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Technical Analysis 8th June 2021: EURUSD, Gold and Bitcoin

This analysis was written at 9:20 am GMT +3, on 08.06.2021

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Market Recap

Bitcoin has been dealing in a consolidation attempt below the 100- and 50-SMAs (Simple Moving Average), without much movement to either the top or downside. That is until Bears were able to take control of the situation and force the instrument lower, testing the current support at $33,000 with the major psychological level seen at $30,000. The instrument is now trading just below the first mentioned support at $33,000, as the technical indicators are showing some exhaustion in the downward move.

After a brief consolidation below the 50- and 100-SMA on the 4-hour chart, EURUSD Bulls found enough buying pressure to rise once more to the top levels. The instrument managed to climb above the mentioned SMAs and reached the 1.2200 resistance level, however, the presence of sellers as well as the lack of enough bullish momentum caused the instrument to fall back below the SMAs. There does seem to be enough bullish pressure to continue the move higher, however, it all depends on the kind of news and overall risk appetite in the market.

Gold’s bullish momentum continued after it was able to break above the 50-SMA on the 4-hour chart, and used the 100-SMA as a springboard to rise higher. The instrument attempted to break above $1,900, but it seemed too much too soon for the instrument as it currently trades below the mentioned resistance. It’s currently using the 50-SMA as a near-term support level in hopes that the Bulls reenter the market with enough presence to continue the movement higher.

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 to Enter Bearish Cycle 

When the Bears took over the Bitcoin market during the Central Asian session on Tuesday, the Bitcoin market finally got rid of its hesitation about the status quo. After plunging to $39,000 last week, the largest cryptocurrency has managed to find some support around $36,000. The convergence of resistance formed by 50-SMA and 100 SMA on the 4-hour chart, has brought down any hopes for a higher move. When the hope of a rebound diminishes, sellers use this to drive it down.

At the time of writing, the price of the flagship cryptocurrency is just below $33,000. Technical forecasts are very pessimistic. According to the well-known cryptocurrency analyst NebraskanGooner, Bitcoin "is currently in a bearish cycle." The initial drop from a record $65,000 was shocking. Bitcoin pitted at about $30,000 and then recovered. However, almost no progress has been made above $40,000, and Bitcoin has remained below that level for most of the time.



The 4-hour chart highlights the formation of the symmetrical triangle pattern discussed on Monday. When the breakout prevailed, the bullish breakout forecast of $50,000 closed the door for us. If the $32,000 support fails, the triangle could fall by 35%, causing Bitcoin to fall to $23,000. Other technical levels that add credibility to the bearish outlook include the MACD (Moving Average Convergence Divergence) and RSI (Relative Strength Index) on the 4-hour chart. Bright bearish signals may continue to attract more sellers into the market.

Current Market Sentiment:Bearish

 

EURUSD Snaps Two-Day Move

EURUSD has finally snapped a two-day move higher, as it fell by 0.08% reaching 1.2180 on the day just before the European session on Tuesday. In the face of important economic figures from the Eurozone and Germany, weakening inflation concerns, discussions of the Fed’s next move, and headlines from Covid and China, the common currency has been under enormous downward pressure.

As the recent explosive growth in the US employment report pushed inflation expectations to a six-week low, market sentiment has improved, driving the US Treasury 10-year bond yield below 1.60%. This, in turn, has pushed the USD lower as inflation headlines worry investors when Thursday comes around. The positive side is the negotiation of US President Joe Biden’s infrastructure spending plan and the removal of restrictions on COVID-related activities in Canada and the US.

 


It is worth noting that before the US President's visit to Europe, the EU-UK dispute caused by Brexit, and the tension between the West and China gave the USD a safe-haven bid, which further exacerbated the weakness of the EURUSD. Recently, a US report cited by the Wall Street Journal (WSJ) concluded that the new coronavirus may have leaked from a Chinese laboratory in Wuhan. In response, China is moving toward legislation that challenges U.S. sanctions.

Current Market Sentiment:Neutral with Bearish Bias

 

Gold Falls After Reaching $1,900

As market sentiment deteriorated, the USD Bulls resumed trading, and gold reversed and began to fall after it rose above $1,900. As US Secretary of State Janet Yellen clarified that she does not expect more spending, the dollar is recovering from Monday’s sharp decline. Over the weekend, Yellen hinted that an adjustment might be made because economic optimism kept the USD and government bond yields safe from the NFP.

In addition to falling gold prices, US inflation expectations have also fallen to their lowest level in six weeks. Faced with falling expectations, the attractiveness of hedge against gold inflation is waning. All eyes are on the forecast that the US CPI data this Thursday will determine the next direction of the gold price. At the same time, investors should pay attention to signs of renewal between China and the United States.



As investors bet that there will be no job growth, Friday's Non-Farm wage data weighed on the USD. According to Reuters calculations and data released by the US Commodity Futures Trading Commission on Friday, speculators reduced their net short positions in the USD last week and were not enough to raise market expectations. The Federal Reserve is positioning its own positions to decrease.

Current Market Sentiment:Neutral to Bearish


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