Welcome Vaultorians, to another weekly analysis on the movements of bitcoin and gold!
BTC/USD – bitcoin slides further, but could a reversal be round the corner?
After another week of low volatility, Bitcoin is trading at $3,365 — a decrease of 1 percent over the last seven days.
This snail-paced sell off has brought volatility to its lowest level since November 18th. At 2.3 percent over 30 days, volatility is now at the same level it was before bitcoin went cliff-diving in the later part of November.
The downtrend of the last few weeks however, has formed a promising pattern on the chart — a falling wedge — which is a bullish pattern that suggests a potential reversal.
To confirm this, a spike in volume would be needed on the breakout of the wedge, without which the pattern is likely to simply signal a continuation of the gradual sell-off.
On the RSI, a bullish divergence has appeared on the 4H chart, strengthening the argument for a potential bullish reversal.
If the wedge does prove to be a turning point, then the price could be expected to move towards a target at the top of the the wedge, which sits at around $3,800 – $4,000.
If we do move lower, and the slow sell-off from December continues, bitcoin could challenge the lows of $3,230 and ultimately test the present bear market bottom of $3,120.
XAU/USD – Is gold just taking a breather, or is this the top?
After pushing through strong resistance at $1,300, gold has ran out of steam, and has dipped back down to trade at $1,309.
On the 4 hour chart, a head and shoulders pattern can be seen, with a neckline around the $1,311 mark. Earlier in the week, this pattern was confirmed as price broke down through the neckline and hit $1,303, only to then retest $1,311 and fail to break through.
This suggests upward momentum has capped out for now, and traders are asking if gold has made a top, or if the metal is just regaining strength before pushing up again to make new highs.
As ever, much will be determined by the dollar, which has a strong inverse correlation with gold, and has been climbing higher this week on the back of better than expected jobless claims from the US, along with weaker than expected German Industrial production data weighing on the Euro and pushing the dollar up (as measured by DXY).
If the dollar continues to push up, then downside pressure on gold is likely to follow, and a move down could find support at $1,303, and then at the $1,295 to $1,300 region.
Zooming out, the broader outlook remains positive, and despite topside resistance we are still in a clear uptrend.
If the move up continues, then resistance is likely to be encountered lies at the $1,311 level of the head and shoulders neckline. From there, further resistance is to be found at the $1,325 region, which if cleared with strength is likely to push price all the way up to the $1,350 region.
Disclaimer: This content is for educational purposes only and does not constitute financial advice. It is very important to do your own analysis before making any investment.