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Technical Analysis 1st April 2021: EURUSD, Gold and Bitcoin

This analysis was written at 9:20 am GMT +3, on 01.04.2021


Market Recap

Yesterday we saw Bitcoin drop $2,000 in less than 5 minutes after $600 million worth of long positions were liquidated. That was the big news that rattled the market as the instrument fell from around the $59,400 mark and reached towards the $57,000 support level. However, the Bulls didn’t give in that easy and fought back against this liquidation, driving the instrument back towards $59,000. Despite this increase, we fear that the bullish momentum that we’ve seen the instrument trading in as of late has all been removed.

There’s a sense of Deja-vu when we look at the EURUSD chart. It seems as if the same setup has been created before the break of the 1.1750 support level. Back then, the instrument was attempting to break above 1.1800 after falling towards the 1.1750 support, however, the bearish pressure was so overwhelming that it drove the instrument back down to reach the 1.1700 psychological support. Now the instrument is attempting to break above 1.1750 with almost the same setup from the previous break, we can’t help but feel that there might be another break towards the 1.1650 support level.

The bearish move that we saw happen on Gold, broke the consolidation phase and reached towards $1,680, has lost a lot of its luster. The instrument managed to find enough buying pressure around the mentioned level that moved it above $1,700 and is currently trading right around $1,710. The current target for the Bulls is around $1,725 which corresponds with the 50- and 100-SMAs (Simple Moving Average), breaking above those levels could mean that the bullish momentum is back on the menu.

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Bitcoin Battles Against $60,000

The $600 million worth of long positions on Bitcoin was liquidated yesterday, this caused a massive downward move that saw the cryptocurrency fall $2,000 within 5 minutes. This type of sudden and aggressive move isn’t uncommon for BTC, however the reason behind the drop, this time, is. The instrument was trading around the $59,400 level before the liquidation began, this drop brough the instrument face to face with the current support level at $57,000.

However, the Bulls were not going to give it up so easily, not without a fight. This helped BTC to rally back higher reaching $59,800 before correcting slightly. The overall situation that is currently surrounding BTC is one of consolidation between $57,000 and $60,000, however, despite the current consolidation mode, the chances of a break below $57,000 remain a real threat if the Bulls are unable to gather their forces and push the instrument above $60,000.



If the cryptocurrency fails to establish a decent foothold above $59,800 and $60,000, a downside correction could be established. This could lead to more downside with the first level of support seen around $58,400. Further down, the instrument will be facing against the $57,000 psychological support. The Bears will want to establish a handheld below that level in order to keep the pressure of more downside on the instrument.

Current Market Sentiment: Cautious

 

EURUSD Consolidates Below 1.1750

We’ve been monitoring this instrument for quite some time now, and after the break below 1.1750, it would seem that the Bears are taking a breather as they keep the pressure on for another break below 1.1700. Investors are looking ahead for the trading day as they set their eyes on the Eurozone and U.S. PMI (Purchasing Manager Index) data. With that being said, the pressure on EURUSD remains quite bearish especially after France’s third lockdown because of another surge of COVID-19 cases.

French President Macron announced yesterday that schools will be shut down, travel restrictions will be imposed, and non-essential shops will be closed, all for the next four-weeks. On the other side of the Atlantic, investors are weighing Joe Biden’s $2 trillion infrastructure spending plan, which democrats are saying is not large enough to address all the aging infrastructure that the country has. This combined with the retreat in the U.S. Treasury yield is keeping a lid on any USD gains, which helped the EURUSD from staying on its downward course.



There’s a lot of economic data for today, which is expected to keep market participants busy as they wait for this new fresh input of data. Investors will be looking at the German Retail sales and Euro area Manufacturing PMI. However, it will be the U.S. ISM Manufacturing PMI that will hold the key for any directional change in the major pair. Let’s not forget that the instrument will continue to be influenced by the latest COVID updates, yield price dynamics, and the market sentiment as a whole.

Current Market Sentiment: Bearish

 

Gold Finds Support

The negative momentum that Gold has been under was abated long enough yesterday, that the instrument was able to find a decent enough support to move higher. The $1,680 level was there when the instrument needed it the most and helped it rise back above $1,700 and is currently trading around $1,710. This bullish momentum comes on the back of a retreat in the U.S. Treasury yields, and simultaniously, concerns over Joe Biden’s infrastructure plan not passing through the needed channels are rising.

The situation in Europe is putting a dent into the global risk appetite as fears of fresh lockdowns and increases in COVID-19 cases are worsening the risk sentiment. The lack of risk appetite will be a boon for the USD which might rise on the expense of the yellow metal. However, market participants will be looking at the U.S. jobless claims as well as the U.S. ISM Manufacturing PMI, before the market gears up for Friday’s NFP (Non-Farm Payroll).



Looking at the support and resistance structure on gold, we can see that the first level of resistance that the yellow metal will face is around $1,715, above which the $1,722 powerful resistance will come into play. The Bulls must break above that resistance in case they wish to have a strong recovery from the lows that we’ve seen. Any higher, the $1,725 and $1,730 will test the commitments of Bulls to the upside cause. 

Current Market Sentiment: Cautious


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