The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 19.01.2021
Due to Martin Luther King Day in the U.S. yesterday, there wasn’t much volatility coming from the markets. That’s the main reason we’ve been seeing such consolidation in the markets without much movement in any direction, however with things back into trading, we can expect the markets to pick up things a notch.
With that said, let’s find out how the markets are doing on January 19th, 2021.
After printing lower highs and a rather stable low around $33,850, Bitcoin has found itself consolidating around the 100-SMA (Simple Moving Average) on the 2-hour chart. The instrument seems to be confined by the $37,400 resistance level, it has attempted to break above twice now and both times the instrument fell back. However, with the RSI (Relative Strength Index) currently printing around the 50-level, it tells us that consolidation is the name of the game for the time being.
EURUSD seems to have recovered somewhat from the low levels of 1.2060 as it moves back higher towards the 1.2100. However, it seems to be encountering some resistance at the 1.2100 with RSI showing consolidation with the indicator printing around the 50 level. Overall, the common currency still shows heavy bearish pressure with its inability to properly bounce from the 1.2060.
Even though Gold was able to bounce higher from the $1,800 support level, it couldn’t generate enough bullish momentum to continue moving higher. It currently trades around the $1,840 level with the RSI showing consolidation as it also prints around the 50 level. Although the immediate risk is to the downside, the precious metal seems to be taking its time deciding which way to go, Bulls and Bears are battling it out right now to see which will be victorious.
What’s the strategy you’re going to use when it comes to trading these markets? Will consolidation remain the dominant factor in today’s trading? Or will there be some action waiting for traders today?
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Bitcoin Remains at Risk
Bitcoin has been able to break above the downward triangle that we highlighted on in our previous article. The Cryptocurrency was able to break above the 100-SMA on the 2-hour chart and is currently trading above it, although only slightly. Bitcoin’s move higher allowed it to break the $35,500 and $36,000 resistance levels to move into a short-term consolidation zone. Even though the spiked above the $37,000 resistance level, proper bullish pressure remains to be seen. In the meantime, the price is facing a strong resistance near the $37,800 and $38,000 resistance levels.
The current structure of the Cryptocurrency suggests that there’s strong support at the 100-SMA around $36,000, with the $35,500 acting as another support should the first one fail. If there is a downside break below both levels, Bitcoin could be facing even strong bearish pressure than we’ve seen so far. The next major support is near the $34,800 level, where the Bulls are likely to take a stand.
If Bitcoin stays above the $36,500 and $36,100 support levels, it could make another attempt to clear the $37,500 and $37,800 resistance levels. The main resistance is still near the $38,000 zone. A close above the $38,000 zone is a must for the price to start a strong surge in the coming sessions.
Current Market Sentiment:Neutral with Bearish Bias.
EURUSD Shows Some Bullishness
EURUSD trades close to 1.2100, holding onto the recovery mode ahead of the European open. The recovery in the risk sentiment comes into play amid expectations of additional fiscal stimulus, this is weighing on the safe-haven USD meaning that investors will start to look elsewhere. Moreover, U.S. President-Elect Joe Biden is set to take Office on January 20, pushing for the $1.9 trillion stimulus package already outlined last week. Meanwhile, the Treasury Secretary nominee Janet Yellen is likely to urge the government to "act big" with its next coronavirus relief package when she testifies before the Senate later on Tuesday.
Additionally, Eurozone finance ministers renewed push for fiscal support for their economies, in order to boost the post-pandemic recovery plans, which also renders support for the riskier assets. Looking ahead, the currency pair will remain at the mercy of the USD dynamics and risk trends ahead of Yellen’s testimony. In the meantime, the German ZEW survey could keep the EUR traders somewhat busy.
Should the EURUSD climb past the 1.2100, it needs to continue higher and the falling wedge’s resistance line, at 1.2116 now. EURUSD buyers are eyeing to refresh the multi-month high above 1.2349. On the other hand, the pair’s U-turn from present levels will have strong support around the 1.2045/40 area including the pattern’s lower line and December 02 trough.
Current Market Sentiment: Neutral.
Gold Finds Support
Gold markets have fallen significantly during the trading session on Monday to kick off the week, but also found a significant amount of support near the $1800 level. By doing so, we ended up turning around to form a nice-looking hammer. The hammer of course is a bullish sign, so if we can break above the top of that we will probably go looking towards the $1860 level which is where we had recently been going back and forth. All things being equal, this is an area that should continue to offer a little bit of support, not only due to the large, round, psychologically significant figure, but the fact that we had bounced from this area previously as well.
If we did break down below the $1800 level, then we could go looking towards the $1750 level underneath which of course is the bottom of the most significant pullback over the last couple of months. To the upside, I think that we could go looking towards the $1960 level, but it is going to be very choppy between here and there and it of course will have a lot to do with what the USD does, so if the USD continues to weaken then we may see gold rally significantly.
Obviously, the exact opposite can happen as well unless of course it is a major rush towards safety because both can rise in that particular type of scenario. All things being equal, we are probably going to be very choppy more than anything else. Ultimately, this is a market that is going to continue to be noisy regardless.
Current Market Sentiment: Neutral.
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