Welcome Vaultorians, to another weekly analysis on bitcoin and gold!
BTC/USD – Bitcoin Bulls Gain Confidence
Bitcoin has continued its grind upwards this week, and is now trading at $5,240.
After acting as strong resistance, the key level of $5,000 is now forming strong support on the daily timeframe. On lower time frames, more levels of support can be found at $5,100 and $5,200.
Price action continues to show consistent and aggressive buying, with each dip down to these support levels bought up rapidly, creating lots of long bottom-tailed candles.
When the $6,000 level was broken in November last year, bitcoin plummeted, and the price is now trading through the region below $6,000 and building a structure for future price to rest on. In this sense, the consolidation we are seeing is a very bullish sign, and suggests that even if we do see future pullbacks, the region will now be able to act as strong support.
Another technical indicator is also suggesting bullish price action — the golden cross, of the 50 DMA and 200 DMA, looks set to take place soon. The last time this happened was in July 2015, shortly after the bear market reached a bottom. However, we did see another death cross, where the reverse occurred, around two months later when bitcoin pulled back again before finally letting rip to the upside.
$5500 – $5550 is now the key area of resistance to watch. If bulls can manage to break through this region, then the price is very likely to head to $5,800.
That said, between $5,800 and $6,200 are likely to be lots of sell orders, which could prompt a strong reaction from this level pushing the price significantly down.
If we move lower from here, support could be expected at $5,200, $5,100, and $5,000.
XAU/USD – Gold in Danger of Further Downside
After one of most bearish weeks of the year so far, gold is trading at $1,275 — a 2.5 percent drop since the last update
The ominous head and shoulders pattern that has been threatening to form on the chart, has now come to fruition, and gold is at its lowest position yet for the year.
In the fundamentals, optimism in the US-China trade talks has boosted the dollar this week, weighing heavily on dollar-denominated gold.
On Saturday, US Treasury Secretary Steven Mnuchin said that talks between the two countries were progressing well, and suggested that the final round of negotiations could be close. In addition, rising US Treasury yields, on the back of strong retail data, has also contributed to the bearish case for gold by making the dollar a more attractive investment.
If we do break down further, the abstract head and shoulders formation would give a target around $1,225, and the nearest significant historic support region is at around $1,183.
But we could also see a temporary reversal at $1,252 and $1,230, or a bottom if enough buyers step in.
If we manage to claw back above support at $1,277, then we really need to get back above $1,300 before the bulls will once again have an edge.
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.