Weekly Price Analysis #5: Week 22 - 2018

Welcome to another weekly price update! Read on to track the latest movements in both Bitcoin and Gold, and scope out future price scenarios.

BTC/USD - Bitcoin Makes Modest Comeback

At the time of writing, the crypto king is changing hands at $7470. Despite significant losses over the last week, the bears have weakened, which saw a new local bottom hit on Monday, where the lower trend line of the triangle pattern (identified in last week’s analysis) held strong.

On hitting this support, which represents a new higher low, the daily candlestick chart then printed a bullish engulfing reversal pattern. Shortly after, we saw a pump of almost 4%, in which Bitcoin gained more than $200 in less than 1 hour.

This pump was met with delight on Twitter, where traders speculated on the possible formation of the ‘Bart Simpson’ pattern that has characterised much of recent Bitcoin price movement. Instead, after a slight retrace, the price has continued to trade in an upward trend, encountering resistance around the $7600 zone.

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Despite strong technical reasons for the reversal, some analysts have correlated the brief Bitcoin pump with geopolitical turmoil, namely, ‘Italexit’, or fears of an Italian exit of the Euro Zone. These fears sent global stocks and the Euro tumbling, and simultaneously, the price of cryptocurrencies rose.

As Bitcoin and other cryptocurrencies represent a decentralised alternative to the established financial status quo, they become more attractive when the establishment is in crisis. However, in this instance, technical analysis would suggest that the strong support at the base of the triangle has caused this reversal.

Looking to the future, should Bitcoin clear the $7600 resistance level, then the next zone of resistance lies at $7800. To the downside, should the lower support of the triangle fail, then more support could be expected at around the $6800 region.

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XAU/USD - Gold Finds Strength over Weakened Dollar

At the time of writing, Gold is trading at $1298. Since the last update, a weakening US dollar has continued to underpin demand for commodities, fuelling an extended rebound for Gold from the $1293 area, where it found a local bottom.

Deteriorating US-China relations, including White House threats on some $50 billion worth of Chinese goods, have led the media to speculate of a trade war - which has further boosted demand for the traditional safe-haven asset. However, the upward movement provoked by this capped out at around $1308, where it reached the all-important 200 day moving average.

Since mid-week, the price has been printing long-legged doji candles on the 1 day chart, signalling bullish exhaustion and indecision on whether or not prices can be pushed above $1,302.

Should this level of resistance be broken, then the next level remains near the $1307-08 region at the 200 day moving average. If this is broken, then the metal could test the next supply zone at the $1314-15 region. On the downside, if the price was to fall, then horizontal support is likely to be found around the $1295 region.

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