The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 15.1.2020
Markets continue to trade normally as Biden’s speech was a complete dud, yesterday, and failed to inject any kind of volatility into the market. With that said, Bitcoin was able to continue in its upward trajectory as it attempted to break above the $40,000; EURUSD was exposed to added bearish pressure yet it was able to reduce it somehow; and Gold remained within its current range waiting on additional stimuli to get it moving.
With that said, let’s find out how the markets are doing on January 15th, 2021.
Bitcoin has finally made its way back towards the $40,000 level which proved itself to be a very strong resistance as the instrument touched it and quickly reversed lower. Bitcoin is currently battling against the support level at $37,500 which gains some strength knowing it intersects with the 100-SMA (Simple Moving Average) on the 2-hour chart. When looking at the RSI (Relative Strength Index) we can see that the indicator has corrected from overbought conditions as it reaches the 50-level which might be a level which allows a bounce back.
The EURUSD encountered additional bearish pressure as the 1.2140 support level couldn’t contain the negativity. The result was a break below the mentioned level towards the 1.2110. There was enough support at that level that allowed the Bulls to at least attempt another move higher. Armed with this bullish correction, EURUSD was able to move back towards the 1.2175, however, being a strong resistance, a break didn’t happen and forced the instrument back towards the 1.2140 where it currently consolidates.
While we’ve seen Bitcoin reach new highs and EURUSD reach new lows, Gold hasn’t gone anywhere and is consolidating. The precious metal hasn’t been moving in either direction really, ever since the move lower towards the 1,816. There were some attempts higher but the 1,865 has been acting a strong resistance while the lower end has been protected by the 1,827 and 1,816 by extension. Trading in between the upper and lower bound has given the yellow metal a pause as it calculates what the next step is.
What’s the strategy you’re going to use when it comes to trading these markets? Will the market commit to the current road set for them? Or will there be some kind of reversal that reverses the current direction?
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Bitcoin Tests $40,000, Again
Bitcoin managed to start a fresh dose of bullish pressure after its successful break above the $36,000, it even managed to break a couple of key hurdles near the $38,000 level to move further into the bullish zone. The price gained enough pressure to challenge the $40,000 resistance, it even managed to break above it but only slightly and quickly fell below it. The high was formed near the $40,212 level and the price is currently consolidating gains, below the $40,000. However, a fresh dose of selling occurred and forced the instrument lower and is currently testing the 100-SMA on the 2-hour chart and the $37,500 support level.
Looking at the graph, we can notice that there’s a contracting triangle forming. This triangle has an upper level at $39,425, which is the level to beat before it can face $40,000. If there’s a clear upside break above the triangle resistance, the price could clear the $40,000 level. In that case, Bitcoin could very well aim for another strong surge and the Bulls are likely to aim a new all-time high in the coming sessions.
If Bitcoin fails to clear the triangle resistance and $40,000, there’s a risk of a fresh decline. An initial support is near the $38,500 level. A downside break below the $38,500 and $38,000 support levels may possibly push the price towards the main $36,000 support zone in the near term.
Current Market Sentiment:Correcting bullish pressure.
EURUSD Slips Deeper into Bearish Pressure
As expressed earlier in this brief, the EURUSD continues to witness extreme bearish pressure forcing it to break below the 1.2140 support level. This break lower extended towards the 1.2110 before finding enough bullish momentum and buyers to push it back higher. However, the bullish pressure was not enough to break above the 1.2175 resistance level as it fell back towards the 1.2140 and is currently attempting to break below it.
Late yesterday, the U.S. President-elect Joe Biden unveiled the much-anticipated coronavirus rescue plan, in this plan he was promising $2,000 in stimulus cheques to Americans, social equity, infrastructure spending, and a potential minimum wage of $15 per hour. However, Biden did not give away the total size of the stimulus program, which, according to media reports released early today, is $1.9 trillion. With all that talk, volatility was nowhere to be seen in the markets.
On the daily chart, the EURUSD closed forming a Doji, which is a sign of indecision in candlestick technical analysis. The Doji has neutralized the short-term bearish bias put forward by last week's rising wedge breakdown and made Friday's close pivotal. A close under 1.2111 (the candle's low) would revive the bearish view and open the doors for a sell-off 1.2050-1.20. Alternatively, a close above the candle's high of 1.2179 would confirm a bullish reversal.
Current Market Sentiment: Neutral with Bearish Bias.
Gold in Consolidation
Battle lines have been drawn on this instrument as the Bulls and Bears both have their targets and each are trying to gain ground over the other. The current fundamental background of this instrument shows that it has been underpinned by dovish Fed Chair Powell and President-elect Biden’s $1.9 trillion stimulus plan. The sell-off in the U.S. Treasury yields amid Fed’s dovish monetary policy prospects seem to bode well for the non-yielding gold.
Also, broad-based USD weakness amid weak jobs data collaborates with the pullback in the metal. Despite gold’s bounce, investors remain cautious heading into critical U.S. Retail Sales and Michigan Consumer Sentiment releases.
Gold has a powerful resistance to clear at $1857 if it wants to take on the upside. However, it’s not going to be an easy task for the Bulls, as a cluster of resistance levels around $1860/61 would challenge their commitment. Further north, the $1864 is the level to beat for the bulls. To the downside, an immediate cap is seen at $1849. The next significant cushion awaits at $1845, followed closely by $1840. The bears will need to crack a couple of minor supports before testing the fierce line of defense at $1829, where the previous week low meets the previous day low.
Current Market Sentiment: Consolidation.
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