Weekly Price Analysis #28 - Week 45 - 2018

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

BTC/USD - Bitcoin Rally Runs out of Steam

As of writing, bitcoin is trading at $6,395 on Bitstamp, after a two percent drop over the past 48 hours.

The first part of the week saw bitcoin move up, hinting at a long-awaited bullish reversal. But this was not to be, and after breaking through resistance at $6,480, bitcoin failed to conclusively crack the $6,500 level and fell out of the rising wedge pattern that had been forming on the 4-hour chart.

Now, with hopes of a trend reversal dashed, bitcoin is falling back down to test support in the $6,350 to $6,370 region.

In the news, reports from investment bankers Morgan Stanley and Digital Asset managers Grayscale show increased institutional investment in bitcoin, suggesting that the leading crypto has entered an accumulation phase. However, trading activity remains minimal — with exchange volume hitting weekly lows not seen since October 2016.

Looking ahead, on the monthly chart bitcoin is edging closer to the long-term trendline of a rising wedge pattern that has been forming since bitcoin’s launch.

November and December are typically bullish months for bitcoin, and if this seasonality kicks in, then we could see some more upside. However, for any short-term bullish continuation, we would need price to hold at $6350 - $6370 region, signalling that this pullback is bitcoin taking a breather before another push up. Strong resistance lies at $6,650 region, and a close above this would set the bull/bear divide of $6,800 in sight.

Should this pullback progress into a longer-term trend, it is likely to find support around $6,220 and then $6,150.

XAU/USD - Gold Falls Following Mid-Term Election Results

Gold is trading at $1,218, and after a red week, the price looks set for its largest weekly drop since August.

The most significant event this week was the mid-term U.S. elections on Tuesday. Gold prices remained indecisive during the day, but began to fall following the results as it emerged that the the Democrats are taking control of the House of Representatives. This creates a split congress, supporting the status quo and suggesting a bullish outlook for equities.

As demand for riskier assets surged, the price of gold swung lower, alongside the Chinese yuan, which is now trading at one week lows with what looks to be more downside in store.

The yuan has had a strong correlation with gold relative to the dollar in recent times, and so this downside supports a bearish scenario for gold, which could find immediate support at $1,217, then $1,214, and below that at $1,208.

If strength returns to the market, then any advance remains vulnerable underneath the $1,240 region, as defined by the December lows.

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.