BTC/USD – Bitcoin Recoils as Bears Rejoice
Last week’s price update concluded with bullish anticipation of the Consensus conference, which turned out to have little impact on the market. In fact, Bitcoin has reversed and broken below the 50-day simple moving average in what is a distinctly bearish development.
Selling pressure appears to have increased after the failure to break the key level of $10,000, and a lack of faith among investors caused by a string of negative news, including the ongoing investigation into South Korea’s UPbit exchange, and Bitcoin movements from the contentious Mt Gox trustee wallet.
At the time of writing, Bitcoin (BTC/USD) is changing hands for $8100, having briefly tested the support at around the $7,941 level. If this level breaks, then a drop to the next level of support just above $7,000 is likely.
If the $7,941 level holds, then Bitcoin could either consolidate and form a trading range between $7,941-$9,000, or given enough volume, make another move to the top at $10,000 or beyond. However, this would take a strong catalyst, and indicators like the RSI are signalling that sellers are still in control.
Another perspective is provided by the weekly candlestick chart, which reveals that since reaching an ATH in late December, Bitcoin has formed higher lows and lower highs to create a symmetrical triangle, if this pattern follows through then the price is likely to make a significant breakout move over the next few weeks.
XAU/USD – Gold falls into the waiting hands of buyers
At the time of writing, Gold (XAU/USD) is changing hands for $1288. The infamous yellow metal has fallen from the highs of last week, right into the hands of buyers at the 100 day moving average support, where it has formed two back-to-back doji candles showing strong demand.
On Tuesday Gold failed to break through the 200 hour simple moving average, and subsequently plunged 1.85% straight through several support levels.
As Gold is inversely related to USD, news of rising Treasury yields pushed money out of Gold and into the dollar, catalysing the breakdown and bringing gold to levels not seen since the low of December 27th. Additional bearish pressure was provided by US Retail Sales released on the same day.
Looking ahead, much depends on the next quarterly Fed meeting in June, the outcome of which will influence the future direction of gold, which is likely to become more bearish if Fed officials indicate that they will adopt a more aggressive approach to normalising monetary policy.
Between now and then, a bearish scenario could involve Gold testing the resistance level around the $1300 area, which could create a minor rebound with an eventual fall down to the next level of support around $1265.