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Technical Analysis 10th May 2021: EURUSD, Gold and Bitcoin

This analysis was written at 9:20 am GMT +3, on 10.05.2021

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Market Recap

Bitcoin has managed to continue higher despite the overwhelming selling pressure it seems to be under at the higher levels. While it’s not much compared to previous movements, the instrument did manage to break above the 50- and 200-SMA (Simple Moving Average) and continued to break above the $59,000 resistance level. BTC came close to breaking above the $60,000 psychological level, but the presence of sellers quickly thwarted any momentum the Bulls had. Another attempt is currently being made to break above $60,000.

The bullish momentum, from Friday after the disappointing NFP (Non-Farm Payroll), continued to move the instrument higher, breaking through the 1.2150 resistance level reaching a high of 1.2180 before beginning to correct lower. The disappointing figure as well as the increase in unemployment, cast a long shadow on the economic recovery of the US and thus put the USD under a lot of negative pressure. This in turn allowed the EURUSD to soar higher, the way it actually did.

Gold was able to experience the same bullish pressure as EURUSD, albeit, at a lower extent. After the instrument managed to break above the $1,800 resistance, it now turned it a support, XAU found the bullish pressure needed to continue the move higher past $1,840 which reached the $1,845 resistance. Since then, gold has been consolidating its gains, however the RSI (Relative Strength Index) does show some overbought conditions on the yellow metal and could be expecting a correction.

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Bitcoin to Reclaim $60,000 

The bullish momentum on Bitcoin has allowed it to attempt a break above the $60,000 psychological level, over the weekend. This came to life thanks to the uptrend which occurred in crypto assets like Ethereum, that stepped above $4,000 for the first time in history. At the time of writing, the pioneer cryptocurrency trades at $59,000 following an ongoing upswing from the support at $56,000. This movement, however, seems to be stalling as per the RSI and MACD (Moving Average Convergence Divergence).

In our last brief, we had highlighted the divergence between the RSI and price action. This usually means that the price action will have to adjust to the RSI’s movements or the other way around, and it seems that it was the other way around, as now both the RSI and price action seem to be a consolidation groove. This is collaborated by the MACD, and even though it prints above the midline in a positive fashion, the histogram is right at the midline indicating that the momentum is extremely low.



In order for BTC to ensure that the upside momentum remains intact, it would need to break above $60,000 to affirm that a breakout is happening. Should there be a rejection at the topside, the first line of support would be seen at $58,000, which followed by the $56,000 level. This level coincides with the 50- and 200-SMAs which we talked about in the previous section. In case these levels fail to keep the bearish move in check, we can expect a move lower towards $53,000 and might continue towards $50,000.

Current Market Sentiment:Consolidation

 

EURUSD Continues Upward Move

The USD has come under extreme bearish pressure especially after the disastrous NFP read and increase in unemployment. This allowed the EURUSD to blast through the roof, attic, and into the lower atmosphere almost breaking above 1.2185. However, the current increase in USD, is forcing the common currency to consolidate the gains that it made.

The greenback performance was hit very hard with the bad NFP read which spooked the market. Traders started to speculate that the Fed will continue its ultra-accommodative monetary policy. This pushed the US Treasury downhill, although it recovered a bit from the whole ordeal. The recovery in treasuries could be the main reason that the EURUSD has started to consolidate the gains.

 


On the other hand, the Eurozone posted remarkable growth in service sector data, shown by the Eurozone PMI survey which was released last week. In addition to that, the retail sales rose firmly in March despite the coronavirus-led lockdown. As for now, the dynamics around the US Treasury yields will continue to influence the pair’s performance ahead of the Eurozone Sentix Investor Confidence release.

Current Market Sentiment:Consolidating Gains

 

Gold's Breaks Above $1,830

Gold defends the $1,830 support, rising around 0.20% for the day just as traders prepare for Monday’s European session. In doing so, gold prices react to the US dollar’s failures to keep early Asia’s corrective pullback from the lowest point since late February. However, the upbeat US Treasury yields and stock futures keep gold buyers hopeful.

Gold cheers the risk-on mood that initially took clues from Friday’s NFP debacle. The latest push to the market sentiment should have arrived from the weekend comments of the Fed Minneapolis Boss Neel Kashkari who said, “The US labor market remains in a “deep hole”...needs aggressive support.” Also, on the positive side, this could be the latest covid vaccine optimism from Eurozone and Australia.



Looking at the resistance and support structure of the yellow metal, we can see that the path of least resistance is towards the upside. The first level of resistance is found around $1,845 as the buyers seem to be struggling to keep the momentum alive, as portrayed by the RSI and MACD. Any pullback moves will be facing against the $1,830 and $1,800 thresholds. Should gold continue on the downward path, a close below $1,796 would direct the sellers towards $1,785 as the next target, before attempting a move towards the $1,700s.

Current Market Sentiment:Consolidation


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