This analysis was written at 9:20 am GMT +3, on 13.05.2021
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Negativity has taken over Bitcoin, the movement lower came in such an unexpected move. The instrument has been caught in a wide range of consolidation as we’ve explained previously in these briefs, however, this time around the instrument managed to break below the $53,000 support, past the $50,000 psychological level and reached the lows of $46,000. The reason behind this move? It would seem that Tesla’s unforeseen rejection of BTC payments triggered the sharp freefall that we’ve witnessed.
The EURUSD has also found incredible bearish pressure as it fell from the $1.2150 high to the $1.2070 support level. This is an interesting support as it’s a convergence between the 50- and 100- SMA (Simple Moving Average) on the 4-hour chart. It could be the level which the Bulls need to stage another run higher, however, they have an uphill battle considering the inflation read from the US yesterday. This was the main trigger for the downward move, wiping out almost all the gains from the NFP release of last week.
Gold wasn’t spared the inflation scare in the US, as it too has suffered from the bearish atmosphere and fell. Interestingly, the instrument was attempting to break above the $1,845 during the time of the release, however, that quickly fell through and saw the yellow metal retrace the gains from the NFP leading towards $1,815. So far, the $1,810 and $1,800 are both in a position to provide the Bulls with the needed stance and bounce to stage a comeback or at least save whatever bullish pressure remains from the upward move of last week.
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A while ago, Tesla, the largest manufacturer of electric vehicles, had allowed it’s clients to pay in Bitcoin. This was a huge move for the cryptocurrency movement, that a well known company is paving the road forward for mass adoption. However, that quickly changed when Tesla announced that it will no longer accept payments in BTC. The reason behind the sudden 180 in stance? Environmental concerns, more specifically, environmental issues related to the high cost of mining and processing Bitcoin transactions.
There was only one way that the BTC market could have reacted, and that was with a sharp move downwards. Bitcoin fell significantly breaking through important supportive levels such as the $53,000 and $50,000. The low of the move, however, reached the $46,000 support before a bounce occurred. The data is showing that Bitcoin has lost more than 12% of its value in the last 24 hours, and is down almost 13% in the past seven days.
However, there was a saving grace from Elon Musk saying that Tesla won’t be selling any of its Bitcoin on its Balance sheet, as it intends to use those for transactions when mining transitions to sustainable energy. The technical part of all of this is quite clear, without even resorting to the RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence); the path of least resistance is obviously to the downside, however, if by a certain miracle the instrument does manage to rise above $53,000, the Bulls would still have a fighting chance.
Current Market Sentiment:Bearish
The USD has continued to appreciate especially after the inflation read. This is keeping the EURUSD under bearish pressure as it trades below $1.2100. Concerns over rising inflationary pressures spooked the market participants as they rushed towards the greenback on its safe haven appeal. The US inflation data jumped in April to the highest level since September 2008, bolstering the narrative of the US central bank tightening its monetary policy sooner-than-expected.
The inflation read also helped the US Treasury yields jump towards the 1.70% mark, after the better-than-expected US CPI data. The mentioned economic indicator was expected to come in at 3.6% on a year-on-year basis, however, it came in at 4.2% which has triggered the entire USD demand boost pushing yields higher and the EURUSD lower. The EURUSD fell despite the growing economic optimism in the Eurozone, and especially after revision of the GDP forecasts for 2021 and 2022.
As for now, the rising inflation pressure across regions primarily supports the demand for the USD. Market participants turn their attention towards the releases of the US Producer Price Index (PPI), and Initial Jobless Claims to seek fresh trading impetus. From a technical point, the RSI is showing that the bullish momentum on the common currency is still not completely gone as the 40-level on the indicator remains intact. If a solid bounce happens from there, we can expect a move back above $1.2150.
Current Market Sentiment:Bearish
Gold fell dramatically after the US inflation data, yet it managed to remain above the $1,810 support resistance and is currently being traded around $1,817 as the European session for Thursday kicks off. However, market sentiment is dwindling fast following the economic indicator better-than-expected result. Gold prices dropped the lowest level in 2 and half months the previous day, amid reflation fears while the latest weakness could be traced to the US 10-year Treasury yields.
The risk barometer, Treasury yields jumped the most in two months on Wednesday before traders reassessed fears emanating from the COVID-19 variants and geopolitics. The same puts a bid under the US dollar and weighs on gold. Given the fewer catalysts ahead of the North American session, the pick-up in the USD could last longer and may extend if Jobless Claims, as well as Producer Price Index (PPI), stay firm. As a result, gold prices may fall below the $1,800 hurdle.
It would seem that with the current economic structure in the US as well as the technical picture that Gold is painting, the only possible outcome is that the Bears will keep a hold on the reins for the time being. However, the $1,810 support level, which coincides with the 50-SMA on the 4-hour chart, gives some hope that the Bulls might be able to keep any bullish pressure alive. However, breaking below $1,800 would cement the current bearish stance which the yellow metal finds itself in.
Current Market Sentiment:Bearish
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