The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 31.08.2021
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The overall market is feeling some bullish momentum thanks to the USD weakness. This weakness is contributed to several factors, most importantly being the comments from Jerome Powell and his date on when QE tapering would begin. Of course, the most important factor for this week is the Non-Farm Payroll (NFP) as it will guide the next decision of the FED and could mean either more weakness of the USD or a sudden boost in positivity.
With that said, let’s find out how the markets are doing on August 31st, 2021.
Bitcoin Shows Strength Above $46,000
Bitcoin continued to be sluggish since last week, with a $50,548 rejection crushing investors as they expected Bitcoin to surpass $55,000 and close August at a low of nearly $60,000. However, profits from the leading cryptocurrency fell to $46,000. The 100-Day Moving Average (DMA) support above $46,000, is critical to prevent further spread of losses. The cryptocurrency is currently trading just above the mentioned level as Bulls remain strong all the while attempting to move above $50,000 even with sell-signals shooting off everywhere.
The Moving Average Convergence Divergence (MACD) indicator is showing such a sell-signal and asking investors to start offloading all their open positions. This sell signal intensified on August 26 when Bitcoin retreated from the aforementioned $50,000 area. As the technical tool closes in on the mean line, Bitcoin will likely trigger another selloff below the 100-DMA. Consequently, Bulls must hold the 100-DMA in place to ensure that losses do not spread.
Trading below $46,000 could make BTC more vulnerable as the existing FOMO in the market turns into panic selling. On the other hand, a daily close above $48,000 will strengthen the presence of Bulls in the market. Once Bitcoin picks up traction to $50,000, FOMO intends to raise the price and possibly confirm a major shift towards $60,000.
Current Market Sentiment:Cautiously Bearish
EURUSD Rises on USD Weakness
EUR/USD manages to find enough bids to refresh the highest levels since August 6th, rallying 0.15% for the day, around 1.1815, ahead of the European session on Tuesday. In doing so, the currency’s major pair welcomes the overall weakness in the USD ahead of the Eurozone Consumer Price Index (CPI). The US dollar index (DXY) fell to fresh two-week lows amid improving market sentiment amid rising virus numbers. Market worries over the eurozone consumer price index today and the number of US nonfarm payrolls (NFP) jobs on Friday appear to be challenging buyers in the pair.
It’s worth noting that the geopolitical concerns of Afghanistan and China are also helping the EUR/USD find that extra boost to the bullish momentum. The comments of politicians from the European Central Bank (ECB) suggest a slight expansion of monetary policy, which will provide additional impetus to the common currency. Sales data, second-tier Chicago PMI in the US, consumer confidence and housing indicators can serve as a guide for further action. However, nothing is more important than the US employment report for August, which will justify the cautious optimism of Fed Chairman Jerome Powell.
Bulls are attacking the 50-DMA barrier around 1.1810 amid bullish signals. This positivity comes amid upbeat MACD signals. Should the quote cross the 1.1810 on a daily closing basis, it will be the first since mid–June, which in turn should recall the buyers targeting the monthly high near 1.1900. Meanwhile, recovery moves will be hindered by the 200 SMA on the 4-hour chart and the 7-day support line situated at about 1.1780 and 1.1755, respectively.
Current Market Sentiment:Bullish
Gold Cheers USD Weakness
Gold is accepting bids to renew intraday highs around $1815, up 0.20% on the day, early Tuesday morning. This comes after a slow start to the day, not forgetting the pessimistic open of the week, gold is recovering the bullish momentum as the US Index dollar (DXY) cannot continue the previous day's rally from a two-week low. In addition to the weak dollar, cautious optimism in the market also favors late-comers for gold.
Behind the moves could be the recently easing virus numbers from Asia–Pacific, after refreshing the multi-day tops, as well as China’s downbeat activity numbers that back the need for easy money policies. However, gold traders remain cautious ahead of Friday’s US jobs report as Fed Chair Jerome Powell announced tapering but refrained from details and booster investor sentiment on Friday.
There was a long build-up to Friday's speech and there was anticipation in the markets for more clues of the timings of a taper of the Fed's Quantitative Easing. However, nothing new came from the event which resulted in an unwinding of additional speculative long US dollar positions, at least in the spot market. Meanwhile, the week ahead will be critical in respect to the Fed chair's opinions. The Nonfarm Payrolls will be the highlight.
Current Market Sentiment:Cautiously Bullish
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