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Technical Analysis 18th June 2021: EURUSD, Gold and Bitcoin

This analysis was written at 9:20 am GMT +3, on 18.06.2021

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Market Recap

Bitcoin continued to fall after it tried to stay above the 200-SMA on the 4-hour chart. The instrument couldn’t face the bearish pressure falling slightly below the mentioned SMA and is currently just trying to stay afloat. The convergence of the 50 and 200-SMAs should be enough of a barrier to either the upside or downside, but the instrument is currently just trading at that level around $38,000. In case the instrument breaks below $36,000, the instrument might fall even more heavily to target the $34,000.

More negative pressure continued to manifest itself on the EURUSD breaking below the 1.1980 support level. This was supposed to keep things in check and repel any more negative pressure, but the fact is, the instrument continued to fall heavily breaking through several support levels key among them was the 1.1930 and 1.1900. The instrument is now trading below 1.1900 as the indicators are showing that more negative pressure is coming, which might put the instrument on odds to move towards 1.1865.

The FOMC continues to wreak havoc on the precious metal, as the instrument broke below the $1,800 support level reaching a low of $1,767 before the Bulls stepped in to curb some of the movement downwards. The instrument is now attempting to climb back higher, but the overwhelming pressure will undoubtedly come back to push the instrument lower. Indicators are showing that the same negative pressure is here to stay. It might take some time before some bullishness can be witnessed.

What’s the strategy you’re going to use when it comes to trading these markets? Will we see more of the same type of trading? Or will there be a break of the norm?

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Bitcoin Between Rock and Hard Place 

It’s been difficult for the Bitcoin Bulls this week, as they’ve been trying to keep the price above $40,000. Unfortunately, the upward movement of the main support level of $31,000 touched the huge obstacle of $41,300 and disrupted the upward trend. Sellers took advantage of the weak bullish field to turn the tide. As a result, the price of Bitcoin fell below $40,000, extending the bearish leg to $37,000, which may fill the gap between the recent CME-BTC futures.

The flagship cryptocurrency is trading at the $37,850 level in a declining momentum. The 200-SMA and 50-SMA have consolidated at the $38,000 mark, which indicates the delay or lack of a rebound to $40,000. Based on tools such as the Moving Average Convergence and Divergence Index (MACD) and Relative Strength Index (RSI), the near-term technical outlook is very pessimistic. If MACD falls to the zero line in the background of the potential negative zone transition, the first outlook is clearly bearish. The MACD line crosses the signal line and the divergence increases and emphasizes the bearish signal.



At the same time, the RSI highlights the increasingly bearish control of falling out of the overbought zone. At present, the momentum indicator is looking for support at the level of 40, but shows an oversold area, indicating that the price may fall to $36,000 and $34,400. Please note that there will be two areas that will characterize Bitcoin trading on Friday; any action above $38,000 may confirm a rise to $40,000, and a break of 100 SMA to $37,000 may result in a huge loss of $36,000 and may climb to $34,000.

Current Market Sentiment:Bearish

 

EURUSD Falls on FOMC

The EURUSD hovered around 1.1925, an intraday high, and recently fell to 1.1920 in the first of three active trading days, and rose 0.10% the day before Friday's European session. Due to slow trading hours and slightly bullish markets, the US dollar consolidated its recent gains, and the currency pair subsequently fell. US inflation expectations are at a three-month low according to the latest inflation data from the Federal Reserve Bank of St. Louis (FRED), inflation expectations are the lowest since March.

This shows that the market believes in the Fed’s comments on the “temporary” rise in inflation and the suppression of the dollar’s ​​safe-haven demand. It should be noted that due to the lack of important data/events and difficult signals from European Central Bank politicians about tapering, the EURUSD is seen to have more negative movements in the future. On a different note, the German Central Bank President and European Central Bank Executive Committee member Jens Weidman has approved the Pandemic Emergency End Procurement Plan (PEPP) the day before, which might put added pressure on the common currency.

 


As of press time, 10-year US Treasury bonds are striving for new directions, and traders may face trouble when trading the EURUSD. The German PPI and Eurozone Economy along with Finance Ministers’ meetings may offer some moves on the EURUSD pair during a rather lackluster day. However, the US inflation expectations and dollar index will be the key things to watch to later understand how the instrument will move.

Current Market Sentiment:Bearish

 

Gold Remains Negative After FOMC

Gold showed a corrective move in its worst week since March 2020, rising 0.57% to $1,783 before the European session opened on Friday. The recent rise in gold prices, deflationary concerns and optimism about President Joe Biden’s infrastructure spending plans are driving market consolidation. In the recent 10 years of inflation data from the Federal Reserve Bank of St. Louis (FRED), inflation expectations are at the lowest level. This shows that the market believes the Fed’s comments on the “temporary” rise in inflation and the suppression of the dollar’s ​​safe-haven demand.

On the other hand, the "Wall Street Journal" (WSJ) published news that "the Biden government has spent billions of dollars" has made progress. More and more bipartisan lawmakers and the White House are arguing about how to fund an infrastructure proposal of about $1 trillion, and one of them is waiting for President Biden’s comment, because the Democratic Party starts a separate discussion that may cost as much as 6 trillion. It is worth noting that the recent Asian concerns about Covid have faded, and the problem of British Delta COVID variant has also eased.



This has also contributed to the recent correction of gold. The US dollar index (DXY) has risen from a two-month high, but it is still expected to set the highest weekly profit since September 2020, below zero. Although the U.S. 10-year Treasury bond yield has recently been struggling to find a clear direction and let gold buyers give it a try. On Friday, the price of gold may follow the dollar higher. This also emphasizes that inflation expectations and economic headlines are important catalysts that may bring new momentum at the end of a turbulent week.

Current Market Sentiment:Bearish


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