Weekly Price Analysis #20 - Week 37

BTC/USD - $6,200 Spells Relief for Bitcoin Bulls

At press time, bitcoin is trading at $6,578. After bouncing off the $6,200 region—a zone that has now been repeatedly tested—the price has been slowly climbing this week and has now hit the top of the range defined over the past few weeks.

Positive sentiment is compounded by news that Morgan Stanley is planning to deal in contracts that will give investors synthetic exposure to the performance of Bitcoin. These will work in a similar way to Bitmex’s XBT, allowing traders to go long or short by purchasing a price swap contract.

This recent bull run, however, is looking noticeably weaker than previous bounces, suggesting waning buying pressure. Should the price turn south at this point, then it runs the risk of completing a head and shoulders pattern on the daily chart, with a neckline at the key support of $6,200. This formation could energize bears into finally breaking the support zone around $5,800, which would likely create a quick fall to $5,500 and below.

If the bulls manage to defend the current support zone - which stands at around $6,550, then a move towards the macro downtrend line is possible, which sits at around the $7000 region. This bullish scenario is supported by the RSI, which shows the price to be gaining momentum on the daily chart.

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XAU/USD - Gold’s Recovery Treads With Care

Gold prices have continued to hover around the $1,200 level this week, a range that has now held for four weeks since the relief rally of mid-August.

Nevertheless, market sentiment remains bearish, and the yellow metal has failed to react positively to traditional economic stimuli—like the release of U.S. soft consumer inflation numbers on Thursday. This information put downward pressure on the dollar, momentarily buoying gold prices, until they hit resistance near the 50-day moving average at $1,212 (shown in blue).

Looking to the fundamentals, should US-China trade tensions abate as the two counties continue trade talks next week, then any safe haven appeal for gold is likely to weaken. This could pave the way for the bearish trend to continue, particularly if the dollar gains strength.

More key price drivers will be released today in the form of retail sales reports, which if strong, could also derail this recent recovery attempt and send gold spinning back down. The bottom of the recent range forms immediate support near the 20-day moving average at 1,198 (shown in orange), below which the breaking of $1,183 and $1,173 would signal a definite continuation of the downtrend.

An upside break of 1220, however, would signal growing strength and a potential continuation of this recent bullish trend.