. Gold on the other hand remained at the resistance level as safe-haven demand allowed it to defend against the CPI data. Bitcoin’s recovery has become a distant memory as technical indicators are showing a Death Cross forming, ending any hopes for a move higher.
With that said, let’s find out how the markets are doing on July 14th, 2021.
Bitcoin Could Move Below $30,000
Bitcoin prices seem to agree that it is impossible to recover now. Although it remained above $32,000 last week, this support level was shattered during the midday trading session. Therefore, as the Bears tightened their control, Bitcoin hovered around $31,800. The sell signal on the 4-hour chart shows that the simplest resistance path for Bitcoin is as follows. Note that a bearish moving average crossover leads to a death crossover pattern.
This pattern occurs when the 50-SMA breaks below the long-term 100-SMA. In other words, recovery is impossible, and BTC may be consolidated at a lower price level. The accurate 4-hour chart shows a bearish signal on Moving Average Convergence Divergence (MACD). On July 12, when the 12th Exponential Moving Average (EMA) fell below the 26-day EMA, a call to sell Bitcoin was issued. In addition, MACD continues to move below the midline. According to the Relative Strength Index (RSI), shorts write very aggressively after going from close to overbought to oversold levels.
If the technical picture remains unchanged, we expect Bitcoin to fall further, and explore the areas below $30,000. Support for the lower limit of the parallel descending channel is currently the last glimmer of hope for the Bulls. Therefore, it is vital to stay in this channel to resume the upward trend. However, if it is lost, the market will be under pressure in the form of panic. The $31,000 support level may be unreliable, so Bitcoin's potential will drop to the $29,000 - $28,000 range.
Current Market Sentiment:Bearish
EURUSD Recovery Remains Capped
The euro/dollar rose to around 1.1780-85, up 0.06%, as the trading session heads into Wednesday's European open. At the same time, in the context of the U.S. dollar's fall from its monthly highs, major currency pairs have seen their first growth in three days. Recently, it weakened due to the cautious mood of the Fed Chairman, Jerome Powell, before his statement. After the strong US CPI boosted shorts the day before, major currency pairs have continued to fall since mid-June.
Also helping these moves were COVID-19 variant fears, which put some safe-haven bids under the USD. The US June CPI data exceeded the expected year-on-year growth of 4.9% to 5.4%, and the base value was also revised up from 3.8% to 4.5%. It is worth noting that the recovery of the Covid variant brings opposite risks to the transition of the Western economy to a pandemic, which in turn highlights the attractiveness of the US dollar as a safe haven.
Looking at the day ahead, Powell's protection of strong inflation data is closely watched because the weak link does not hesitate to remember the dollar Bulls. Another piece of important data is the US PPI (Producer Price Index) for June which is expected to be 6.8% year-on-year, higher than the earlier 6.6%, and the speech of Isabel Schnabel, the policymaker of the European Central Bank.
Current Market Sentiment:Bullish
Gold Seeks Levels Above $1,818
After the inflation rate in the United States rose, the price of gold remained within familiar territories, as traders looked towards the Fed chairman (Powell), the gold price had returned to the range of approximately $1,810 before the release of its known data. Jerome Powell's two-day testimony will begin on Tuesday. At the time of writing, due to the overall weakening of the U.S. dollar and growing concerns about Covid options contamination, gold was trading at $1,810 and rebounded from the decline to $1,804.
The Delta Variant of COVID-19 has exacerbated a risk by helping gold prices remain high. Despite the rebound, the price of gold is still well below the previous week's high of $1,818. After closing on Monday, the XAU/USD currency pair traded sideways at around $1,810 in the first half of this month on Tuesday. US inflation pushed gold to the $1,800 support level on the first trading day in the United States, but buyers had no problem defending this level. At the time of writing, XAU/USD is up 0.3% per day to $1,812. For the second day on Tuesday, buyers defended the psychological level of $1,800, which was also supported by the 50% Fibonacci retracement level of the April-June uptrend.
In addition, the relative strength index (RSI) on the daily chart continues to climb above 50, indicating that the next bullish outlook remains unchanged. If the price rises above this level and enters the support level, the next target may be the $1838 (50-day SMA) level. As mentioned before, $1,800 is pending as a key support. As long as the daily close is below this level, it may attract more sellers and open the door for further declines to $1,790 (100-day moving average) and $1,770 (61.8% Fibonacci retracement).
Current Market Sentiment:Consolidating with Bullish Bias
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