The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 26.07.2021
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The market is showing signs of optimism after the weekend, namely as the cryptocurrency market found some fundamental catalyst to rise higher. The USD has also played a major role since the negativity in the instrument continued to push the market higher and allowed the other instruments to find their bullish players. EURUSD was able to stop the bleeding at 1.1790 and keep things aloft above 1.1800. However, the market remains very prone to more negative moves.
Gold is almost showing the same bearish signs, as the positive sentiment in the market is pushing the instrument lower. Yet, the Bulls are trying to keep the negativity at bay. Bitcoin is the clear winner of the weekend as it broke higher, reaching the $40,000 level before it corrected slightly as the momentum indicators are showing extreme over extension.
With that said, let’s find out how the markets are doing on July 26th, 2021.
Bitcoin Reaches $40,000
Bitcoin prices rose nearly 20% after a massive bullish rebound in the weekend and following the start of trading in the new week. There were multiple resistances that were broken with this rise, including the 50- and 100-SMAs, and the $36,000 resistance level that almost reached a leverage of $40,000. However, the Bears were quick to step in and stopped the move higher as the current price is around $38,276, at the time of writing.
After the recent confirmation of the buy signal, the Moving Average Convergence Divergence (MACD) confirmed the bullish outlook. The call to sell was made after the 12-day exponential moving average crossed the 26-day moving average. Along the midline, the chances of a continued upward trend increase significantly. The Wavelength Index (RSI) moves from the oversold area to the overbought area. The strong rise of this technical tool highlights the growing upward trend.
Therefore, Bitcoin's path of the inferior resistance still points upward, at least for now. The confirmation of the breakout of $39,000 supports the uptrend, as the Bulls seek to trade above $40,000 on the upcoming trading day. Keep in mind that gains above $40,000 may also start another big rebound towards the 200 SMA on the 4-hour chart, but the next Bull market may be at $50,000.
Current Market Sentiment:Bullish
EURUSD Remains Vulnerable
In early Monday trading, the euro/dollar rose slightly during the Asian session. The currency pair opened higher and entered a narrow trading range in 15-point increments. At the time of writing, the trading price of the EUR/USD pair was 1.1772, a gain of 0.01% on the day. The U.S. dollar index (DXY), which tracks the U.S. dollar and its six major competitors, has fallen below 93.00. As Wall Street announced positive corporate returns, investors turned to riskier assets, which meant better corporate performance.
Meanwhile, the US infrastructure deal is still not resolved on issues like transit funding, redirecting Covid relief money, and ensuring that it’s fully paid. On Thursday, the European Central Bank (ECB) maintained its monetary policy stability, but changed its outlook to reflect its recently increased inflation target. Currently, investors expect German business climate data and US new home sales to drive business growth in June. Many Eurozone economic reports this week are expected, but the main event will be the Fed meeting.
Before Wednesday's FOMC meeting, the U.S. dollar should continue to trade modestly. Despite concerns that the rest of the world will be deadlocked by deviation from the Delta Variant of the COVID-19 virus, we expect the Fed to work hard to deal with the reality of the above-average growth. The tone should broadly support the view of a contraction in the fourth quarter of this year, and may increase for the first time in the fourth quarter of 2022.
Current Market Sentiment:Consolidating with Bearish Bias
USD Weakness Allows Gold’s Bounce
After opening below $1,800 in early trading on Monday, gold rose sharply. This price increase is related to the US dollar index, which has reached 93.00. The general risk sentiment has also boosted the demand for precious metals. The rapid spread of the coronavirus Delta variant and its impact on the pace of economic recovery have created opportunities for rising gold prices. Investor concerns about inflation also make gold seem more attractive.
In terms of economic news, the Federal Open Market Committee is meeting this week. Traders expect the Fed to keep interest rates unchanged. Comments by Fed Chairman, Jerome Powell during this meeting, will also have a major impact on the price of the precious metal. U.S. Treasury yields also supported the bullish momentum of gold, as US Treasury yields plummeted before the FOMC week, gold prices rebounded above $1,800 in Asian trading on Monday.
In other news, the violent actions in the Chinese technology industry seem to be affecting the tone of risk. As the two sides (US and China) negotiate in the first few months, they will also impact the price of gold. However, all eyes are currently on Wednesday's FOMC meeting, looking for hints of exit, while Covid updates and U.S. durable goods order data will make traders happy. Please note that at the confluence of the daily moving average (DMA) 21 and 100, the price of gold remains at the key support level near $1,798, and a downward breakthrough is inevitable.
Current Market Sentiment:Cautiously Bullish
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