Weekly Price Analysis #31 - Week 48 - 2018

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

BTC/USD - Has Bitcoin Found a New Bottom?

Bitcoin has rebounded this week, and is currently trading at $3,967 on Bitstamp after falling around seven percent over the past 24 hours.

After touching $3,480 on Sunday, bitcoin languished at the lows for a while before breaking through resistance at $4,000 on Wednesday with a candle that in a daily candle that — at over 12 percent — represents the single biggest gain in 24 hours since April.

Having broke $,4000, the rally lost momentum and failed to capture the $4,400 level, where bears returned in strength.

Away from the charts, data from Google shows the number of searches for “bitcoin” has reached a high not seen since April. Although this metric is traditionally bullish, in this case it is likely related to plunging prices that have put bitcoin in the headlines, and drawn crypto-sceptics out to celebrate the downturn.

Looking ahead, a clean break of $4,500 is needed to set the bulls free, which might convince traders that $3,480 was the bottom of the bear market, and induce a fresh round of FOMO.

Momentum however, remains strongest to the downside, and if price manages to stay below $3,951 then more doubt is likely to creep in, potentially sending the price spinning down to make another yearly low. On the way down, support could be expected at the $3,000 level.

XAU/USD - Strong Dollar Takes the Shine off Gold’s Rebound

After a push up from $1,211 over the past couple of days, gold is now trading at $1,222, testing resistance at a diagonal trendline.

Strong gains in equities earlier in the week dented demand for gold, which fell to $1,211 on Tuesday. Then, on Wednesday, Fed reserve chairman Jerome Powell proclaimed that interest rates are currently "just below" what could be considered "neutral" — A dovish remark suggesting low interest rates are to come and prompting gold prices to jump over one percent, hitting $1226.50 as the dollar fell.

The price action of dollar and gold has almost formed a mirror image this week, showing how gold remains heavily influenced by dollars performance and the expectation of rate hikes.

Looking ahead, the rebound from $1,200 now seems to have lost momentum, and if price continues to fall then support lies at the confluence of the 20 DMA, and horizontal resistance at the $1,220 region.

If this fails to hold, then a clean break of $1,215 could see a retest of the strong support back at $1,200.

To the upside, immediate resistance lies at the diagonal trend line at $1,225, a break of which would set horizontal resistance at $1,232 into play.

But as ever, price action is likely to be dictated by movements in the dollar, and events to watch on that front include the pending G20 summit, and further trade talks between the U.S. and China.

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.