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Technical Analysis 19th May 2021: EURUSD, Gold and Bitcoin

This analysis was written at 9:20 am GMT +3, on 19.05.2021

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Market Recap

Pop goes to the support! Bitcoin has resigned itself to the bearish momentum as the instrument breaks through the $42,000 support, and continues below $40,000, as it currently trades around $39,250. BTC continues to look for some kind of decent support to stage some kind of meaningful comeback, but the odds of that happening are pretty slim, especially when you take a look at the technical indicators and how they continue to push the negative scenario forward.

The bullish momentum continued to play a major role in the upward movement of the EURUSD, as the easy break above 1.2200 has put major targets on the instruments back. Traders have become somewhat fearful of an extensive move lower, especially with how the RSI (Relative Strength Index) is showing signs of overboughtness. However, the market will continue to play to the fundamental aspects especially with how the risk-on mood is allowing EURUSD to continue moving higher while the USD safe-haven demand becomes a distant image.

The movement higher in Gold has hit a bit of a snag. We’ve had spoken, in our last brief, that there is a bit of resistance forming at the top levels with the range between $1,875, and $1,880 is becoming congested with seller presence. That can be seen on the chart with how the instrument halts the major move higher and begins to consolidate the gains it made. Furthermore, the MACD (Moving Average Convergence Divergence) is showing a complete lack of momentum as the histogram prints at the midline.

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’s Fall from Grace 

Bitcoin has definitely lost all sense of bullish momentum and was replaced by a powerful bearish one. The pioneer cryptocurrency seems to be unstoppable at this point, breaking below several important supports such as $45,000, $42,000, and the psychological support at $40,000. The last one was supposed to help the Bulls regain some composure but that was gone before the Bulls had a chance. Currently, the instrument is battling against the 200-SMA (Simple Moving Average) on the daily chart.

Defending the mentioned support at the 200-SMA on the daily chart is beyond crucial. If history serves, back in March of 2020, the instrument broke below the mentioned SMA and flash dropped towards $3,800. Hence the importance of the Bulls to keep that level in check. However, the path of least resistance is obviously to the downside as the RSI and MACD are obviously showing the signs of more downward pressure. That said, we can notice that the RSI has entered into oversold territory meaning that there could mean some movement higher should that hold.



The MACD is only confirming the bearish momentum as per the MAs falling below the midline as the momentum continues to increase as per the histogram which continues to increase to the lower area below the midline. It’s not impossible to say that Bitcoin’s downtrend is unstoppable at the moment unless the 200 SMA emerges as a robust anchor. Therefore, investors should wait for a real break above $40,000 to go all-in on BTC and anticipate recovery toward $50,000.

Current Market Sentiment:Bearish

 

EURUSD Reaches 1.2230

The first thing we need to mention is the continuous Bull run that EURUSD finds itself under which started back when the instrument was trading at the lows of 1.1985. The main reason comes from the weakness of the USD, which is keeping the pair well buoyed as the risk-on mood continues to allow more investors to buy the instrument while dumping the safe-haven USD. Meanwhile, the US Treasury yields were little changed at 1.65% amid delayed rate hike expectations.

Fed officials continued to hammer their stance on the continuation of the easy monetary policy to boost the economy on Monday. In addition to that, another set of mixed US economic data kept the pressure on Fed officials to delay the discussion on tapering measures. On the other hand, the eurozone economy narrowed down 0.6% in the first quarter (Q1). Economic releases on Tuesday revealed that eurozone Gross domestic product recorded a fall of 1.8% YoY, while employment fell 0.3% in Q1. The dismal data weighed on the single currency and kept the pair’s gains limited.

 


The pair has been gaining momentum, keeping track of the previous session’s upside gains. The Bulls could have a chance to test the first hurdle at the 1.2250 horizontal resistance level if price sustains over the 1.2235 mark. The instrument would track back towards the January 8th high at 1.2284 then. Bulls will flex their muscle to the January 6th highs in the vicinity of the 1.2350 area.

Current Market Sentiment:Cautiously Bullish

 

Gold Stumbles at $1,870

Amid overbought conditions on the daily time frame, Gold price has stalled its uptrend, as investors turn cautious before placing any fresh bets. Market participants also remain unnerved ahead of the much-awaited FOMC April meeting’s minutes due later this Wednesday, as growing inflation concerns continue to drive the sentiment around gold price. Meanwhile, the latest bounce in the USD amid a downbeat mood limits the gains in precious metal, with the buyers failing to find a strong foothold above $1870 once again.

The easing of measures to contain the pandemic have lifted higher-risk assets and counterintuitively, precious metals as well, as the greenback, melts away, giving way to higher beta currencies, such as the Aussie, that stand to benefit most from economic revival. With investors sounding the alarm over inflation, institutional interest in the precious metals complex is likely to continue rising following months of outflows.



Gold’s latest moves could be attributed to the fears of the Indian variant of COVID-19 and the cautious sentiment ahead of the US Federal Open Market Committee (FOMC) meeting minutes. Also, mixed sentiment concerning the Fed’s next move amid reflation fears add to gold traders’ confusion. Hence, gold Bulls need upbeat FOMC minutes and trade-positive sentiment to keep the recent gains.

Current Market Sentiment:Cautiously Bullish


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