Weekly Price Analysis #8: Week 25 - 2018

Welcome everyone, to another weekly update.

BTC/USD - Bitcoin Trading in a Narrow Range

At the time of writing, Bitcoin [BTC/USD] is changing hands for $6650. The past few days have seen a sideways market, so steady that volatility is now at its lowest level in more than a year, which some claim signals a likely bottom, as futures broker Bill Baruch said in a CBNC analysis last Monday(18th).

Whether or not the downward volatility has really subsided however, is unclear. Further downside was seen on Wednesday (20th) when a $31 million hack of South Korea's Bithumb exchange - the sixth largest in the world by trading volume - sent the price falling 3 per cent from $6,740 to $6,560.

The negative narrative caused by the drop has failed to persist, however, and in reparation, the Seoul-based cryptocurrency exchange has halted all deposits and withdrawals and announced that it will be fully compensating customers.

While the bears have struggled to bring the price down, the bulls have equally failed to push the price upwards—leaving bitcoin bound captive in this narrow range, and struggling to find a breakout.

As seen on the daily chart, Bitcoin has printed intraday highs above $6,800 in the last three trading days, but has failed to close above this level, instead creating a consolidation period that looks to be leading into a pennant pattern.

If the pennant breaks below, then it’s size would indicate a move of around $1700, taking the price of Bitcoin to around $5000.

On the way down, the price could find temporary support around the $6550 area, and the $6425 area.

Should we break to the upside, then a break of the $7000 region with some momentum would indicate that a temporary bottom has been made.

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XAU/USD - Strong Dollar Sends Gold Spinning

At the time of writing, gold [XAU/USD], is trading at $1268. It has been a tumultuous week for the metal, which is down 2.7% since last Friday.

On Thursday (22nd) gold dropped to $1261, recording a new low for 2018. This surprised some, given the escalating trade war between the U.S. and China, which has triggered a sharp downturn in global equity markets.

However, following a hawkish statement from the Fed, traders and investors have been betting on the dollar rather than gold, with divergence between the U.S and the rest of the world’s monetary policy driving demand for the greenback.

With this, the price of gold has been getting crushed, and has only eased away from these lows as the dollar turned negative on weaker U.S. economic data, supporting a slight recovery off the support at $1261.

Looking to the future, further downside could see the metal test $1240. Should events spur increased demand for gold, then future support could be found again at the $1289 and $1302 levels.

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Disclaimer - the content of this article is merely educational, and you would be well advised to do your own research before making any financial decisions. This is not financial advice.