The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 19.07.2021
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As the new week kicks off, we are seeing a rather subdued start. Not much has happened in terms of price movements with most instruments deciding to take a breather before more impetus comes along and changes the entire situation. We’ve seen how the EURUSD seems to be settling in a consolidatory phase without much price changes. Bitcoin saw the same kind of trading movement, as the instrument was unable to fully move out the consolidation. Gold is the odd instrument out, as the bullish momentum weakened just enough for the Bears to take over and drive the instrument towards the $1,810 support level.
With that said, let’s find out how the markets are doing on July 19th, 2021.
Bitcoin's Jump Needs a Catalyst
As trading starts in the new week, the price of Bitcoin seems to be hovering between $31,000 and $32,000. Overshadowed by a slight correction during the Asian session, BTC lost some positions near $32,000. If the $31,000 support level is broken, the current correction may rise sharply, especially now that the Bulls are tired. Moving Average Convergence Divergence (MACD) indicates that Bitcoin is in the hands of the Bulls to a certain extent.
This bullish outlook follows a strong buy signal and may be cross-amplified by an above-average MACD. When the 12-day exponential moving average (EMA) crossed the 26-day EMA, it was the first time to buy bitcoin. A stable bullish technical picture may help the bulls change history and may allow Bitcoin to break through $32,000. The increase in the overall pressure may reverse the bullish desire. As mentioned above, BTC has lost some positions from a high of around $32,000.
For buyers, the most impressive safe haven is $31,000, but when the situation becomes difficult and losses exceed the recovery momentum, Bitcoin will bottom out and seek support. At the same time, the previous anchor stood at the $30,800 line. It should be noted that the Relative Strength Index (RSI) cannot move above the midline, which means that the bulls lack the catalyst to support their fight to eventually rise to $40,000. The bullish effort has not paid off and wear and tear has occurred, which means that more buyers are leaving the market, which may make the $31,000 and $30,000 support levels easy to fall.
Current Market Sentiment:Bearish
EURUSD Sellers Test 1.1800
The EUR/USD dropped to 1.1800 for the third consecutive day before Monday's European session. During the slow Asian trading hours, sentiment related to the risk of the coronavirus triggered a rise in risk-off mood which bolstered the U.S. dollar. This Delta variant is spreading at a faster rate, resisting the vaccine and urging global lawmakers to reconsider the fight against COVID19. As Australia is eager to extend the closing time, Britain is preparing for Freedom Day and is being criticized at home and abroad.
The U.S. Congress recently passed a law to strengthen U.S. research and development, which prohibits scientists and scholars from participating in U.S.-funded research projects with the support of Beijing, according to Bloomberg. On the other hand, doubts over the European Central Bank’s (ECB) next moves after showing readiness to accept above-target inflation. Despite the government’s refusal, the Federal Reserve System's (FED) aggressive measures have increased euro/dollar spending.
On Friday, US consumer data was mixed, mostly weak, but the details showed stronger inflation expectations are positive for the US dollar. Looking ahead, EUR/USD traders will pay attention to sentiment headlines in the absence of data/major events. The statement of the German Bubba report is also important because Berlin supports adjustment of monetary policy to control inflation.
Current Market Sentiment:Consolidating
Gold Eases But Holds 200-SMA
Before Monday's European session, gold was trading at approximately $1,812. The safe-haven offer below the U.S. dollar and the fall in gold may cause hesitation on the Fed's next move. This may support an article in the Financial Times (FT) suggesting that the dollar index (DXY) has climbed to the highest level in the world in more than a year.
As the calendar day approaches, headlines of Covid Delta variants, mainly from the United Kingdom and Australia, will be the key to generating new momentum. Friday saw the yellow metal trade around $1810, but closed on Friday, down 0.94%, falling from a high of $1,832.06 to a low of $1,809.03, while the U.S. dollar rebounded slightly after a bullish retail sales report. The strong data and the shift in interest rate expectations after the Fed’s plunge in June, and the surge in expectations for 2023, have helped the US dollar strengthen in recent weeks.
Investors, for now, are seeking carry and considering that gold does not hold a similar carry advantage, speculative flows into precious metals have remained subdued. The permanent weakness of gold relative to real yields may weaken the yellow metal before the Fed raises prices to support price increases.
Current Market Sentiment:Bearish
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