Welcome Vaultorians, to another weekly analysis on bitcoin and gold!
BTC/USD – Correction or Reversal for Bitcoin?
After testing resistance at $5,460, bitcoin’s recent rally has turned around, and the leading cryptocurrency is now trading at $5,032.
With almost two months of sustained buying pressure, and seven consecutive green weekly candles, this retrace has come as a shock, and traders are now asking if this move down is a healthy correction in a continued uptrend, or a reversal, indicating significant more downside in store.
As seen on the daily chart, the retrace so far is quite shallow, reaching only to the support area at the 0.236 fibonacci level.
If we can manage to hold support here at 0.236 ($4,915), then the market structure is still bullish, and will remain bullish up to the point that a retrace moves below the larger green demand zone around the 0.5 Fibonacci level ($4,200-$4,400) — a region which previously acted as strong resistance.
On the hourly chart, long wicks at the bottom of the candles at $5,000 indicate solid defense by the bulls. But, volume on these candles is low and continues to descend, suggesting weakness and the possibility of more downside.
If volume returns and the price moves up, then we could soon exepect another test of $5,500.
XAU/USD – Gold Rally Stalls at Resistance
After a volatile week, gold is now trading at $1,295.
A double whammy of poor economic data releases on Tuesday helped gold’s cause, renewing its safe haven appeal and catalysing a rally to test the $1,310 level.
This consisted of poor economic data from the US, with job openings dropping to 7.09 million, from 7.54 million in the previous release, and a cut in the global growth forecast from the International Monetary Fund. Both helped put the shine back on gold, which surged above the symbolic $1300 level to hit two week highs.
But, $1,310 proved too high a hurdle for gold to jump, and the price retreated, only to break back through $1,300 on Thursday after a spate of positive economic news.
On Brexit, leaders agreed to a flexible extension of the deadline until Oct. 31, and in the US, Treasury Secretary Steven Munchin said the US and China have agreed on a mechanism to police trade agreements, fueling investor optimism.
Also released were minutes of the Federal Reserve’s March meeting, revealing that the majority of Fed members expected rates to remain on hold in 2019, which, being bearish for the dollar, should help to put a bid under gold in the coming weeks.
Technically, gold once again needs to get back above the $1,300 psychological level in order to avoid further downside. Holding this level will reintroduce the possibility of revisiting the highs at $1,350.
If we move down, a break below $1,278 is likely to bring significant further downside.
Disclaimer: This content is for educational purposes only and does not constitute financial advice. It is very important to do your own analysis before trading or investing.