The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 26.05.2021
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The USD continues to be the weakest link among the other instruments after the most recent indication that the FED will not be addressing any tapering talks, which allowed the US Treasuries along with the USD to fall. This affected every one of the instruments, starting with the EURUSD and Gold, both of which had much to gain from the movement higher and were seeking to break through previous highs. Bitcoin was also quite positive in its movement, managing to stop a movement lower at $36,000 and is attempting to break above $40,000.
With that said, let’s find out how the markets are doing on May 26th, 2021.
Bitcoin Seeks Area Above $40,000
Bitcoin has shown investors that it can climb it’s way out of the hole it fell into last week, that’s not all as the instrument was able to move higher and attempt to break above $40,000. However, increasing suspicion in the market is limiting Bitcoin's ability to continue its high-level upward trend. The upward move has now exceeded the $39,000 level and continued to move higher seeking a solid break above the $40,000 resistance level.
It’s necessary to break above the $40,000 to confirm the upward trend towards $50,000. After falling to $30,500, the MACD (Moving Average Convergence Divergence) found that the trend was on the bullish side. This movement forces the indicator to reduce the gap to the Midline (0.00). The deviation of the MACD line from the signal line (blue) increases confidence in the bullish forecast. More specifically, at the time of writing, Bitcoin is trading at slightly higher than $39,000.
On the other hand, the 50-SMA (Simple Moving Average) provides immediate support and helps the Bulls focus on gains above $40,000. The outlook for the RSI (Relative Strength Index) is bearish because it indicates a decline. This indicator shows that buyers cannot overcome the key resistance of $40,000. Therefore, exhaustion may tire the Bulls by opening a new retracement to $36,000.
Current Market Sentiment:Cautiously Bearish
EURUSD Finds Bullish Pressure
The common currency managed to maintain a good trading position near the intraday high of 1.2260, rising 0.07% on the day before the European session on Wednesday. This increase can be attributed to the development in the overall market sentiment which is turning more risk-on allowing the increase that we witnessed. In view of the recent weakening of inflation expectations in the United States, Fed officials seem to have dispelled their concerns about inflation and as traders sought higher-risk assets.
The sentiment and the surge in the EURUSD may be related to the removal of the Chinese Phone manufacturer Xiaomi from the blacklist by the United States and the ongoing vaccination campaigns in Western countries. It is worth noting that the willingness of the United States to relax the ban on Russian oil pipelines has also boosted market sentiment. Let’s not forget that the current economic situation is also helping the sentiment and risk-mood.
Compared with the Federal Reserve, the pressure from the ECB (European Central Bank) on monetary policy adjustments is much smaller, which in turn leads risk-takers to the Euro. Apart from the Fed’s speech, there were no obvious catalysts in the economic calendar on Wednesday. In turn, EURUSD traders turned to other risk catalysts related to Covid, trade and politics in search of new momentum.
Current Market Sentiment:Bullish
Gold Seeks $1,900
Gold Bulls have taken a breather, near $1,900, after they were able to break through the upper bound of the tight consolidation zone, however, it seems that the instrument has fallen to $1,898.72 after seeing a multi-day high refresh during the Asian market opening on Wednesday. The yield on 10-year government bonds has hit new lows since January and late April, which is the most likely cause for the price of gold to rise the day before. Let’s not forget the current indecision in the markets over the inflation risks associated with the US market.
Even when officials of the Federal Reserve (FED) try to calm down their pessimism, they still face the gradual relief of deflation risks and anxiety. In addition, the data mix and cautious sentiment before the US Core PCE index (Personal Consumption Expenditure, which is the Fed’s preferred inflation indicator) has also exacerbated market hesitation and insurance. The Fed’s speech may continue to amuse gold traders, and the Bulls should remain in control of the market.
In order for the Bulls to maintain any control of the market, the price shouldn’t drop below $1,875. The psychological level at $1,900 and $1,910 may be a direct obstacle to growth to the October 2020 high around $1,933. The instrument has started a new week relatively quiet, with almost no changes on Monday. Driven by the sharp drop in U.S. Treasury yields, gold rebounded on Tuesday, hitting its highest level of $1,898 since the beginning of January. At the time of writing, XAU/USD was trading at $1,897, a rise of 0.8% per day.
Current Market Sentiment:Bullish
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