The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 18.01.2021
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All markets are currently experiencing increased bearish pressure. Bitcoin has continued to move lower, establishing lower highs, which is a sign of decreasing bullish momentum, while both EURUSD and XAUUSD are fighting against their respective supports. The reason lies with the increased strength in the USD due to the concerns surrounding Biden’s stimulus plan.
With that said, let’s find out how the markets are doing on January 18th, 2021.
Market Recap
Bitcoin has been a bit shaky as of late, as the bullish pressure that we’ve been accustomed to has diminished notably. The instrument has been trying to continue moving higher but the resistance levels have been quite a handful for the Bulls forcing them to retreat. This in turn has brought the instrument down, this, however, couldn’t stop the current support at $33,850 from keeping things in check. It’s also important to take into consideration that Bitcoin is currently forming a downside triangle, which means one of two things, either another rally higher breaking previous highs, or a rather sharp move lower.
The bearish pressure continues to sink its teeth deeper into the EURUSD as the common currency broke below the 1.2110 support and continued to move even lower reaching the 1.2060 support level. The widening of the Bollinger Bands suggests that volatility in this pair has increased and that will cause some major moves in the near future. However, with the RSI (Relative Strength Index) showing signs of major oversold conditions, we can expect the volatility to be to the topside. This comes on the back of increased worry over surging COVID-19 cases in Europe.
After the consolidation that Gold was experiencing, it had finally decided on a certain path and stuck to it. The precious metal had decided to continue its move lower as it broke below the support that was previously mentioned which increased the downward pressure leading the yellow metal towards the $1,800. This is a major psychological level, meaning breaking below it would mean the end of the bullish momentum and the return of the Bears. As long as the instrument manages to stay above the mentioned support, the Bulls have hope of turning this around.
What’s the strategy you’re going to use when it comes to trading these markets? Will the bearish pressure continue to dictate what is happening in the market? Or will the Bulls have something to say about that?
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Bitcoin in Bearish Triangle
Bitcoin couldn’t get the needed bullish momentum to break above the $38,000 and soon found itself falling because of that. The bearish momentum continued as Bitcoin broke the $36,400 and $35,500 support levels to move into a short-term bearish zone. The price even spiked below $34,500 and settled below the 100-SMA (Simple Moving Average) on the 2-hour chart. A low was formed near $33,850 before the price started a decent upward move. It climbed above $35,500, but it seems to be facing a strong resistance near $37,000.
A high is formed near $36,860 and the price is currently showing a few bearish signs. There’s also a major bearish trend line forming with resistance near $36,000 on the 2-hour chart. On the downside, an initial support is near the $35,000 level and a connecting bullish trend line. A clear break below $35,000 might call for a test of $34,480. Any lower and the support at $33,850 will be called into action.
If Bitcoin manages to stay above the $34,700 support level, the chances for any upside break increase exponentially. The first major resistance is near the $36,750 level. The main resistance is now forming near the $37,800 and $38,000 levels. A close above the $38,000 level is a must to start a strong increase towards $40,000 or even higher in the near term.
Current Market Sentiment:Bearish.
EURUSD Remains in Bearish Territory
EUR/USD remains depressed around 1.2070, down 0.05% intraday, while heading into the European session open on Monday. The major currency pair earlier dropped to the fresh lows ever since 9th December as the USD began the week on a front-foot. However, the absence of major catalysts due to Martin Lurther King Day over in the United States and cautious sentiment ahead of the key event in Italy probe the traders by press time.
Italian politics is getting interesting as Prime Minister Giuseppe Conte faces a confidence vote in the lower house on Monday. Although PM Conte is likely to win today, as per Bloomberg, Tuesday’s voting in the Senate can turn him down following the recent shock from former ally Matteo Renzi. Other than the virus updates and politics, cautious mood ahead of US President-elect Joe Biden’s first day of duty and initially negative signals for taxpayers and Canadian oil companies weigh on the risks.
Looking forward, Italy’s December month Consumer Price Index (CPI), is expected to remain unchanged at -0.1% YoY (Year-on-Year), will join the political play in Rome and the Eurogroup meeting to entertain EUR/USD traders. Although news from Itay may keep sellers hopeful, chatters between the ECB President Christine Lagarde and fellow bloc members can help Euro to lick its wounds. It’s worth mentioning that the off in America, due to Martin Luther King’s Birthday, will restrict the pair’s moves.
Current Market Sentiment: Bearish with Neutral Bias.
Gold Faces Bearish Pressure
Gold prices plunged to a six-week low reaching $1,802 before bouncing back quickly on Monday. The rising USD and uncertainties surrounding US President-elect Biden’s 1.9 trillion stimulus plan appear to be the primary weighing factors. Market sentiment is tilted towards the cautious side after US equities pulled back from their recent highs despite robust corporate earnings. As US markets are closed for a public holiday, thinner liquidity conditions could exacerbate price volatility.
Looking at the DXY (Dollar index), we can notice that it has advanced to 90.83 – the highest level seen in more than a month. Doubts surrounding US stimulus plans alongside rising demand for safety may be contributing to the Dollar’s strength. DXY has broken above the 50-Day Simple Moving Average (SMA) line for the first time in two-and-half months. Further strengthening may continue to exert downward pressure on precious metals.
Technically, gold prices entered into a bearish setup after breaking below the support at $1,820. Prices have likely found some near-term support at around $1,800 – where the lower Bollinger Band and a previous support level intercept. The RSI is showing signs of recovery after the indicator broke below the 30 level and quickly found its way back towards the 50-level. Breaking below the $1,800 support may open the door for further losses with an eye on $1,770 – the previous low.
Current Market Sentiment: Bearish with Neutral Bias.
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