Weekly Price Analysis #25 - Week 42 - 2018

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

BTC/USD - Bitcoin Gets Untethered

Bitcoin is currently trading at $6,395. Events this week have been dominated by uncertainty around Tether, and you may notice I have switched to chart the Bitstamp version, which is unaffected by the ‘Tether premium.’

This premium is the price discrepancy between Bitcoin on Tether exchanges and Bitcoin on Dollar exchanges that has been developing for several weeks, with Tether exchanges Bitfinex and Binance consistently posting prices around $200 dollars higher than those on exchanges like Bitstamp which deal directly in fiat.

This has been caused by a gradual loss of faith in Tether, which came a to a head on Monday as the coin — which is supposed to be pegged to the dollar — slipped to lows of $0.80 on Poloniex.

As traders sold Tether, they bought Bitcoin, fueling a 12 percent rise in the price of Bitcoin on Tether exchanges. This also dragged up the price on other exchanges, but the move couldn’t sustain itself and eventually the price dropped back down to $6,468 as Tether pushed back up towards the one dollar mark. Since then, Bitcoin has been consolidating in a tight range between $6,350 and $6,490.

The question traders are now asking, is if this artificial breakout could be the catalyst for another Bitcoin rally?

On the weekly chart, we can see that the Tether pump actually broke out of the descending triangle which has been forming over last few weeks. However, as the price failed to close above the triangle, we can consider this a fakeout.

When this triangle is broken again, $6,850 will be the key resistance level marking the edge of a bull market. A break out and decisive close above this indicates strong bullish momentum, and could make an end of year rally a possibility.

Conversely, a drop below the bottom of the channel at $6,350 could bring $6100 into play, but this region would need a powerful break if we are to see more downside.

XAU/USD - Gold Building Strength

Gold is currently changing hands for $1,227. Prices have been hovering between here and $1,220 for the past few days — a region not traded at since July.

Last week’s fall in equities sparked more demand for the safe haven asset, and after the aggressive move up gold has been more restrained, edging slightly upwards as traders build confidence at these levels.

Interestingly, gold has remained strong even as the dollar has been rising on the back of the Fed's release of minutes from its September policy meeting, that showed further rate hikes were in store for December and next year.

Looking ahead, price action shows that bulls have a firm upper hand. Should this Bullish momentum continue, the next significant resistance would be faced at $1,240, and a clear break and close through this, would likely reach the $1,250 region.

More likely perhaps, is continued consolidation in this range, which has strong support at the $1,220 level. Should we break below, then we would likely return to the range of the past few weeks with strong support around $1,200.

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.