Weekly Price Analysis #4: Week 21 - 2018

BTC/USD - Bitcoin falling faster, but where is the bottom?

At the time of writing, Bitcoin is trading at $7595, which is almost 60% down from the start of 2018, after a prolonged bearish trend which has been driven by a clear reduction in trading volume. However, despite now trading in its third consecutive week in the red, zooming out a little reveals that over the long-term the upward trend remains intact.

The downward trend has also seen several relief rallies, with Bitcoin seeing a 54% price increase in a matter of 3 weeks before the most recent downturn, which has seen the price fall down to a local bottom at $7342, with only a weak bounce off support at the $7800 level.

On Thursday, after hitting lows within the session at $7,260, the Bitcoin price shot up around 4%, providing momentary respite from the heavy selling pressure. While it is not clear what caused this rally, it parallelled a similar movement in the price of gold, which is thought to have come in reaction to geopolitical uncertainty around North Korea.

On a larger scale, the price pattern is holding true to the symmetrical triangle featured in last week’s analysis. A bounce might be seen at the bottom of the triangle, which could eventually let bitcoin break downward to potentially reach a triple bottom target of around ~5900, or upwards to retest previous levels of support.

With the relative strength index sitting around 40, the asset is not yet oversold and there could be scope for further losses.

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XAU/USD - Gold charms investors as North Korean negotiations fall through

At the time of writing, gold is changing hands for $1302. After finding support at the $1290 level, gold edged slightly upward through the week, drawing multiple long-legged dojis on the one day chart.

This correlated with a gradual rise in geopolitical tensions as rhetoric between the two leaders Trump and Kim Jong-un deteriorated, which eventually reached a conclusion as President Trump cancelled the planned summit with the North Korean Leader, planned for June 12 in Singapore.

This sent a wave of uncertainty through the markets, causing a surge in demand for the safe haven asset, which took the commodity through the $1,300 barrier to reach levels of $1,306—the highest level since May 15th.

The safe-haven demand for gold was reinforced by lack of progress in the US-China trade talks, which has seen no agreement reached, with Trump instead announcing 25% tariffs on imported vehicles to the US. Furthermore, the US Dollar has been in a stage of correction, in anticipation of the rate hike in June.

Thursday’s rally was curbed at the 200 SMA, and it has since been lingering slightly below this level. Should it break upwards, then resistance levels might be found at the $1,310 region, followed by minor resistance at $1,318, and major resistance at $1,330. Should the price of the commodity fall, then support levels might be seen at $1,291 and $1,285.

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