The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 22.07.2021
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The markets are awaiting today’s Super Thursday event risk. As the ECB is set to present its decision on the interest rate, while Christine Lagarde (President of the ECB) will deliver a speech that might play up any forward guidance on how the ECB is to handle the issue of increased inflation. Other than that, the market will remain reliant on price dynamics, an aspect that the EURUSD was lacking as it continued to trade sideways ahead of the ECB risk event. Gold reached some resistance, but was unable to break above, which resulted in a descent as the momentum fades. Bitcoin, found enough bullishness thanks to Elon Musk and other industry leaders following some information that came out during the B Conference.
With that said, let’s find out how the markets are doing on July 22nd, 2021.
Bitcoin's Recovery Delayed
Bitcoin Bulls showed muscle strength on Wednesday, climbing from below $30,000 to a daily high of $32,807. The recovery started as a reflex after the decline earlier this week, but was then triggered by the attendance of Elon Musk at the B Conference. In this meeting, Tesla’s founder and Twitter CEO Jack Dorsey, and other industry leaders, discussed the issue of demystifying cryptocurrency. After Musk announced that his space company SpaceX owns Bitcoin and plans to hold it for a long time, the price of Bitcoin has risen further.
Musk also revealed that he owns Ethereum, in addition to Bitcoin. Besides discussing the fundamentals and raising the topic of the Bitcoin technology level during Conference B, resistance above $32,000 seems to make the Bulls uneasy. As a break above a falling wedge,- on that is regarded as highly bullish, asserted the uptrend. When the wedge shape formed, Bitcoin's trading volume dropped significantly, leading to a consolidation phase. Cheap allies will be confirmed when the price breaks through the upper trend line resistance.
As buyers took action to take advantage of soaring prices, the surge in transaction volume added to the bullish outlook. The resistance of the 100 simple moving average (SMA) stopped the uptrend, triggering a correction. BTC is trading just under $32,000, while the bulls are working hard to gain further support in order to avoid potential losses of up to $30,000 or $29,000. Despite the delayed recovery above the $32,000 level, the Moving Average Convergence Divergence (MACD) shows bullish momentum, indicating that the upward trend may eventually resume.
Current Market Sentiment:Cautiously Bullish
EURUSD Awaits ECB Decision
The price movement of the euro/dollar on Wednesday was triggered by an increase. As worries about the new COVID-19 fade and market sentiment improves, major currency pairs may benefit from the general weakness of the U.S. dollar. The European Central Bank's interest rate decision will be reviewed on Thursday, July 22nd at 11:45 am GMT.
Soon after, the President of the European Central Bank Christine Lagarde will hold a press conference at 12:30 PM GMT. The risk of holding an ECB meeting after the recent monetary policy review is equivalent to the relatively high implied overnight volatility of the euro/dollar. In fact, the EUR/USD implied overnight volatility of 7.9% is in the top 86% of the measured value over the past 12 months, exceeding the 20-day average of 5.4%. This assumes that the hypothetical trading range of the EUR/USD currency pair is 98 points.
However, to be honest, this seems relatively mild for the central bank's interest rate decision, accompanied by updated economic forecasts. The reason behind this may be due to the fact that the European Central Bank will not announce a real change in policy on Thursday. The forward-looking recommendations are to be made by Christine Lagarde in a statement. To this end, the European Central Bank’s strategic review detailed the central bank’s adjustments to its inflation assessment. In particular, the current long-term goal of the European Central Bank is an average inflation rate of 2%, which provides greater leeway for rising inflation.
Current Market Sentiment:Bearish
Gold Falls at Odds with Renewed USD Strength
With a new wave of risks sweeping the Asian market, and traders temporarily ignoring Covid's concerns, the price of gold was close to a low point, hovering around $1,800. The positive increase in government bond yields will offset further depreciation of the U.S. dollar, which will depress the price of gold even further. The key support seems to be around the area of $1,795 and $1,797, which appears to be under threat again as the market welcomed the news of the US stimulus plan before the ECB announced monetary policy.
The demand zone is a combination of 21-day moving average (DMA) and 100-DMA. Later, weekly initial jobless claims and US housing data will boost the business, and Covid news will also be closely watched. At the time of writing, XAU/USD was trading at $1803.23, down 0.4% the next day. It fell from a high of $1,813 to a low of $1,794.66. As the U.S. dollar fell from a high of more than three months, gold rebounded from its low point, and as the stock market rose, risk appetite returned.
Due to the inflation delta, investors remain cautious, supporting the US dollar on the one hand; on the other hand, high inflation in the United States leaves room for the Fed to reduce its incentives to put pressure on gold prices, because investors are looking for opportunities for gold without results elsewhere.
Current Market Sentiment:Cautiously Bearish
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