Weekly Price Analysis #30 - Week 47 - 2018

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

BTC/USD - Is This Capitulation?

Bitcoin is currently trading at $4,389, representing a 20 percent decline over the past week.

After last week’s candle closed on a bearish note, the price continued to plummet before finding support around the $4,300 region. Over the last few hours, this support has flipped to become resistance, and the price is now pushing up to test the $4,400 mark.

Since the 2018 lows were swept, buyers have been matched with wave after wave of aggressive selling, causing investors to lose faith and repeating the bearish cycle.

Capitulation — defined as the point of maximum psychological and financial pain that can be endured by investors before liquidating their positions — often marks the end of a bear trend, as fear eventually gives way to greed and buyers step in.

Although there is no guaranteed way to spot capitulation — the selling frenzy of last few days has briefly given way to buyers, with daily buying volume hitting levels not seen for months.

At this stage, the market remains deeply oversold — the daily RSI is still extremely low, suggesting that a pullback could be on the cards.

If we do move back up, then immediate resistance lies at $4,600, followed by $5,500, and the bull/bear line at $5,800.

If the nosedive continues, then immediate support lies at $4,100, then at $3,500, and then $3,000.

According to data compiled by trading veteran Peter Brandt, the average bitcoin decline halts at 85.3 percent of the high, which would put the bottom of this bear market at $2,892 — 85.3 percent of the $19,675 December high on Bitstamp.

XAU/USD - Gold Pushes up as Dollar Sinks

The price of gold has been pushing up over the past week, driven by falling global stock markets, and the weakening of the dollar, as measured by the Dollar Index (DXY).

Economic data released mid-week raised concerns over the strength of the U.S. economy, and cast doubt over future Fed rate hikes.

This boosted demand for the safe haven asset, which moved up to find support at the 20-day moving average.

On Thursday, the U.S. Thanksgiving left gold nearly unchanged, and low volume is also expected on Friday as the holidays continue.

If the 20 DMA continues to hold, then prices will be poised to take out target resistance at the $1,234 region and potentially around $1,240. For more upside to sustain however, we would need to see a weakening dollar, which historically has been very strong.

If gold prices do retrace from this point, then immediate support could be found in the $1,216 region, and then 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. *