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Technical Analysis for Bitcoin, Euro vs U.S. dollar, and Gold for 31st March 2021

The Daily Cryptomenon

This analysis was written at 9:00 am GMT +3, on 31.03.2021

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The market is quiet on edge this Wednesday as two pieces of important news are coming out. The first has to do with the U.S. ADP Non-Farm Payroll which is the precursor to the actual NFP reading from the U.S. government. The other news is the much-anticipated speech by Joe Biden where he’s expected to lay out the details of his $3 trillion infrastructure spending stimulus.

Bitcoin’s bullish momentum appears fading as it nears the $60,000 psychological level. EURUSD and gold are facing more bearish pressure as the U.S. Treasury yields continue to do their thing and rise.

With that said, let’s find out how the markets are doing on March 31th, 2021.

Bitcoin’s Bullish Momentum Fading

For the past couple of days, Bitcoin has been stuck in a range between $58,000 on the downside and $59,500 on the upside. There’ve been several attempts on hitting the highs above $60,000, however, all have been silenced and never heard again. Looking into the technical aspect of Bitcoin, one can notice the formation of a rising wedge on the 4-hour chart. This pattern usually indicates that the upward momentum will fade soon and a downward movement will be established in its place.

Usually, this pattern forms after a drop in the price of an asset and the subsequent one rises. When the bullish momentum isn’t strong enough to carry the instrument above certain key points, a rising wedge pattern emerges. Based on the technical analysis of this pattern, one can expect a downward move on Bitcoin prior to the two trendlines of the wedge converging. That’s not all, the rise in volume helps clarify that the instrument is indeed heading towards a drop, with some calculations, we’ve managed to estimate that Bitcoin might reach $53,000 because of the recent pattern.



However, it isn’t all doom and gloom with Bitcoin. Looking into the MACD (Moving Average Convergence Divergence), we can notice that the possibility of more upside isn’t entirely out of the question. The MAs are both above the midline (showing bullishness), while the histogram is printing in the green (showing strong momentum). If these two factors, rising wedge and MACD, counteract each other, we can expect that there will be more consolidation in the future of this instrument.

Current Market Sentiment: Cautiously Bullish


EURUSD Extends Weakness

The EURUSD continued to push against the support levels, breaking through and reaching around the 1.1700 level. It actually hasn’t seen this level since early November 2020. All of this came thanks to the USD, which keeps on trekking higher due to the increase in Treasury yields. The $3+ trillion U.S. infrastructure plan that was unveiled by President Biden on Wednesday, was the main catalyst which prompted this sudden surge in the U.S. Treasury yields and, of course, this means that the EURUSD is going to suffer for it.

Over in the Eurozone, things aren’t looking any better, which only serves to add additional downward pressure on the major pair. The continuous rise in COVID-19 cases and slow vaccination campaigns, due to the supply delays, are also playing a major role in keeping the EURUSD pressured, as the expectations of an economic recovery in the Eurozone continue to be pushed out. Therefore the macroeconomic divergence between these two remains the main reason why we see EURUSD falling the way it currently is.



Investors have chosen to ignore the current upbeat Chinese Manufacturing and Services PMI data, as the EURUSD remains at the mercy of the USD’s price dynamics. So now, investors will be looking for the Eurozone CPI and ADP Non-Farm Payroll figures expected to come later today, all before the highly awaited speech by Biden, where we expect him to give more information about the infrastructure spending stimulus.

Current Market Sentiment: Bearish


Gold Free Falls

After the break in consolidation that we highlighted in our previous brief, the precious metal gold continued its downward descent reaching the lows of $1,700. The movement lower was highlighted by the increase in the U.S. Treasury yields as Joe Biden is expected to reveal the details of his infrastructure spending stimulus later on today. Investors will be eyeing that speech with increased attention for clues on what that might mean for the yellow metal.

That’s not the only factor affecting gold in such a negative way; actually, the overall U.S. economy is strengthening due to the faster-than-expected vaccination attempts and this only serves to add more negative pressure on XAU. The inflationary fears that accompany this recovery aren’t disregarded either, but investors seem more willing to invest in the Treasury yields rather than the non-yielding precious metal. Not to mention the quarter-end flows which seem to add another layer of bearish pressure on the instrument.

 


Looking into the resistance and support structure of the instrument, we can notice that the $1,680 is currently the support the Bears want to beat. With any break lower, the instrument will be facing off against the $1,676 support level, which should provide enough bounce to counteract the strong negative pressure currently seen on the instrument. The ultimate target for Bears seems to be around the psychological level of $1,650, as Bears and Bulls will fight tooth and nail to either break or keep from breaking.

Current Market Sentiment: Bearish


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