Weekly Price Analysis #23 - Week 40 - 2018

Welcome Vaultorians, to your weekly update on the movements of Bitcoin and gold.

BTC/USD - The Chop Continues

As of writing, Bitcoin is changing hands at $6,578. The price has continued ranging this week, and seems to be forming a new, even narrower channel between the regions of $6,420 and $6,620.

Each time price hits the bottom of the range, Bitcoin bounces, but each time the top is reached, the price once again drops—this shows lack of strong bullish or bearish momentum. Price has now traded in this way since early September, and could be either forming a bottom, or just waiting for the final capitulation.

Looking ahead, a bearish scenario is supported by recent sell-offs, which continue to be steeper and more violent than the rallys, suggesting a final shakeout is inevitable. This bearish sentiment seems to be shared by retail traders, as shorts are once again approaching yearly highs (at least on Bitfinex).

If the price drops, then the same levels remain in play from recent weeks, with first support at the bottom of the range around $6,420, a break below which would put monthly lows in sight.

On the other hand, $6k support has now held for so long that it seems almost impenetrable, and with bullish news on the horizon, including the arrival of Bakkt, positive price movement could be expected. Regardless of the direction, the next move is likely to be big, Bitcoin volatility remains close to yearly lows, and such price constriction typically leads to larger moves.

If we move to the upside, then a range breakout past the top at $6,620 could signal greater upside, and a definitive break of the $6,840 region would be very bullish.

If we do break below, then the move is likely to be equally violent, and likely to test the lows at $5,800.

XAU/USD - Gold

Our favourite yellow metal is now trading at $1,200. Price action has stayed in a clear range between the $1,190 region and $1,212 region - a channel clearly defined over the past few weeks.

Earlier in the week, price fell to hit the bottom of the channel and then bounced, rising 1.5% on Tuesday to make a weekly high. This largely thought to have been driven by safe haven demand driven by fiscal worries over Italy and the EU.

This upside was capped midweek however, on the release of strong US economic data - particularly in job gains and the construction industry.

Chairman of the Federal Reserve Jerome Powell commented that the outlook for the US economy was remarkably positive, and hinted that interest rates may need to move higher than the market currently anticipates. This could be implemented as soon as the next quarterly meeting in December.

When the fed increase the interest rate, inflationary pressure is reduced and dollar value tends to also increase. This can be expected to be bad news for gold, as the pair have demonstrated a noticeable inverse relationship over recent months - with gold falling as the dollar surges.

Should we break to the upside and break range resistance at $1,212, then $1,224 region could come into play. A close above this region would be reason for excitement.

A bearish break on the other hand, is likely to find find support at the bottom of range at $1,190, and then $1,182, a break of which would make further downward price action very likely.

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.