There has been yet another update I’d like to point out, Square Financial, the owner of the Cash App which allows purchase and sell of Bitcoin, launches banking operations. Square in late February announced a purchase of Bitcoins worth $170 million. PayPal, which is expanding its crypto offerings in the UK, is assumed to purchase the crypto-custody firm Curv.
Bitcoin Purpose ETF surges for the 10th day in a row validating interest from institutional investors and as the crypto adoption surges among the financial organizations, so will the price of Bitcoin.
As per the technical analysis, it seems that Bitcoin has completed the formation of wave 4 and is forming wave 5 according to the Elliott Wave theory.
As seen on a 4 Hour chart of BTC/USD, Bitcoin is supported by MA200, closed above MA100 and EMA50 and continues the uptrend. There is a resistance at $51130 – $51140 levels, if Bitcoin closes above these levels, it will jump towards the ATH at $58000 and further.
The pair has formed an ascending parallel channel as seen in the daily Bitcoin chart below.
As the levels of the parallel channel suggest, the next resistance could be at $62000 and $63800 if the strong impulse remains.
Whenever the Euro is discussed in the global arena all eyes are on Germany as the locomotive of the Eurozone train. German GDP reported recently shows that the country’s economic recovery plan is going under the plan. German GDP QoQ for the fourth quarter reported is at 0.3%, closing above the forecasted 0.1%.
As in the EURUSD pair, Euro still looks stronger than the US Dollar, the last is in a downtrend again and is already below 91. The postponement of the stimulus check, military drills in the South China Sea and the recent quote from Schumer about lawmakers drafting a bill to outcompete China could place the US Dollar in a weaker position, despite the positive outlooks from the FED.
The EURUSD chart is about to confirm the Inverted Head and Shoulders pattern, which will signal the bullish run of the Euro up to $1.23400.
Euro is still testing the resistance at $1.21660 and if the pair is able to close above this level and the $1.2777 resistance up ahead, this will be a confirmation of another hike.
This 15M chart of the pair indicates levels to watch when making an investment decision on EURUSD. The correction of the last impulse has ended on at 0.5 Fibonacci level, however the price action after the correction has no signs of an impulse wave, hence the pair could possibly test $1.21256 and $1.21118 before going into another bull cycle.
The short-term local dynamic support and resistance is important to trace as the breakout from either the support or resistance could denote the short-term trend direction. The economic calendar also suggest to watch important events today as the FED Chair Mr. Powell will testify before the JEC, US Home Sales data will be announced and according to forecasts, Home sales surged in January, if the Home Sales data is positive than it is expected that the US GDP which is released tomorrow might be beyond the forecasted.
Gold’s January 6 decline continues and the precious metal yesterday closed near the 2020’s quarterly lows after the release of the strong US CPI, PPI and Retail sales data. As the stimulus bill proposed by President Joe Biden’s administration is getting closer and is set to be finalized next week according to the New York Times.
The bill is set to increase the inflation as planned by the FOMC, however as the bill acceptance gets closer, Gold which is traditionally an inflation hedge, loses its positions against the US Dollar. The explanation is that investors are betting on global currencies, such as the US Dollar as post-pandemic expenditures will skyrocket local GDP’s. Many banks have reported losses during the pandemic as loans have dropped drastically, while savings increased. The economic and industrial rebound will boost stocks and other exchange traded products.
More investors are looking towards Silver nowadays. Worlds largest asset management firm BlackRock sold SPDR Gold Shares worth $2.7 million, $471 million worth of GLD ETF, and purchased 1.18 millions of SLV (iShares Silver Trust) and $27 million worth of SLV ETF. Still the Gold share of BlackRock’s total assets remains larger than Silver-backed assets, such a switch could signal the consolidation of Gold price and an uptrend continuation of Silver.
From the technical point of view, XAU/USD remains bearish and the recent retest of the local static support as a resistance could drive the price for the precious metal below $1750.
The 4H chart of XAU/USD highlights the downtrend channel and support and resistance zone of the pair.
There are several supports being tested at the moment, which suggest that Gold should retrace and test $1820, such is signalled by the MACD and RSI indicators. Currently, XAU/USD on Overbit is traded at $1784 which is still below the $1786 resistance and is held in a tiny corridor of decisive support and resistance levels. If Gold is able to close above $1786, it might continue the climb towards $1820, if breaks below $1770 then a downtrend continuation will drag XAU/USD towards $1750 and $1714.
All eyes are the US economic data, Building permits in January are expected to be lower than in December, however the positive-looking Initial Jobless Claims will confirm the economic recovery in the US projected by the FED and will boost the US Dollar Index.
Mr. Musk in his latest tweets backed Bitcoin and other currencies, in one of his tweets he said “I do at this point think bitcoin is a good thing, and I am a supporter of bitcoin.” The question which remains is if other companies follow the lead of Tesla in accepting cryptocurrencies.
Bitcoin set a new All-time-high yesterday hitting $48188, the coin still has plenty of room for growth as the long-awaited $50000 is closer than ever.
There is a great support of the uptrend clearly traced on an hourly BTC/USD chart.
The pair has also formed a symmetrical triangle and a breakout from the triangle will signal the bullish continuation. The coming resistances if the breakout is confirmed are at $48920 and $51050, though panicking sellers might sell Bitcoin at levels near $50900. MACD also nears the signal line and will cross when BTC escapes the triangle trap.
Bitcoin’s 4 hour chart on other hands has another story to tell. The level where BTC/USD is currently is very wild as Bitcoin has tested yet another resistance.
As the chart above suggests, Bitcoin might touch the dynamic resistance once again at $4900 – $49200 levels and retrace. The price action similar to the February 8ths jump was seen on January 4th. Such price action suggests that as stronger the impulse wave, the deeper the correction.
The best price action would be to test $49000 – $49450, retrace to $41400 and go for another bullish run towards $55000. Breakout from the triangle will signal the short-term trend continuation of the pair.
Bitcoin is still bullish, notwithstanding the mid and short-term corrections, as more companies invest in Bitcoin and accept it as a payment method that drives value to the cryptocurrency.
LVR restrictions are one of the RBNZ’s tools designed to reduce the risk associated with ‘boom-bust’ cycles, which helps to meet their statutory purpose of ‘promoting the maintenance of a sound and efficient financial system’. LVR restrictions set a ceiling on the percentage of new mortgage lending that banks can offer at high LVRs.
New Zealand Central Bank’s rate cuts and other measures and tools have reacted positively on NZD during the pandemic as since April 2020, Kiwi against the US Dollar was able to rise by 13.74%.
The situation around the US Dollar remains mixed, the recent report on a 25% drop of new Covid-19 cases looks positive, although the pause on the stimulus bill resulted in a -0.42% drop of the US Dollar index. The negative impact on the USD may be also caused by tensions rising on the South China Sea, the US Carrier was reported to sail near the Chinese-controlled area in the disputed waters.
NZD/USD looks bullish, as the pair broke out from the triangle and is still above the long-term dynamic resistance.
The 4Hour chart of the pair is signalling the bullish continuation of the pair amid the breakout from the triangle pattern, however there are still several resistances to tide over.
As RSI nears the top barrier, there is a high chance that the pair will correct slightly before the continuation of another bullish impulse. Nearest support levels are $0.72200 – $0.72130, if Kiwi remains above these levels, another impulse will take the pair higher towards $0.73000 and 0.73900.
An hourly NZD/USD chart suggests to watch for the breakout from another short-term resistance at $0.72570 and also confirms the bullish sentiment of the pair as it follows the higher high and higher low bullish principle.
All three time frames have support of 100 and 200 MAs and EMA50. Today’s JOLTs Job Openings data and tomorrow’s Core CPI and CPI data from the US will play a significant role in identifying the short-term trend direction of the pair, while Thursday’s Initial Jobless Claims and the FED Monetary Policy report will impact the mid-term trend direction.
Cryptocurrency market has been up lately after the developments around GameStop, redditors and Robinhood. Despite announcements from the SEC that they will investigate the issue and will draw stricter regulations on trading and investment, some influencers including Elon Musk in their Twitter accounts decided to support the crypto-industry by placing a Bitcoin hashtag on their bio. Mr Musk in his latest podcast also said that he is late to the party but he is a supporter of Bitcoin.
A study by a group of researches at Blockchain Research Lab revealed that all six Tweets done by Elon Musk had an impact on trading volumes of the coins he was tweeting about. The largest impact was on Dogecoin for sure back in December, when SpaceX CEO in his official Twitter account wrote: “One word: Doge”. Just recently, Elon Musk added another tweet: “I became a meme, destroyer of shorts”, soon after his round of tweets on Dogecoin, as a result Doge surged again.
Will there be a Tweet on Bitcoin again? The answer is, very likely. Will there be consequences? The answer is the same. The SEC will surely press charges on Elon sooner or later, the reason they are not doing the same right now is of course the “regulation”. Whenever the regulation is still on draft papers in shelves of lawmakers, the SEC cannot press charges but only file legal statements unless there are petitions. Hence, Bitcoin remains bullish for a short-time.
As for technicals Bitcoin established a weekly high at $38782 and was sent off below the resistance of $37830.
The impulse of February 1 suggests that currently Bitcoin is forming a wave 3 pattern and if remains below the aforesaid resistance, BTC will most likely drop to $34450 levels to test the previous resistance of the last impulse as support. The drop of the BTC is also signalled by a harmonic bat pattern, which mainly is formed during the corrective waves.
As the pattern suggests, the price of the asset after reaching the D point of the pattern should retrace to the point B to test is as support, and to the point C if closes below B.
On the other hand, the logarithmic growth of the number of Bitcoin addresses signals the Bullish continuation of Bitcoin. Another signal of the money inflow in crypto-trading and Bitcoin trading is the recent events related to Robinhood and Redditors, the growing interest in crypto may push some stock traders to leverage their Bitcoin share in their portfolios.
Another indicator to consider is the Stock-to-Flow, which is way above the current price. Having such a high S2F ratio, I’m not expecting a deep correction of Bitcoin in the near time.
Whenever there were money injections in the economy, Bitcoin price felt the safest, hence investors are thoroughly monitoring the situation around the Stimulus package approved by President Biden’s Administration.
Taking into account the bullishness of Bitcoin, I still believe that it should correct a bit before another impulse. A retrace from the current level to $34667 would be the best price action as per the Elliott Wave principle.
As seen on the chart above, the $34677 level is a Fibonacci 0.618 level of the last impulse and a strong resistance, which if rested as support will bring another uptrend impulse as buyers will gain strength.
The US vaccination plan and restrictions implemented resulted in a decrease of the new active cases.
More and more trials and tests are ongoing in different pharmaceutical companies, and yet another giant – Johnson and Johnson reported that their vaccine is 72% effective against moderate and severe disease in the US, and 57% in South Africa. In South Africa, 95% of cases in the trial were due to a variant known as B.1.351, which is known to be more contagious and carries mutations. These mutations are most likely to be less responsive to antibodies. The spread of this variance is already confirmed in the UK and caused anxiety. Another best part of this vaccine is that it’s single-dose and affordable.
President Biden’s administration already signed a policy to lift the rate of vaccination among the US delivering more than 33 million shots. The European Union on the other hand is demonstrating a rather weaker approach to beating the Covid-19 spread, with Spain hitting new records of Covid-19 cases.
US GDP as per the final quarter of the last year, released on January 28, demonstrated a 4% growth, while the data from the EU, released yesterday, were rather unsettling. Europe’s GDP (QoQ) is down 0.7% and (YoY) is down 5.1%. Despite the released positive PMI data and a rather positive Core CPI (YoY) s per January, Euro still looks weaker against the US Dollar.
As seen on the chart above the pair is following it’s downtrend path within a descending channel. By the time of writing this article the pair is testing the $1.20120 support and lacks momentum to retrace from this level. Hence, EUR/USD will most likely break the aforesaid support level and drop to test the lower edge of the channel and find support at $1.19650-$1.19600. After the test of $1.20120 support, the pair retraced and tested the previous strong support at $1.12500 as resistance, hence this adds bearish sentiment to the pair.
The path of the downtrend on a 15M chart also demonstrates the same levels and a rather bearish sentiment of EUR/USD.
The Non-farm Employment change which is going to be released today and tomorrow’s Initial Jobless Claims will be significant for the USD, as the employment growth is the FED’s key metrics for the economic recovery.
Key notes taken from the FOMC Statement are the economic recovery is still dependent on the virus spread and the progress of the vaccination, employment remains one of the key factors of monetary policies, downward risk to employment and inflation have increased, path ahead still remains uncertain.
The US Dollar Index corrected after the FOMC announcement was made and when the attack of Redditors happened on Wall Street, the movement led by thousands of amateur investors from WallStreetBets at Reddit.
The influx of traders resulted in malfunction in a popular trading app Robinhood, several other brokers alongside with crypto-currency exchanges halted deposits and new account registrations. Adding fuel to the fire, Ilon Musk and Reddit’s co-founder Alexis Ohanian tagged Bitcoin in their profile bio, resulting in a 10% surge on January 28 and another 15.25% on January 29.
As many will find these movements positive, when a group of amateurs squeeze the market and get profit, for the market itself and for the regulators such actions are considered fraudulent and cause an “unhealthy” environment. The US Securities and Exchanges Commission for sure will consider new strict regulations on admission of traders into the financial markets. Such regulations will surely have a negative impact on traders, brokerages and the market in general as it will cause the outflow of liquidity, however the price of assets will normalize in time lowering the volatility.
From the technical view, Bitcoin against the US Dollar is traded at $33707 on Overbit and is currently above the dynamic resistance, above the EMA50, although below two major Moving Averages, MA100 and MA200.
The volatility is currently low, and it looks like that the market is awaiting an opening of the new financial week There might be a slight panic and sellers may bring down the Bitcoin price to the support at $32200 where there will be another attempt of an uptrend or buyers will push the price above MA100 and MA200 brea the resistance at $34440 and proceed to $37900 and to $39600 above that. The uptrend is also supported by the Fibo 0.618 level of the last correction, however there are no clear signs of a new impulse at this point.
If the price hits the $37900 and is rejected, Bitcoin will consolidate, and if the downtrend from that resistance is high look for a formation of a harmonic Gartley pattern (yellow).
As the pattern formation is theoretical it clearly outlines support and resistances during the current price action, taking into account the fact that after the test of Fibo 0.618 level, Bitcoin didn’t show an impulse yet.
The debates of the new stimulus plan brought in a lesser volatility to the markets. The number and the date of stimulus injection still remains uncertain.
Whereas Covid-19 cases rose hitting new records, the Volatility index also jumped today, all eyes are on the FOMC meetings and the Fed rate decision which is expected to remain unchanged.
Silver is one of the assets to watch, as the metal has formed a symmetrical triangle and could follow along the uptrend channel. The FOMC Statement will be decisive on the price action of XAG/USD, though there are key points to consider.
As seen on the chart below, the price uses Pitchforks levels as supports and resistances, and currently Silver is testing the 0.382 as support. Bears are pushing the price lower, while bulls do not have enough power to push the price back upwards.
Moving averages, MA100 and MA200 as well as EMA50 show a great resistance and might withhold the uptrend continuation of XAG/USD. As seen on the chart MA200 is about to overtake MA200 and if that happens, Silver may continue to retrace further down to $24.20 levels.
On an hourly chart, silver has formed a symmetrical triangle; breakout of each edges of the triangle will signal the short-term trend continuation.
If the price breaks below the lower edge of the triangle, I’m expecting a drop down to $25.08 and $24.55. If breaks above the upper edge of the triangle, the price will jump towards $26.40.
If Silver holds above $24.55, then there is another possible formation to watch, see the chart below.
This long term Silver sentiment looks bullish, if $24.55 support is not penetrated and the price doesn’t close below this support. In that case, Silver may once again form an Inverted Head and Shoulders pattern and proceed towards $27.65 levels.
Some investors worry about the deduction of the stimulus bill and expect that the “buy-everything” year, whereas due to paychecks volumes in markets jumped, will end soon and the bubble will explode. The US Dollar Index is still above the 90.400 support zone and remains strong, any positive outlook stated by the Fed will boost the US Dollar index, hence bring down the Silver and Gold prices.
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.
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.
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.
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.
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)
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.
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.
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.
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.
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.
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.
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.
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:
The United States of America: 8,133.5, which is 79.3% of the total currency reserves
Germany: 3.362.4, which is 79.3% of the total currency reserves
Italy: 2,451.8: which is 71.2% of the total currency reserves
France: 2.436,1, which is 66.4% of the total currency reserves
Russian Federation: 2,298.5, which is 23.8% of the total currency reserves
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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%.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.