Weekly Price Analysis #18 - Week 35

BTC/USD - Bitcoin Bounces, But can it Hold?

At the time of writing, Bitcoin is changing hands for $6,983. The past seven days have seen the cryptocurrency climb to hit a peak of $7,139 and then drop during the latter part of the week to hit lows in the $6,790 region. Since then, the cryptocurrency has been bouncing, giving investors hope that the short-term bullish outlook can be maintained.

On Tuesday (August 28th) bitcoin broke out of the 50-day SMA (shown in blue), suggesting considerable bullish momentum. This was bolstered by positive fundamental news with various investment firms announcing the launch of new products to attract institutional players.

However, bitcoin still needs to confirm a trend reversal, and how the price reacts when it hits the upper trend line around the $7,000 region will give a good idea of whether the bottom is in place or if this movement upwards is just a dead cat bounce.

If bitcoin breaks this downward trend line, which coincides with the 50-day SMA, then a rally back to the $8,500 region could be in play. However, we are still in a long-term bear trend and any upward move is likely to face significant resistance along the way—first at the $7,400 region, which if broken would set $8,100 region into play.

To the downside, if this short-term bounce fails then the bears are likely to be rejuvenated and could send bitcoin into a tailspin to test the yearly lows between $6,100 and $5,800.

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XAU/USD - Bears take the shine off short-term uptrend

On the daily chart this week, gold has printed a faint reflection of bitcoin—with an initial climb to highs around $1,214, and then a pullback to $1,199. As I write, the yellow metal is trading at $1202, after finding support at the $1200 level,

In economic news, on Wednesday the Commerce Department reported that in the second quarter, gross domestic product increased at a 4.2% annual rate, and the Conference Board announced that the index of consumer confidence rose beyond expectations in August, from 127.9, to 133.4.

This pushed the US. dollar higher, and put a cap on the price of gold, which began to pull back as traders took profit from the recent gains—a two week high which has become a rare occurrence with the recent downward movement.

Looking to the future, the pickup in the U.S. dollar, especially against the Chinese Yuan, continues to threaten this short-term uptrend. Should it fail completely, then support might be found at the $1,184 region, and then the local bottom at $1,174.

To break higher, the precious metal will have to take out historic resistance at the $1,207 region, and the 50-day moving average (shown in blue) at $1,222.

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Disclaimer: This information is not financial advice, and should not be treated as a recommendation to buy or sell. It is to be used for educational purposes only.