The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 16.06.2021
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The FOMC is right around the corner as market participants have become a bit jittery thanks to the multitude of information that’s going to be blasted at them. There’s going to be the decision on interest rates, the economic projections, dot-plot, and Powell’s speech, all of which will hold their weight and are going to affect the market in one way or another. The EURUSD and XAUUSD are both adopting the Wait-And-See approach until the time of the event when traders will decide which way to trade. Bitcoin, however, couldn’t care less as it focuses on breaking above the $41,000.
With that said, let’s find out how the markets are doing on June 16th, 2021.
Bitcoin Remains Elevated
Bitcoin started a new rebound after breaking through the key resistance zone of $38,500. BTC even rose above the $40,000 resistance zone and was well above the 100-hour SMA. However, the price seems to be struggling to continue the upward momentum above $41,000. There had been a couple of serious attempts to climb higher than $41,000, but the Bulls didn’t have the needed momentum to do so. Before the price corrected lower, the recent high was formed near $41,384.
Since then the price fell below $40,500, but the Bulls were active at $39,500. Its trading price is higher than the 23.6% Fibonacci retracement of the recent drop from a high of $41,384 to a low of $39,476. There seems to be some strong resistance at $40,500 which represents the 50% of the Fibonacci retracement level that recently fell from a high of $41,384 to a low of $39,476. However, the first major resistance is seen near $40,650.
A large trade triangle is also forming, with resistance at around $40,650 on the 1-hour chart. A clear break of the triangle resistance may trigger an upward movement. The next resistance is near the $41,200 level. The closing price above the $41,200 mark may move to the $43,500 mark. A break of the triangular support level may push the price to the $38,500 support level and the 100-hour SMA.
Current Market Sentiment:Consolidating Gains
EURUSD Remains Cautious Ahead of Fed
The euro/dollar fell back above 1.2100, marking the first daily decline in the first three days as the European session kicks off this Wednesday. At the same time, at the time of writing, the currency pair is trying to keep the rebound from the intraday low near 1.2120. The Federal Open Market Committee (FOMC) meeting can be said to be the main catalyst for the couple's recent inaction. However, strong inflation expectations are pushing prices below the dollar and giving sellers hope.
Some US Economic indicators for May, may be the catalyst of recent concerns about fuel re-expansion. Although retail sales fell -1.3% from the forecast -0.8%, PPI rose by more than 6%. The main signal of US inflation, that is, the New York Fed’s survey of consumer expectations and the 10-year equilibrium inflation rate of the St. Louis Federal Reserve System (FRED), were both very strong giving hopes that inflation talks might be on the table. In addition, China’s largest military exercise near Taiwan and its dislike of the recent criticism from the North Atlantic Treaty Organization (NATO) on human rights issues is pushing for a thorough investigation of the origin of Covid in order to further drag down the price of the euro/dollar.
The Deputy Governor of the European Central Bank Luis de Guindos said that May housing projects and building permits in the United States may propose preliminary adjustments to the euro/dollar price before the Fed’s announcement, most of which are lower. The decision to change interest rates, quarterly economic forecasts, and President Jerome Powell’s speech will be key events.
Current Market Sentiment:Wait-And-See
Gold is Negative Ahead of FOMC
Gold buyers are attacking an intraday high of about $1,861, which is the first one-day rise since Wednesday’s ECB (European Central Bank) meeting. A weaker USD should trigger a corrective pullback in gold before the FOMC meeting, with daily gains of 0.14%. As the previous day's rally faded near a one-month high, the USD is tracking the slow movement of government bond yields.
However, market participants seem to be optimistic before the European session, as mixed U.S. data has raised concerns about inflation and dot-line graphs, not to mention Powell’s cleverly pushing back market power to reduce the likelihood of traders following suit. Traders are keeping an eye out for second-tier data from the United Kingdom, Canada and the United States, not to mention the Sino-US trade negotiations, but nothing is more important than the Fed and Powell's forecasts.
The focus that traders have is on whether or not PCE inflation is revised upwards as per the FOMC’s economic forecasts, this may help achieve more sustainable inflation growth in the medium term. This will be more aggressive than the market is expecting and should put pressure on precious metals.
Current Market Sentiment:Wait-And-See
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