EURGBP Analysis – Can the Last Support Once Again Save Euro from Plummeting

EUR/GBP has touched an important support level at 0.88700 and held above the support. As seen on a 4H chart below, Euro could be in a high danger if it goes down below that support.

Correction of December 25, 2020 has formed a sharp descending triangle and a breakout from its upper edge will signal a strong uptrend. First resistances to watch if the breakout is confirmed are 0.89440 and 0.90000. Resistance at 0.89440 is very important and further price action of the pair upon testing of this level will be decisive.

EUR/GBP quote on Overbit

On the other hand there are two other patterns one should watch when trading EUR/GBP. The chart above has formed a Head and Shoulders pattern and the support of 0.88700 acted as a neckline. Since the pair is still above the neckline there is no confirmation of the pattern, however if the pair closes lower the 0.88700 support it will continue the downtrend to 0.87900 and to 0.86900 below that to complete the Head and Shoulders pattern.

An hourly chart of EUR/GBP has another pattern formed, which supports the downtrend, the inverted cup and handle.

EUR/GBP quote on Overbit

What this pattern in general tells is that bears are in charge and after a slight correction upwards, the downtrend will continue breaking the lowest support, which in this case is 0.88700.

Factors that might support the downtrend of EUR/GBP are extensions of lockdowns in the Eurozone as the number of Covid-19 cases surge in previously highly affected regions such as Spain and Italy. The political developments in Italy also play a significant role in an economic recovery and further stability of the Eurozone. Italy was the hot zone of the Covid-19 pandemic in Europe and had the largest EU aid. The dispute in the government is related to the 750bn Euro bill, where the former PM Renzi wants to invest the money in digital economy and green energy, and the current PM Conte would like to spend 209bn Euro for Covid-19 relief.

The economic data from the UK sounds very promising as well, for instance PPI input (MoM) as per December which will be released tomorrow is expected to be higher by 0.5bp than in November, moreover Retail sales and Core retail sales data from the UK which will be announced this Friday, January 22 are looking very positive. The forecasted Retail sales (MoM) as per December is 5bp higher related to the November’s -3.8.

For a look at all of today’s economic events, check out our economic calendar.

EURUSD Analysis – Breakout is Confirmed, Yet Obstacles Ahead Remain

The US Dollar is down again after testing a resistance at 90.950, although it is above an important support level of 90.420. The tension rises as Joe Biden’s elected Treasury Secretary and former FED Chair – Janet Yellen is expected to announce before the Senate that the $1.9 trillion stimulus package proposed by Biden’s administration should be approved. Joe Biden also stated that he is planning to extend the travel restrictions from those who travel from Europe and Brazil soon after Donald Trump signed an order to lift those restrictions starting from January 26.

The volatility of EUR/USD will be high and will last until the end of Thursday ahead of the ECB Interest Rate decision.

From the technical point of view, EUR/USD remains bullish following a breakout from the dynamic resistance of the descending channel, however, there are resistances that might halt the further uptrend.

EUR/USD quote on Overbit

Admitting that Euro retraced from an important support of $1.20540 and the impulse was strong enough to break the dynamic resistance, some indicators and levels show that a correction to the uptrend should be expected. By the time of writing this article, EUR/USD quote on Overbit is $1.21287 which is above the Fibo 0.236 level and below the $1.21350 support and resistance zone. While MACD still signals the bullish continuation, RSI indicator is already in the overbought zone.

Closing above the $1.21350 will lead to a jump towards $1.21670 resistance and Fibo 0.382 level and towards Fibo 0.5 at $1.22020 above that. If Euro fails to overtake the resistance mentioned, one should not consider the downtrend continuation of the pair, as it might be a retest of the dynamic resistance as shown on the chart below.

Important Economic data to watch this week for EUR/USD are:

January 20, Eurozone – CPI (YoY) and (MoM), Core CPI (YoY)

January 21, Eurozone – ECB Rate Decision

January 21, US – Initial Jobless claims (Dec), Building permits (Dec) and Philly Fed Manufacturing Index (Dec)

January 22, US – Existing Home sales (Dec)

January 22, Eurozone – Manufacturing PMI (Jan), German Manufacturing PMI (Jan)

Gold Analysis – This Moving Average has Something to Say

The hardest to react to such an increase of the US Dollar index was Bitcoin losing 20% yesterday. Gold was stable yesterday and didn’t show signs of a bearish reversal amid a sudden surge of Covid-19 cases in China.

The US Dollar Dollar index set so far the lowest point on January 06 this year at 89.391 and was able to recover and breakout from the descending downtrend channel of November 02, 2020.

DXY chart by TradingView

If the US Dollar closes above 90.720 it might show one of the sharpest jumps up to 92.100 after testing a resistance at 91.120.

The gold chart below shows that the precious metal is back in the descending channel. As seen on the chart the further uptrend of XAU/USD was denied by the MA200. This Moving Average on the chart signalled the bearish continuation, examples are September 10, 15-16, October 09, November 16 and December 08 of 2020. Hence, Gold needs to close above this MA200 to continue the uptrend.

Gold price on Overbit

By the time of writing this article, XAU/USD quote on Overbit is $1845 per ounce and remains above the dynamic support and the neckline of the previously confirmed Head and Shoulders pattern, see the pink line on the chart below.

Gold price on Overbit

While Gold remains above this dynamic support, it still holds all the chances to continue bullish. The first resistance Gold will face when closing above the MA200 is $1880. The bullish run of XAU/USD is also supported by RSI and MACD indicators, however MACD hasn’t crossed the signal line yet, although is very close to doing so.

If Gold closes below the dynamic support it will drop towards $1817 and below that to $1780. The US JOLTS Job openings as per November announced just now 6.527M, higher than the forecasted 6.632M and the previous month’s 6.494M, this data signals the recovery and could trigger investors to bet on the US Dollar rather Gold.

Another important data from the US which Gold investors should trace is tomorrow’s CPI and Core CPI. Forecasts are mixed, while the MoM CPI as per December is expected to surge and be at 0.4%, Core CPI (MoM) as per December is expected to fall and be at 0.1%. While the JOLTS Job Openings look positive and announced numbers are higher than expected, the CPI data could be more positive as well.

BTC/USD Analysis – Bitcoin is in A Razor – Sharp Triangle

Another all-time record is set this year, the cryptocurrency market cap is now valued above $1 trillion.

The growing interest in cryptocurrencies might be a result of a weakening US Dollar and the prolongation of the pandemic and restrictions. As the US is breaking records of new Covid-19 cases, many investors may consider that the reopening of borders and normal life is far from being achieved, hence the bet is on cryptocurrencies market as during the pandemic last year ROI of the crypto-market prevailed against other markets.

Active Bitcoin addresses already surpassed the 2017 high, and some analysts say that this may trigger another round of sales as some HODL’ers might consider selling their Bitcoins with profit.

Besides the weakening USD there are other factors which may have a weight on Bitcoin’s uptrend, JP Morgan Chase Co.’s long-term Bitcoin price prediction announced on January 5, and the US Banking regulator allowing use of less volatile coins for payments, primarily “proprietary” coins of banks which are bound to the local currency.

There is a razor-sharp triangle on an hourly chart of BTC/USD. The latest moves show exhaustion of bulls, MACD and indicators are at the top of their graphs and signal for caution.

Bitcoin price on Overbit
Bitcoin price on Overbit

As seen on the chart above, Bitcoin nears a dynamic resistance and if sellers decide to close their positions here, the correction might continue down to $36,385 and $34,440.

Though it might look that the end of the uptrend is near, there is another channel being formed, which shows that Bitcoin against the US Dollar may climb up to $45,000.

Bitcoin price on Overbit
Bitcoin price on Overbit
Bitcoin price on Overbit
Bitcoin price on Overbit

The next target for Bitcoin enthusiasts and buyers is $40K whereas the pair may correct to test the dynamic resistance as support and continue the uptrend towards $45K.

The uptrend of the pair may be supported by the newly applied business operations restrictions in the US amid growing number of COVID-19 cases. As a result the US economy might struggle during the winter and the US Dollar will most likely continue the decline, aggressing the growth of the Bitcoin price.

Gold Analysis – Year in Review and Forecast

Regardless of the beginning of the uptrend on January 1, 2016, and the beginning of the new motive wave on August 27, 2018, the true excitement started on March 17, 2020. The hike of March 17 this year was similar to the one on August 12, 2010, when the US Dollar collapsed.

This year, when the new coronavirus was spreading in drastical speed and caused a Global pandemic, Gold hit the new ATH at $2072 on August 06, 2020. Central Banks of some countries when the pandemy started filled their basket with Gold. Turkish Central Bank is among the record purchasers of Gold since 2017, in 2020 the state bank has added 155.4 tonnes to it’s reserves, next goes India with 35.2 tonnes, and the most aggressive Gold buyer Russia is on third place with 27.4 tonnes, next UAE with 23.9 tonnes. China, who is the world’s leader in gold production and a purchaser of the astonishing 708.2 tonnes in 2015 and 95.8 tonnes last year, remained silent this year.

The World official holdings as of December, 2020 are as follows, countries only, does not include commonwealths and international banks:

  1. The United States of America: 8,133.5, which is 79.3% of the total currency reserves
  2. Germany: 3.362.4, which is 79.3% of the total currency reserves
  3. Italy: 2,451.8: which is 71.2% of the total currency reserves
  4. France: 2.436,1, which is 66.4% of the total currency reserves
  5. Russian Federation: 2,298.5, which is 23.8% of the total currency reserves
  6. People’s Republic of China: 1,948.3, which is only 3.6% of the total currency reserves.

Data of the World Gold Council

See the diagram below, which better reflects the official quarterly gold reserves change since Q1 2000 upto Q3 2020.

The new year ahead might surprise with the new Gold-bull-movement as countries which opened the border during the pandemic are going for another lockdown amid a spread of the new virus strain. The long-awaited $2.3 trillion pandemic aid was signed by President Trump and that did not hit the US Dollar Index as much as it did during March 27, 2020 when the first stimulus bill, the so-called $2.2 trillion Cares Act was signed by President Trump.

Hence there was no hike of the Gold as it was on March 27, 2020. Positive news around the Globe, Brexit deal, vaccine distribution hold investors from purchasing Gold, however continuing tensions between the US and China and the new Covid-19 variance still keep the XAU/USD rate $1850. The situation may worsen as the signed $2.3 trillion pandemic aid includes measures to further bolster support for Taiwan and Tibet.

As for now, Gold is near the upper threshold of the descending channel. The precious metal against the US Dollar hit the dynamic resistance and retraced, however still keeps above the decisive level of $1850.

Gold price on Overbit

As seen on the 4H chart above, XAU/USD did not sharply drop after the test of the dynamic resistance and the static resistance, hence it is assumed that the price will break the resistance and continue upwards. Indicators on the same 4H chart demonstrate that Gold may continue the uptrend, MACD is over the signal line and RSI doesn’t show that the metal is overbought, Both simple moving averages 100 and 200 do support the uptrend and EMA50 has touched the price and is keeping below it, supporting the uprend.

By the time of writing of this article the XAU/USD quote on Overbit is at $1880 and has formed a triangle. Gold is above the lower edge of the triangle, though keeps near it, if the lower edge of the triangle is broken, the price will drop to $1859 – $1855, though should keep above $1850 for a bullish attune.

Gold price on Overbit

If the pair breaks above the upper edge of the triangle and the upper threshold of the descending triangle, it will proceed towards $1915, after a slight correction at $1906. An hourly chart has all three Moving averages concentrated at the price level, RSI and MACD still signal the bullish. Upcoming economic releases from the US will play a significant role on the price action.

Follow these data releases closely as they will conclude the year trend of the pair and will signal the price action after the Holidays:

December 30, US Pending Home sales as per November is expected to be higher than in October.

December 31, Initial Jobless Claims, expected to be 30K higher than the previous released 803K.

For a look at all of today’s economic events, check out our economic calendar.

AUD/CAD & AUD/USD Analyses: Australian Dollar is Performing Better than the US and Canadian Dollars

As Canada is World’s one of the largest oil exporters, its currency has a major dependency on oil price. Oil demand is decreasing due to the pandemic and with the new virus strain spreading so fast and European countries shutting down their borders, demand for oil decreases. The situation might get even worse if the spread of this new strain gets out of control and located in different countries worldwide, especially in the US.

Australian dollar, unlike its counterpart CAD, is gaining due to the rising amount of demand for gold. The weakening US Dollar, new Covid-19 variance, US stimulus package might nudge investors to purchase the precious metal. As the Canadian Dollar is dependent on oil, Australian dollar is dependent on gold, as Australia is the 3rd largest Gold producer in the World.

Both pairs, AUD/CAD and AUD/USD are about to complete the 5th motive wave of the Elliott Wave cycle and each pair is approaching an important resistance, which could halt the further growth.

AUD / USD quote on Overbit

As seen on the chart above, AUD/USD was halted by the resistance at $0.76398. The pair was able to quickly recover and is now looking towards breaking the aforesaid resistance and continue the uptrend. Elliott Wave count on the Daily chart of the pair suggests that there should be one last impulse before the pair can go into a deeper correction and the level where this 5th wave could end is near $0.79900 as there is a strong resistance.

AUD / USD quote on Overbit

If AUD/USD fails to break the resistance, it should not drop below the $0.74045 – $0.74000, where an EMA50 support and previous high, which also is wave 3 are located. Nevertheless, continuation of the uptrend towards $0.79900 looks more realistic.

AUD/CAD weekly chart clearly demonstrates where the pair could stop its impulsive uptrend move, the dynamic resistance of March 23, 2013.

AUD/CAD chart by TradingView

The Elliott Wave count of this pair also suggests the end of the motive at 0.99890. The pair is back inside that descending channel, hence the levels of this channel will play a significant role in price action of AUD/CAD.

AUD/CAD chart by TradingView

Currently, the pair is testing an important resistance, despite the indication of overboughtness of the pair by RSI, MACD, MA100 and EMA50 acted as a support and signal the continuation of the uptrend. If the pair fails to break the current resistance at 0.97740, it might drop towards 0.96510 but never below that, otherwise the EW count would become invalid.

Both Australia and Canada won’t be publishing important economic data this year, the only drivers for the stability of these currencies will be developments in the US and Covid-19 statistics including the developments of the new variant of the virus. Unlike Australia and Canada, the United States will publish two important economic reports forecasts of which look positive, these would be Pending Home Sales (MoM) as per November and CB Consumer Confidence for December.

EURUSD and GBPUSD Analyses. New Covid Variance Might Checkmate the Vaccine

Donald Trump on his official Twitter account stated that the bill proposed by the Congress is a disgrace and is only $600 which is much lower than the anticipated $2000 per an individual. Although Trump has less than a month left before he leaves the White House, he can still “veto” the bill, otherwise it will be accepted, so far President Trump only threatened not to accept the bill.

If the Congress delays the formal transfer of the bill into the law due to the actions of Trump or due to other means, the Dollar might as well strengthen. As Europe and the UK are fighting against the new virus strain and no cases yet are reported in the US, Dollar appears stronger. If the bill is accepted, the US Dollar index will drop once again, if the bill is postponed and Trump’s proposal on a larger stimulus pack is put before the Congress, the Dollar index will plummet, nevertheless the developments in Europe and the UK.

The US government did not set a requirement of passing a Covid-19 test to passengers flying from the UK to the US before boarding their flight, despite the rapidly spreading new Covid-19 strain. Airline operators agreed to allow only those passengers who have been tested Covid-negative within 72 hours before the flight. While the US officials argue on which action is the best to be taken to keep the new variant away from the US, the top US infectious disease expert Dr. Fauci yesterday, December 22, said on live-TV that it is possible that the new variant is already in the US. The contagiousness of the new coronavirus will push the governments to accelerate the spread of the vaccine, although the effectiveness of the vaccine on the new strain is questioned.

The US Dollar Index today lost 0.32% in value which conversely pushed both the Euro and the British pound against the US Dollar upwards. Hanging Brexit negotiations still hold the two major European currencies in an uncertain position, whereas the deal gets postponed, however the EU Chief Negotiator on Tuesday put certainty into the deal saying that both sides are ready to make a “final push”.

The EUR/USD continues the uptrend, though was withheld by the dynamic resistance of the ascending channel. Spanish GDP reported earlier today was supposed to set the Euro higher, though the actual numbers were slightly lower than the expected, 16.4$ against the forecasted 16.7% as per Q3.

EUR / USD quote on Overbit

Currently the pair is traded at $1.21950 which is below the resistance of 1.2200. The pair on a 4H chart has formed a symmetrical triangle and the breakout of any edge of the triangle will signal the short-term trend continuation of the pair.

EUR / USD quote on Overbit

If the price breaks below the lower edge of the triangle, Euro will drop towards closest support levels at $1.21227 and below that to $1.20840.

The British Pound against the US Dollar was able to gain 0.50% today after the test of the dynamic support and an upper 0.5 level of the Pitchfork. By the time writing of this article the GBP / USD quote on Overbit $1.34300 and is testing the December 14’s high.

GBP / USD quote on Overbit

Higher lows and higher highs demonstrate the willingness of the pair to continue the uptrend. Both Moving averages 100 and 200 and the EMA50 support the uptrend continuation, MACD line already crossed the signal line and is also showing signs of the uptrend continuation. If GBP / USD closes above $1.34630, the next resistance to watch would be at $1.35280, where the pair will hit the static and dynamic resistances.

The US Economic data which are expected to be released today do not look positive, Initial Jobless claims are expected to be at the same level as previously reported 885K and new home sales in November expected to drop slightly and be at 995K compared to the October’s 999K, personal spending as per November is expected to be as low as -0.2%, 0.7% lower compared to the October’s 0.5%.

For a look at all of today’s economic events, check out our economic calendar.

Gold is Under Pressure as The US Once Again are Back with a Strong Dollar Policy

In 2017 the Trump administration said that the US Dollar is “too strong” and that the weaker US Dollar would help to increase the export of the US goods. Secretary of the treasury Mnuchin also added that the stronger US Dollar would negatively impact the US Economy in the short term.

Speaking of the Secretary of the treasury, after Biden is officially a president of the United States, Jannet Yellen former Chair of the Federal Reserve, during her times of operating in the FED was always asserting the strength of the US Dollar and was claiming that a stronger US Dollar will drag the US Economy from further growth. Those were the words of a Fed chair, now as Yellen will be appointed as a Secretary of the treasury, her primary task would be to strengthen the US Dollar. The interest rates are at historic lows and the federal debt is larger than ever, if the US Dollar continues the downward trajectory the US won’t be able to pay for it’s debt.

The “strong-dollar” policy is the US policy that assumes that a strong exchange rate of the US Dollar will encourage investors to buy more US treasury bonds. While there are advantages of the stronger dollar such as it increases the import of goods from abroad, lower prices keep the inflation low, US investors can purchase larger amount of foreign stocks and bonds, US firms will have to compete with lower price products being imported and it would be harder to export domestic products as the price would be higher.

The US Dollar Index is back to the above-90 levels and is showing some strength after a drastic drop to 89.780, lowest since April 2018. The strength of the DXY might also be backed by developments in Europe and the UK, whereas France and other European states are closing their borders due to the newer more contagious mutated Covid-19 virus.

A strengthening US Dollar today hit the safe-haven asset which was growing significantly this month. Gold is down 0.35% in value today and according to the charts below it could either signal a bearish continuation or a correction before another impulse.

Gold 4H chart demonstrates that the precious metal was rejected by the dynamic resistance and an upper edge of the descending channel.

Gold price on Overbit

The impulse of November 30 looks very strong despite the rejection of the price by the dynamic resistance. There also is a formation of an important chart pattern on the watch on the 4H chart which confirms the uptrend of XAU / USD which at this point looks very accomplishable. By the time of writing this article, XAU / USD quote on Overbit is $1874.50 and is above an important static and dynamic support of $1860 demonstrated below.

Gold price on Overbit

As seen on the chart above, Gold remains bullish as it’s above the neckline of the favorable pattern for Gold buyers – the Inverted Head and Shoulders. The EMA50 is located on the same level, hence Gold might test the $1860 before another impulse towards the retest of the dynamic resistance at $1907 and $1961 if the dynamic resistance is penetrated. The further uptrend of Gold might be as well backed by the growing number of diseases in Europe and the UK as the new mutation is reported to be more contagious, this discovery is very unfavorable during the festive days.

However, if the price drops below the neckline and the $1860 support it may drop to $1817 and in that case it would be more unfavorable as forced by panic investors will start selling the precious metal and the XAU/USD might end up continuing a decline inside the downtrend channel. The new “strong-dollar” policy and developments in Europe will play a significant role in further price action of Gold, hence I highly recommend to follow the economic data published on the economic calendar.

For a look at all of today’s economic events, check out our economic calendar.

Bitcoin is The New Gold. Here is Why!

There were two major news stories on November 27, both shaking the market, one of which was President Trump’s statement on vaccine deliveries which supposedly should start this week, the other was the assassination of the Iranian nuclear scientist. While one of the market’s sentiment indicators – the Volatility Index was dropping sharply last week, it’s today at 22.0 adding 5% to the index value.

Despite the growing Volatility, Gold continued downwards, same as Silver, whilst Bitcoin and Ethereum’s uptrend. It looks as if the digital Gold nowadays has a greater value than the traditional safe-haven asset. With all those analyst’s statements on Bitcoin price, Central Banks’ bombshell Digital Currency researches, the value of traditional assets is shading.

Bitcoin price was correlated to other assets so many times, it makes no sense now, hence we will review each asset separately.

Gold on a Daily chart signifies a possible end of the correction as it reaches 0.5 Fibonacci level and tests an important support at $1764.

Gold price on Overbit

As seen on the chart above, Gold still looks weak as it remains below dynamic supports and below moving averages. On a 4-Hour chart however, it’s clearly visible that Gold has tested the support of $1764 several times and remains above that level.

Gold price on Overbit

The RSI is highly divergent and has formed an ending diagonal pattern, Gold has tested the November 24th 21.640 oversold level on RSI today and has formed a double bottom pattern on RSI, let’s see if these price chart patterns on RSI play out well for XAU/USD. If the support withholds, the precious metal will most likely test the $1817 level, which holds both dynamic and static resistances and EMA50.

Bitcoin on other hands looks better than its traditional namesake. By the time writing of this article Bitcoin price on Overbit is $19252 and is growing rapidly. With such pace BTC/USD will soon establish a new YTD high and will hit the long-awaited $20K sooner today.

The daily BTC chart outlines an important resistance of May this year which was tested by the asset as a support and remains above it.

Bitcoin price on Overbit

On a 4-Hour chart it is clearly visible that Bitcoins last downtrend was a correction to test the dynamic support of the uptrend channel and continue the growth. The hike is also slightly backed by the weak US Dollar, which today lost 0.27% and is now at 91.450, below the monthly support of 92.

Bitcoin price on Overbit

While RSI indicates that the price is close to being overbought, Bitcoin traders and investors with such an urge for ATH and 20K won’t stop until BTC/USD reaches the target. There are strong resistances to watch for, the main would be the upper threshold of the channel and of course the $20K, though I believe that Bitcoin will close above $20K, probably at $20 430 – $20 500 levels.

USDCAD Analysis: Escape from the Bearish Trap Coming Soon

While investors betting on the US Dollar were cheering the come-back of the US Dollar, DXY is dropping again, though remains above a significant support level of 92.273.

There are no important announcements expected from Canada, while the US will report on CB Consumer Confidence as per November later today, and must-watch data on GDP, Initial Jobless Claims, New home sales and Crude Oil inventories. The reason why I mentioned Crude oil inventories in this analysis is because the Canadian Dollar is very dependent on the Oil price as Canada is the fourth largest oil exporter.

USDCAD continues the correction after a substantial growth on November 9. The pair is consolidating between $1.30900 and $1.30494.

USD/CAD quote on Overbit
USD/CAD quote on Overbit

On a 4-Hour chart USD/CAD has formed a bullish flag pattern, breakout from which will signal a bullish continuation. However, as RSI indicator shows there is also another pattern to watch – bearish rectangle, which if confirmed will signal the decline of USD/CAD down to $1.29812. See the chart below. The bearishness of Dollar/Canadian is also endorsed by Moving averages, both simple moving averages of 100 and 200 and an Exponential MA 50 are above the current quote.The US Dollar is losing against the Canadian dollar since March 2020 and continues the downtrend forming a descending triangle, each forthcoming high is lower than the previous and the forthcoming low is lower than the previous. As seen on a daily chart of the pair, there is a possible another low which should be tested by the pair, before the USD could show strength and breakout from the downtrend.

USD/CAD quote on Overbit

Since the support of $1.30494 remains intact (there is no closing below it), USD/CAD has all chances to take a chance and jump towards $1.32000 and $1.23400. Fibonacci levels on a 4-Hour chart demonstrate the importance of the aforesaid support level, if the pair closes below $1.30494 there is another support level to watch, which will be in the area of Fibo 0.618 of the November 9 uptrend and a dynamic support of the flag pattern. Only when USD/CAD closes above $1.31000 it will proceed further towards $1.32000.

Bullish continuation of the pair may be backed by the strong US data tomorrow, New Home sales as per October are expected to be at 970K, which is 11K higher than in September, initial Jobless Claims is expected to continue the decline and be 730K, which is 12K lower than the previously announced 740K, and the GDP data might strengthen the US Dollar. Another important update to watch tomorrow is FOMC meeting minutes of course.

For a look at all of today’s economic events, check out our economic calendar.

Bitcoin is Eyeing $19,680

Since Gold is centralized as it is owned by Central Banks and Bitcoin is not, Bitcoin attracts more and more investors, evading the volatility that government organizations may incur.

Charles Schwab’s 2019 survey revealed that GBTC stocks were more popular among millennials than Disney or Netflix.

Source: Charles Schwab

Many analysts are bullish on BTC/USD and many predicted that the price will hit $20 000 by the end of the year, which still looks achievable.

On November 21, Bitcoin established a new high at $18 974, almost reaching the $19 000 barrier and found a strong support at $17 626.21 where the pair continued the bull run.

Bitcoin price on Overbit

As seen on the chart above the uptrend of Bitcoin yesterday was backed by the EMA50 and the dynamic support of November 18. By the time of writing this article Bitcoin on Overbit is traded at $18 711 and is above an important resistance at $18 672.

There are two patterns to watch in this price action of the pair, one of which is an expanding diagonal, the other is a parallel ascending channel, both signalling the continuation of the bullish run.

Bitcoin price on Overbit

There are two major resistances up ahead, one of which is the area of the previous high of $18 974 and $19 000 and the next is at $19 685.

Bitcoin price on Overbit

MACD on an Hourly chart already is about the signal line, and there is a strong support by EMA50 and MA100, however the resistance at $18 672 remains penetrated though intact, Bitcoin must close above this resistance to continue the surge.

GBPUSD Analysis: There is One Formidable Pattern

Core retail sales in the US weakened the USD as the values were lower than the previous and lower than expected. Core retails sales from the UK will be announced tomorrow and the forecasts say that the British Pound might be in danger.

The Pound looks strong and is looking to break the resistance and climb higher, though there are resistances and patterns that signal a correction.

First and the foremost is the dynamic resistance (upper threshold of the ascending channel) on a 4H chart. The pair penetrated the resistance and was sent back yesterday. The pattern on the same 4H is “double top” which in general signals a bearish move.

GBP/USD quote on Overbit

In the bigger picture, we have witnessed the closing price of November 11 and November 18 bear a strong resistance, and highs of the aforesaid candles also are at Fibonacci 0.786 level. Only closing above that level will confirm the further bullish run.

GBP/USD quote on Overbit

By the time of writing this article GBP/USD quote on Overbit is 1.32340, which is above the dynamic support, though is below EMA20. The MACD line is already below the signal line, hence might be confirmation of a correction, though the best would be to wait for the pair to break the dynamic support.

GBP/USD quote on Overbit

If the breakout is confirmed, the pair will drop towards 1.31430 and below that to 1.30648. Continuation of the correction might be backed by strong US Jobless Claims data today and weak UK Retail Sales data tomorrow.

For a look at all of today’s economic events, check out our economic calendar.

USDJPY Technical Analysis: Support Zones You Should Know

Japan has been showing a steady recovery from the pandemic today’s Trade Balance and Exports data testifies. Battered US Dollar Index also supports the downtrend of the USD/JPY. Yesterday’s US Retail Sales, import and export price indexes data announced were below the forecasted, more importantly Core Retails sales (MoM) was 1 bp lower than the previous month’s 1.2%.

On a daily USD/JPY we can witness a downtrend channel that the pair follows. One of the important metrics on this chart is that the MA100 acted as a resistance on November 11, when USD/JPY hit the upper edge of the channel.

USD/JPY quote on Overbit

MACD is about to cross the signal line which will be a confirmation of the bearish continuation, which in other hands could be supported by the weak US Data to be announced this week. The market will be paying close attention to the two major US data announcements – Initial Jobless claims, expected to be 2K lesser than in the previous month and Philly Manufacturing Index which is expected to be lower by 10.3 bp than the previous month’s 32.3.

Important levels to watch are $103.70, which is a static and dynamic support on a 4H chart, closing below this level will be a ground for another round of sell-offs down to $103.166.

USD/JPY quote on Overbit

On both Daily and 4H charts, Moving averages act as resistances and MACD indicates bearish continuation. Investors also are cautious regarding the current Biden – Trump situation. Covid-19 vaccine effectiveness news helped the US Dollar Index gain some strength, though weakened again when it was announced by Biden that it’s actual application will take some time. If there are no tangible signs of economic recovery in the US and the spirit of “uncertainty” remains, the US Dollar against its counterpart Japanese Yen might as well plummet further to near year’s minimums – $101.747.

For a look at all of today’s economic events, check out our economic calendar.

ETHUSD Analysis – The Ethereum 2.0 Dilemma

So far the deposit contract address on a popular transaction scanner shows that only 50,401 Eth worth of $22,787,804.13, 3200 ETH of which belong to the Founder Vitalik Buterin are staked, that is more than 10x lower than the required 524,288ETH.

The delay in the Launch of the PoS due to the insufficient deposit may hit the Eth token value as such happened before when Ethereum was postponing major updates. There are several other reasons why Ethereum holders are not rushing to stake their tokens, first of which is the soar of Ethereum price during the past weeks, the other reason is the growing number of DeFi projects and according to the popular metrics 8.5M of Eth is locked in DeFi.

Investors and traders are still looking to make the best out of the trading of this token against the US Dollar as ETH/USD shows signs of new highs.

Ethereum price on Overbit

As seen on the chart, ETH/USD has formed a symmetrical triangle pattern. As a general rule, one should follow the price action of the pair and wait for a breakout from either threshold of the triangle. Since, the price currently is holding near the upper threshold, breakout could be confirmed anytime soon.

Ethereum price on Overbit

Ethereum’s price surge was not mainly supported by the Eth 2.0 transition, although it played a significant role, but was rather backed by the weakening US Dollar and uncertainties in the market followed by the US Presidential Elections. The election is still not over and the tension still remains, especially over Biden’s stimulus plans and Trump’s lawsuits, hence the price of Ethereum might as well continue to grow.

Although postponement of the chain release might as well have a negative impact on Ethereum. Key level to watch if the breakout from the ascending channel is confirmed is $477-$500, if the price breaks the lower threshold of the triangle, the price might as well drop to $431 and below that to $416.

Silver on The Verge – Key Levels to Watch

Investors are watching closely towards the development of the situation in the US mainly watching Biden’s stimulus plan named “The Biden Emergency Action Plan to Save the Economy”. As the number of Covid-19 cases in the US surged over the past week, over 100 000 new cases and over 1 000 deaths, the pressure on the President-elect over the stimulus pack grows.

Both Gold and Silver retraced as weeks started and formed a similar pattern, which signals a possible further correction.

Silver has reached an important resistance level today, November 09, at $26.01 and couldn’t get enough momentum to breakout from this major barrier.

Silver price on Overbit

The upper threshold of the descending channel halted the further uptrend of Silver. MACD also signals the upcoming correction as the MACD is heading downwards to cross the signal line. As per this correction there are two important support levels to watch, $25.35 and $24.64, $24.50.

The correction of XAG / USD would be confirmed if the dynamic support of the ascending channel on a 15M chart of the pair is penetrated. As stated by Elliott’s Wave Theory, each impulse wave should consist of a 5-wave pattern, hence there should be one more leg up before we witness $25.35 and $24.64.

Silver price on Overbit

By the time of writing this article, XAG/USD on Overbit is traded at $25.61 per ounce and has touched the dynamic support of the ascending channel. Closing below this support will lead to a further short-term downtrend to support levels indicated above. As per mid and long-term perspective Silver looks bullish and closing above $26.00 will lead to further surges towards $27.17 and $30.

The US Dollar is near support level at 92.140 and there are many factors which might push the DXY further downwards, such as Trump’s lawsuits and Biden’s Emergency Aid, and tomorrow’s JOLTs Job Openings data as per September, the number expected to be announced is 903K lower than the previous month, and if lower number is announced, the US Dollar Index might drop further which will on other hand pump the prices of Silver and Gold.

Bitcoin Pre and Post Election Analysis

Early this morning Bitcoin put the first step towards an engulfing bullish move after testing the lower threshold of an ascending channel and received a pretty well support from EMA50.

Bitcoin price on Overbit

Bitcoin is healthier when whales withdraw their funds from exchanges. In the past 14 hours almost 17 329 BTC were withdrawn from Huobi, 5 of them were 2 000 BTC tranches, 33 419 BTC were withdrawn from Binance, making a total of $237 336 745 worth of Bitcoin withdrawn.

The first cryptocurrency is most likely to continue the uptrend and even break records highs this year. According to the structure of the price action on the chart and patterns BTC/USD follows, the price in the nearest term will test $13 845, the next resistances and key levels to watch would be $14 091 and long-awaited by many investors $14 385 – $14 400.

Bitcoin price on Overbit

MACD on an hourly chart already crossed the signal line and is heading upwards, whereas on a 4H chart above it is still lagging a bit, hence the cross may happen anytime soon. Bitcoin on an hourly chart is above MA200 which was a great support level and is above MA100 which acted as a resistance previously, hence there is little doubt left that Bitcoin is bearish.

However, this is a market and anything could happen, I truly do not think that Bitcoin will break below the ascending channels dynamic support and close below and if such happens, then the nearest support we could count on would be $12 959 – $12 870 levels.

AUDUSD Elliott Wave Analysis, One More Leg Up to New Highs

Despite the growing numbers, AUD was not able to overtake the US Dollar and continued the down slide this week and the pair yesterday only lost 0.92% against the USD. As the Election day gets closer, the volatility rises in the market, giving an edge to the US Dollar in spite of continuous losses of the US Indices and somewhat weak Core Durable Goods and CB Consumer Confidence.

The market awaits two key data to be published today from the US – GDP (QoQ) as per 3rd Quarter which is expected to reveal a significant 31.0% growth compared to the previous 31.4% loss and the Initial Jobless Claims to reveal 775K which is lesser than the previous months’ 787K by 1.52%.

By the time of writing this article the AUDUSD on Overbit is traded at 0.70490 which is slightly above the dynamic support. The 4H chart of the pair has formed a triangle pattern and one more leg up is required to complete the 5-wave ABCDE correction.

AUDUSD quote on Overbit

A breakout from this triangle could trigger another round of impulse waves. The Daily chart on other hand signals the bearish continuation. The RSI divergence on a daily chart demonstrates the power of bears, whereas all bullish attempts are put to a stop lower than the previous.

AUDUSD quote on Overbit

Since the bullish impulse wave of March 19, AUDUSD has formed triangle patterns two more times, though they were not of a greater cycle as this last one, all two were then followed by another impulse wave, let’s see if this triangle also triggers an impulse of a greater Elliott Wave cycle.

Follow the economic updates and earnings of the US companies, as these are playing a great role on the US Dollar Index. Beware of volatility and trade with caution during the economic data announcements.

For a look at all of today’s economic events, check out our economic calendar.

EURGBP Analysis Ahead of Fishy Brexit Talks

GBP showed significant strength on Friday amid new Brexit negotiation hopes. The deal has faced another dilemma – the fish. UK wants the EU vessels to stay out of the UK waters after the Brexit, while the EU would like to keep access to the UK waters to their vessels after the Brexit under the Common Fisheries Policy. UK officials claim that France and the Netherlands use super-trawlers to empty the UK waters and the PM Boris Johnson vowed to do everything to protect the UK fisheries.

The upcoming week will be a great test for both currencies not only by virtue of the EU summit in Brussels but as remarkable data will be published for both sides of the deal: the UK – Unemployment change, for EU – ZEW Current Conditions and ZEW Economic Sentiment. If the UK leaders are able to convince the EU leaders to accept the deal without postponing it again, the Euro may weaken and continue to fall, if it’s postponed then the GBP will fall against major currencies on weak employment data.

Asides the unemployment data, the upcoming ‘hotspot’ restrictions in the UK, which might eliminate small and medium businesses and result in a labor layoff, could back the downfall of the Pound.

The EUR/GBP pair continued the downtrend after the test of a high at 0.92924 on September 11, remarkable the day UK announced the new trade-deal with Japan.

EUR/GBP quote on Overbit

Two patterns to watch on pair’s 4H-chart are “Bullish flag” and “Triangle”. Euro remained above a crucial support and resistance level and halted the fall at 0.90680, if the pair remains above that level amid UK and EU data, it might as well continue upwards to test the dynamic resistance (upper edge of a triangle once again) at 0.91200. Below this level will result in the pair to test the following static support at 0.90490 if that support is broken then the pair will drop deeper towards 0.90100 to test the static and dynamic resistance, where the “Flag pattern” will be confirmed and the pair will most likely bounce back and continue bullish

Yet MACD is signaling the trend reversal I highly advise to trade with caution as the upcoming week will be highly volatile for both currencies.

For a look at all of today’s economic events, check out our economic calendar.

Gold, Euro and Pound are Bearish Against the USD

The argued $1.6 or $2.2 trillion remains in the budget which bolsters the US Dollar Index and results in a 2.20% gain of Nasdaq and 2.24% gain of Dow Jones.

Strong US Dollar gained against major pairs and safe-haven assets like Gold, resulting in a 1.96% loss of value of the Gold. As I’ve said during my previous articles, Gold will continue the uptrend, though there are strong resistances which it should overtake before showing strength for another jump.

One of the major resistances is at $1917 which called a halt to an uptrend continuation of the precious metal and led to a price drop. Another resistance is at $1906, which also supported the downtrend move.

Gold price on Overbit

Gold was able to recover the same after Mr. Powell’s speech where he outlined in the FOMC economic projections that the outlook remains ‘uncertain’ and depends on the spread of the virus. While writing of this article XAU/USD on Overbit is traded at $1987, below the MA100 on a 4H chart, though it does signal the bearish short-term move, MACD indicator signals the opposite.

Gold price on Overbit

Yet another time $1906 could be a strong resistance and might push the price towards $1874 and below that to $1855. If the dynamic resistance (the lower edge of the tringle) withholds, bulls will try to push the price above the $1917 resistance.

Euro and the British pound are in danger against the US Dollar as the forecasts for the economic data for the next week are unpromising. Britain would like to impose harder restrictions, whereas public places such as restaurants, bars and pubs would be asked to close before 6PM. Average earnings index is expected to drop to another 0.3%, and an employment change data as per August to show a sizeable -125K. For Euro the market will be watching the German ZEW and CPI (MoM) data next week.

There are two patterns to watch on the GBP/USD pair, both being the same formation yet signaling the different price actions – Head and Shoulders and an Inverted Head and Shoulders.

The short-term outlook of the pair projects the retest of the MA100 at 1.28670 and a possible drop towards a major static resistance and a mid-September low at 1.28820.

GBP/USD quote on Overbit

The long-term projection of the British pound looks more positive, the 1.28820 drop could trigger a trend-reversal and the Pound would form an Inverted Head and Shoulders pattern and climb towards 1.29900 and 1.30600 levels.

GBP/USD quote on Overbit

Euro is below the MA100 and the MACD signals the downtrend continuation, though is still above the dynamic resistance. Weak data from Germany and EU may result in a drop of the Euro against the US Dollar down to 1.17060 and 1.16780.

EUR/USD quote on Overbit
For a look at all of today’s economic events, check out our economic calendar.

Gold, NDX and the US Dollar Index Forecast

Central Banks of the largest economies already announced that further stimulus will be required to keep the economy stable and adhere the positive inflation rates.

US is ready to pump into the economy with the new Heroes Act, a $2.2 trillion stimulus pack. While House Speaker Pelosi and Treasury Secretary Mnuchin continue to negotiate, Covid-19-infected president Trump has asked to sign the Act and provide stimulus to the economy, tweeting on his Twitter: “OUR GREAT USA WANTS & NEEDS STIMULUS. WORK TOGETHER AND GET IT DONE. Thank you!” The urgency of signing the bill is not only flanked by the contagion of the President but the Presidential election which is less than a month away.

Trump is still behind the democrat opponent Joe Biden, and if Biden is elected, the economy might face further difficulties as Biden’s tax plans will most likely to stifle business as the US presidential nominee is planning to increase the business tax.

Biden-proposed business tax changes:

  • Increases the corporate income tax rate from 21 percent to 28 percent.
  • Creates a minimum tax on corporations with book profits of $100 million or higher. The minimum tax is structured as an alternative minimum tax—corporations will pay the greater of their regular corporate income tax or the 15 percent minimum tax while still allowing for net operating loss (NOL) and foreign tax credits.
  • Doubles the tax rate on Global Intangible Low Tax Income (GILTI) earned by foreign subsidiaries of US firms from 10.5 percent to 21 percent.
  • In addition to doubling the tax rate assessed on GILTI, Biden proposes to assess GILTI on a country-by-country basis and eliminate GILTI’s exemption for deemed returns under 10 percent of qualified business asset investment (QBAI).
  • Establishes a Manufacturing Communities Tax Credit to reduce the tax liability of businesses that experience workforce layoffs or a major government institution closure
  • Expands the New Markets Tax Credit and makes it permanent.
  • Offers tax credits to small business for adopting workplace retirement savings plans.
  • Expands several renewable-energy-related tax credits, including tax credits for carbon capture, use, and storage as well as credits for residential energy efficiency, and a restoration of the Energy Investment Tax Credit (ITC) and the Electric Vehicle Tax Credit. The Biden plan would also end tax subsidies for fossil fuels.

Increasing the tax charges might hit hard on returns of the Nasdaq-listed corporations, which in other hands may proceed with labor layoffs and wage cuts to maintain the positive return. Hence, post-election drop in the US Indices is very possible.

US Indices are probably going to show positive signs today amid Trump recovery hopes, though mid-term shows that the indices are about to show deeper correction.

Nasdaq-100 on a daily chart might continue the drop towards 10800 to test the dynamic resistance and a neckline of the Head and Shoulders pattern, and proceed towards 10100 if below the neckline.

Chart by TradingView

Even if the US indices drop, the US Dollar index might continue the uptrend as increased CIT will pump money back to the treasury, though investors will closely monitor the core US data and if the FOMC plan on economic recovery continues to proceed as planned under Biden. Undoubtedly, during the pre-election and election days the market will be highly volatile and the Dollar Index might as well test the resistance at 95 or drop to 92.80 if breaks the 93.60 support.

Chart by TradingView

The closer gets the election, the more pressure is on the commodities market. Gold investors are looking for any signal from the USA to proceed with their next move. Further Covid-19 prevention measures and stimulus bills might nudge the Gold’s surge. Yet XAU / USD is still locked in a downtrend channel and in order to continue the uptrend, Gold should breakout from the downtrend channel with a strong impulse.

Gold price on Overbit

Currently Gold is traded at $1899, Gold quote on Overbit, retraced on October 2 after testing of the MA100 and a resistance of September 22 at $1917 and was able to keep above the mid-line of the Pitchfork – an important support and resistance zone, bringing new hopes of the further surge.

Gold price on Overbit

If XAU / USD remains above the mid-line and is able to break the $1906 resistance, it will proceed towards $1928 to test the dynamic resistance (upper edge of the channel) and the MA200. Closing above $1928 and $1930 might bring another stimulus for investors to pump the price higher to $1950 and $1966.

For a look at all of today’s economic events, check out our economic calendar.