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Technical Analysis for Bitcoin, Euro vs U.S. dollar, and Gold for 18th May 2021

The Daily Cryptomenon

This analysis was written at 9:00 am GMT +3, on 18.05.2021

For todays important  economic announcements, visit our Economic Calendar.

As the market gets ready for a series of speeches from various Central Bank Members, market participants begin to hedge away their exposed risk and look for signs on how they will move when the ball drops. Bitcoin continues to play to the whim of Elon Musk’s tweets, but there seems to be some hope with a double bottom pattern emerging, allowing for some bullishness.

EURUSD and Gold are both moving higher, thanks to a weakening USD as the risk-on mood continues to play the main factor. The instruments have managed to break through their respective resistance levels and are aiming for higher levels, however, technicals are fighting against them.

With that said, let’s find out how the markets are doing on May 18th, 2021.


Bitcoin’s Sign of Recovery 

Bears have been in control of this instrument ever since the first indication of Tesla stopping receiving payments in BTC format, citing environmental factors. This has sent BTC spiralling towards the $42,000 support, where the Bulls have been able to defend against many attacks. Bears have continued to try and break below the mentioned support, but the Bulls are not having any of it as they push the instrument higher, in doing so, they have managed to create a double bottom pattern. This is a clear bullish sign as it indicates the decreasing bearish momentum as well as the possibility of more upside.

The move higher has already begun as the instrument has managed to climb above $44,000 as well as the $45,000 short-term resistance. Now the focus is on $46,000 which might put up a fight against the Bulls. The best case scenario for Bulls here is a break above $46,000 and a sustained move above $48,000, in doing so the Bulls would cement that a recovery is in place and we could be seeing a move past $50,000 not too long after. On the other hand, should $46,000 reject the bullish move, $42,000 becomes a likely target for Bears as they aim for psychological support at $40,000.



Looking into the technical indicators, the bearish pressure is still quite obvious as per the RSI and MACD (Moving Average Convergence Divergence). The RSI is still below the midline at 50 and despite the upward trajectory, there doesn't seem to be enough momentum to carry the instrument higher. This is confirmed by the MACD histogram which prints at the midline of 0 while the MAs are well below that, indicating negative pressure with little momentum.

Current Market Sentiment:Bearish


EURUSD Shifts Focus to 1.2200

The movement in EURUSD continues to be quite bullish as it moves higher reaching 1.2170 with focus on breaking above the 1.2180 resistance level. The broad USD selling, accompanied by the risk-on mood in the market is favoring the move higher, however, market participants are waiting for the second reading of the Eurozone Q1 GDP, as well as comments from ECB (European Central Bank) President Christine Lagarde for fresh impulse.

Optimism surrounding the COVID-19 vaccine could be cited as the major reason for the latest risk-on mood, which in turn exerts downside pressure on the USD. US President Joe Biden is considering, for the first time, to share the American authorized COVID-19 vaccine, around 20 million doses, with the nations in need. On the same line is China’s support for the global drive to abandon vaccine patents and fasten the cure’s production. Further, updates that COVID-19 jabs from Moderna and Pfizer are capable of taming the Indian variant of the virus offer extra support to the market Bulls.


It’s worth mentioning that the better-than-expected US data and the Fed policymakers’ continued rejection to tapering, except for Dallas Fed President Robert Kaplan, weighed on the greenback the previous day. Looking forward, the EUR/USD pair traders will seek confirmation of the European Commission’s (EC) upbeat GDP forecasts to keep the Bulls hopeful.

Current Market Sentiment:Cautiously Bullish


Gold Continues Moving Higher

Gold continues to move higher reaching the $1,870 resistance as Treasury yields manage to bounce higher across the curve, which helps put a lid on the USD decline. XAU refreshed three-month highs at $1874 in the last hour, as the greenback continues to remain undermined by the expectations that the Fed will maintain interest rates lower for a longer period, especially after the weaker US Retail Sales report tamed concerns about rising inflation.

Further, gold received an additional boost after Dallas Fed President Robert Kaplan on Monday reiterated his view that he does not expect rates to rise until next year. Meanwhile, mounting growing covid cases in Asia and escalating Middle East tensions keep the buoyant intact around the traditional safe-haven gold. Meanwhile, the Federal Reserve's vice chairman Richard Clarida has said the Fed will respond to higher inflation should that be required, but he and others, including Fed’s chair, Jerome Powell, have constantly insisted that now is not the time to start taper talk while employment remains deep in a hole.

 


The technicals of Gold are looking like more upside is the way forward, however, with the current structure of RSI and MACD, we could be seeing a correction in the near term. The RSI is showing that the instrument has entered into overbought territory, as the indicator breaks above the 70 level. The MACD is showing that the main direction is bullish with the how the MAs are moving, but the decreasing histogram shows that the momentum is losing steam.

Current Market Sentiment:Cautiously Bullish


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