Hello Vaultorians, and welcome to your weekly analysis on bitcoin and gold!
BTC/USD – Bitcoin Short Squeeze Imminent?
Bitcoin is now trading at $5,478 — a 6.3 percent increase on the week, and an over 30 percent gain on the month of April.
Last week’s Tether FUD failed to generate significant downturn, causing only a short-lived pullback to the $5,000 region before the uptrend resumed. But the claims against Bitfnex have also had another effect — exacerbating the ‘Tether Premium’, which has now returned with a vengeance, and bitcoin traded against Tether on Bitfinex is commanding prices over $350 higher than on dollar exchanges like Bitstamp.
General uncertainty around this situation, along with bitcoin now retesting a major resistance bank, is leading traders to load up on short positions, which are rapidly rising on the Bitfinex exchange.
As these short positions will have stop loss buy orders above the price, which could now act as fuel for a short sharp move upwards.
Key resistance is now at the $5,500 level, which if broken could yield a move towards the next resistance zone at $5,800 – $6,200.
If we see a pullback, then price is likely to find support at $5,100, and then $5,000, which has been shown to be an area of significant demand.
XAU/USD – Gold Falls on Fed Statement
Gold is now trading at $1,272, a 1.4 percent drop since the last market update seven days ago.
On the economic calendar this week, the main event was Wednesday afternoon’s Federal Open Market Committee (FOMC) statement and press conference from Fed Chairman Jerome Powell, which made no changes to US monetary policy but still managed to push gold lower.
Though the statement didn’t give any clear consensus on what the next Fed interest rate move will be, some members stated concerns that inflation is too low. But, at the same time, the causes for this inflation are thought to be transitory, and Powell was generally positive on the prospects of the US economy, suggesting a lower chance of interest rate cuts anytime soon.
This news put a bid under the dollar, and pushed gold lower on Wednesday afternoon to meet near four-month lows.
Elsewhere, Central Banks have been continuing their buying spree of 2018. This is revealed in a report from the World Gold Council, which finds that central banks, led by China and Russia, have bought the most gold in the first quarter of the year since 2013.
On the chart, a double bottom pattern has now formed, suggesting strong buying support at the $1,266 level. A strong follow through from this move could push the price back up to the key bullish perch of 1,300.
On the bearish side, a downtrend has clearly been forming over last few weeks, the upper bound of which will present an initial hurdle to any upward movement. Should more downside be in store, further support can be found at $1,250 – $1,255.
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.