Weekly Price Analysis #42 - Week 8 - 2019
Welcome Vaultorians, to another weekly price analysis!
Bitcoin and gold are both at key levels, and moves from here are likely to dictate the direction of these assets in the weeks to come.
BTC/USD - Bitcoin Prints Bull Pennant Under Major Resistance
After a bullish week, the leading crypto is now trading at around $3,922 — a 10 percent increase since the last update.
This bullish surge has breathed new life into the crypto market, and $BTC futures on the CME exchange hit record volumes on Tuesday — with over 18,000 contracts traded.
Volume precedes price is one of the key principles of technical trading, and this lift in volume has inspired bullish sentiment in traders, who are now largely expecting another leg up (as demonstrated by the drop in short positions).
This boost in volume can be explained by a breakout on the weekly chart, which has taken us right out of the symmetrical triangle pattern that had been forming over the past few weeks. If this pattern follows through, then we could place a target at around the key psychological level of 5,000.
However, the bull flag that has just formed on the daily chart is sitting below a strong area of resistance that price previously failed to break in December and January.
If the bull flag fails and we break down, then support could be found at the yearly open around $3,700.
If we manage to break through the resistance, then we could face more headwinds around $4,400, before a clear run towards the $5,000 level.
XAU/USD - Gold Approaches Critical Juncture
Gold is now trading at $1,323 — a 0.6 percent gain over the week.
Despite touching fresh highs of $1,347 on Wednesday, gold has pulled back over the last couple of days and is now sitting at support.
The bullish momentum of recent weeks however — sustained by ongoing political uncertainty and demand from central banks — remains intact, and price is still within the bull channel that has seen gold gradually step up over the past few weeks.
As is usually the case, the reason for gold’s minor pullback is strength in the US dollar. Minutes from the Federal Reserve’s January meeting were released on Wednesday, revealing that policymakers are ready to hike rates if the economy performs as expected. This created strength in the dollar, and signalled a change of direction for gold — which printed a shooting star on the daily chart as the dollar pushed up.
Gold’s move down continued through Thursday, but now seems to have found support as traders move in to buy the dip. If the price continues to gather strength at this level, then we could expect the metal to ultimately face down the multi-year resistance that lies at $1,350.
Should we crack this level, then the price looks set to head for $1,400 — a price not seen since 2014.
If we move lower, then support could be found at the bottom of the bull channel around $1,316, and then at the psychological level of $1,300 — a move below which would signify the breaking of bullish market structure.
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.