Weekly Price Analysis #35 – Week 1 – 2019

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

BTC/USD – Bitcoin Threatens Further Downside

Bitcoin is now trading at $3,810. The leading cryptocurrency has traded within a narrow range since Christmas, with prices locked between $3,580 and $3,980.

In a fitting end to a bearish year, bitcoin suffered a total 13 percent drop during the month of December, marking one of the most prolonged periods of falling prices in its short history.

In the optimistic mood of the new year, some hopeful traders are now pointing to an inverse head and shoulders pattern that has formed on the daily chart over the past six weeks, suggesting a reversal could be imminent. This pattern would have a neckline around $3,950, and a target of around $5,500.

However, as this pattern has been forming on the chart, trading volumes have fallen – failing to confirm the pattern with a significant increase on the rise of the right shoulder. This paints a bearish picture, suggesting that bitcoin could be in for more downside in the coming weeks.

A look at the hourly chart presents more evidence supporting this bearish thesis, with volume on pullbacks hitting higher levels than any upward moves.

If bulls do manage to gain the upper hand, then immediate resistance can be found at the top of channel at £3,900 – $4,000, at $4,200, and then at $4,600.

For the bearish trend to resume, a clean break of the bottom of the range at $3,630 would be needed, and buyers could be expected to step in at $3,500, the previous low of $3,120, and the psychological level of $3,000.

XAU/USD – Gold Soars to Six Month High

Unlike bitcoin, gold has started the new year with a bang — pushing up ~1.2 percent in 2019 so far.

This spurt upwards is a continuation of the rally catalysed in early October by a sharp drop in global equities. As market sentiment has soured, uneasy investors have lost their appetite for high risk assets, and fled into safe havens like the Japanese Yen, US government bonds, and gold and silver.

In the past week, market confidence has taken another hit — with Apple cutting sales forecasts on concerns over China’s weak economy, and uncertainty around the partial shutdown of the US government. This has been detrimental to the dollar, which is now teetering below the 97 mark (as measured by DXY), but a boon for gold — which has pushed up to its highest level since June 2018.

Looking ahead, gold is now approaching the key psychological price of $1,300. A clean break through this level would restore even more confidence in the metal, and could cause the price to push up through supply zones at $1,325, $1,350 and $1,375 to touch $1,400 — a level not seen since 2013.

Though upwards momentum is strong, the price on the hourly chart has hit the top of an ascending channel and is now pulling back. This movement could find support at the bottom of the channel around $1,288, or further down at $1,280.

Although a bounce would be suspected at these levels, much depends on today’s release of U.S. Nonfarm Payroll data, which could set the tone for gold and the greenback over the next few days.

*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.