Weekly Price Analysis #33 - Week 50 - 2018

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

BTC/USD - Bitcoin Consolidates Below $3,500

After a week of consolidation under resistance at $3,500, bitcoin is now trading at $3,250 — representing a 4% drop since the last update.

Despite a few short-term pumps, the market is still driven by negative sentiment — with the “fear and greed index” ramped right round to the “extreme fear” end of the spectrum. This is the complete opposite to the euphoria of this time last year, when bitcoin was soaring to fresh highs.

Despite the downside momentum, certain community figureheads remain steadfast in their support: ex hedge-fund manager Mike Novogratz is confident that bitcoin will make a comeback, warning on Bloomberg earlier in the week that "revolutions don’t happen overnight," and comparing the downturn to a “methadone clinic” designed to help bitcoin sober up from the excess of 2017.

Looking ahead, the dominant pattern on the chart is still the six month long descending triangle — a bearish continuation pattern which according to classical charting principles would breakdown to a target around $2,000.

At present, the bulls are sitting on support at $3,250, but are failing to hold on to the $3,500 level, which now looks out of reach. This bearish outlook was reinforced by a bearish daily candle on Thursday, which managed to close just above $3,250.

If this level is broken, then buying could be expected at the $3,000 region, which might be psychologically significant, and then the $2800 level.

To see any significant upside, the bulls would have to blast past resistance at $3,500, ideally to break the $3,633 level. This bullish outlook is supported by the daily RSI, which shows building upside momentum.

XAU/USD - Gold Rally Fails at Major Resistance

Gold has continued to edge up this week, and is now trading at $1,239 after failing to break through resistance at $1,250.

US economy is showing signs of weakness, and Federal Reserve officials are suggesting a less hawkish tone for 2019, with fed not expected to raise interest rates more than once in 2019.

Economic forecasts from the Atlanta Fed GDPNow model shows reduced growth expectations - predicting an increase of 2.4% in Q4 2018 versus 2.7% on December 6.

Economic slowdown could be bullish for bullion, but at present the dollar is pushing up, dashing gold’s dreams of capturing the $1,250 region.

If the dollar softens, then gold might have a achance of rallying back up — building on economic uncertainty, and the atmosphere of global fear from Brexit, and trade talks with China.

If bulls return to the yellow metal, then immediate resistance lies at $1,250, and if we can push past the 200 Day Moving Average (shown in orange) and past horizontal resistance at $1,266 then we have a good chance of reaching $1,293.

To the downside, strong support lies at the 100 Day Moving Average (shown in blue), which coincides with a a trendline off the August low.