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Daily Market Analysis By FXOpen

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FXOpen Trader:
GBP/USD and GBP/JPY: British Pound Could Correct Lower


GBP/USD gained strength above 1.3600, but it struggled to continue higher above 1.3700. GBP/JPY also corrected lower after forming a short-term top near 142.25.

Important Takeaways for GBP/USD and GBP/JPY

[*] The British Pound tested the 1.3700 resistance zone before correcting lower.
[*] There was a break below an ascending channel with support near 1.3638 on the hourly chart of GBP/USD.
[*] GBP/JPY also corrected lower from 142.25 and declined below 141.50.
[*] There was a break below a major bullish trend line with support near 141.20 on the hourly chart.
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GBP/USD Technical Analysis

This past week, the British Pound saw a steady increase above the 1.3550 resistance against the US Dollar. The GBP/USD pair even broke the 1.3600 resistance zone to move further into a positive zone.

The pair climbed above the 1.3650 and 1.3680 resistance levels, but it struggled to gain momentum above 1.3700. A high was formed near 1.3710 on FXOpen and the pair recently started a downside correction.


There was a break below the 1.3650 and 1.3620 support levels. There was also a close below the 1.3620 level and the 50 hourly simple moving average. Moreover, there was a break below an ascending channel with support near 1.3638 on the hourly chart of GBP/USD.

The pair traded as low as 1.3565 and it is currently consolidating losses. An initial resistance on the upside is near the 1.3600 zone. It is close to the 23.6% Fib retracement level of the recent decline from the 1.3710 high to 1.3565 low.

The first key resistance is forming near the 1.3620 level. The next major resistance is near the 1.3640 level and the 50 hourly simple moving average. It is close to the 50% Fib retracement level of the recent decline from the 1.3710 high to 1.3565 low.

If there is an upside break above 1.3620 and 1.3640, GBP/USD could easily drift towards the 1.3700 zone. On the downside, the 1.3565 level is a decent support. If there is a downside break below the recent low, the pair could continue to move down towards the 1.3500 support level in the near term.

GBP/JPY Technical Analysis

The British Pound formed a short-term top near the 142.25 before it started a downside correction against the Japanese Yen. The GBP/JPY pair traded below the 141.80 support level to start the recent decline.

There was a clear break below the 141.50 support level and the 50 hourly simple moving average. There was also a break below a major bullish trend line with support near 141.20 on the hourly chart. The pair cleared the 50% Fib retracement level of the upward move from the 140.34 low to 142.25 high.


It is now trading well below the 141.20 level. It is testing the 76.4% Fib retracement level of the upward move from the 140.34 low to 142.25 high.

The next major support is near the 140.60 level, below which the pair could dive towards the 140.00 support zone in the coming sessions. On the upside, the previous support near 141.30 might act as a resistance.

The first major resistance is near the 141.50 level and the 50 hourly simple moving average. If GBP/JPY climbs above 141.30 and 141.50, it could revisit the 142.25 zone in the coming sessions.

FXOpen Trader:
Important Week for Global Policy Rates


The week ahead of us is critical for the currency market. On Wednesday, we have the inauguration day in the United States, as Joe Biden will officially become the new President. The Biden’s administration economic agenda is based on three pillars – fiscal stimulus, infrastructure spending, bringing back the Obamacare program – and the markets will closely monitor the developments in these three areas.

One day later, FX traders have the first major central bank meeting of the year, as the European Central Bank (ECB) announces its decision this coming Thursday. The central bank made it clear that the Euro is too high and that the higher EURUSD exchange rate weighs on inflation, but that did not stop the EURUSD rate from reaching 1.23.

In the meantime, the exchange rate eased from the highs, trading below 1.21 – is this the start of a new cycle for the EURUSD pair?


Fed vs. ECB

The pandemic caught the ECB already having the interest rate in negative territory. In the aftermath of the European sovereign crisis in 2012, the ECB lowered the deposit facility below zero, where it still is at present. As such, the central bank was forced to use other unconventional tools to ease the policy during the pandemic.

So did the Fed. But the Fed opted to avoid negative rates and to focus more on stimulating the business environment by printing huge amounts of new dollars. In 2020 alone, the Fed printed over 30% of all the dollars ever created. Yet, this did not translate into inflation, although it is too early to tell at this point if inflation will be a theme in the years ahead.

The Fed’s actions sent the dollar lower, and the ECB and other central banks had little or no power to stop the dollar’s decline. As such, the Euro and the other G10 currencies, all appreciated against the dollar.

Now that the crisis is adverted, as suggested by the available vaccines and the vaccination programs around the world, the market may choose to revert the dollar decline theme seen during the pandemic. If that is the case, this week, we should see the first signs of a trend change.

Global policy rates are close to zero and are expected to remain so for the foreseeable future. Only in 2023 and beyond the major central banks are forecasted to lift the rates. However, even then, the ECB’s deposit facility rate is predicted to remain below zero.

Therefore, judging by the interest rate differential that exists and will keep existing in the years ahead, the market may see a sharp reversal in the EURUSD exchange rate.

FXOpen Trader:
BTC and XRP – Prices continue to rise


BTC/USD

The price of Bitcoin has been moving sideways since last week as it came up to $40,000 area but then fell to $33,813 at its lowest point yesterday. This occurred after recovery and now we are seeing another minor one with the price reaching $37,486. Currently, it is being traded slightly lower but is still in an upward trajectory.


Looking at the 4 hour chart, you can see that the price made it slightly below the 0.382 Fib level on Sunday’s low but managed to pull back up above it. This could indicate that support has been found but we are still yet to see if it manages to exceed the local high at the 0.618 Fib level.

The primary scenario is one in which we are seeing an ABC correction of a higher degree and so far this has played out. The downfall below the 0.5 Fibonacci level has confirmed the previously assumed ABC to the upside which is the B wave from the higher degree count.

This is why from here we would be expecting the continuation to the downside, but that might not come as expected. The C wave which was projected to the downside should have been developing a five-wave impulse but has instead made a three-wave decrease followed by a recovery.

Now if the price continues increasing this count might get invalidated but this would potentially still be the part of the correctional count which is set to push the price lower.

XRP/USD

The price of Ripple has been increasing and came up by 13.87% from its yesterday’s low at $0.2714 to $0.309 where it is now being traded.


On the 4-hour chart, you can see that the price broke out from the descending triangle on the upside after the third interaction with the horizontal support level was made. As the price found support there we have seen a bounce that led the price for a breakout and a higher high was made compared to the previous local one.

This could be the start of the 5th wave from the five-wave impulse that started in December last year after the price made the end of the significant downside move. The price hasn’t made it inside the territory of the 1st wave which makes this scenario valid and now if we are seeing the development of the 5th wave it is set to push the price of Ripple higher then on the 7th of January where the ending point of the 3rd wave is.

FXOpen Trader:
EUR/USD Recovering Losses, USD/JPY Remains At Risk


EUR/USD started a downside correction from well above 1.2300 and recently found support near 1.2055. USD/JPY is showing bearish signs and it could decline heavily below 103.50.

Important Takeaways for EUR/USD and USD/JPY

[*] The Euro remained well bid above 1.2050 and started a fresh increase.
[*] There was a break above a major bearish trend line with resistance near 1.2120 on the hourly chart of EUR/USD.
[*] USD/JPY is declining and showing bearish signs below the 104.00 resistance.
[*] There is a key bearish trend line forming with resistance near 103.98 on the hourly chart.
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EUR/USD Technical Analysis

In the past few days, there was a steady decline in the Euro from well above 1.2200 against the US Dollar. The EUR/USD pair even broke the 1.2120 support level, but it remained well bid above 1.2050.

A low was formed near 1.2053 on FXOpen before the pair is currently recovering losses. There was a break above the 1.2100 resistance level and the 50 hourly simple moving average, opening the doors for a steady increase.


There was also a break above a major bearish trend line with resistance near 1.2120 on the hourly chart of EUR/USD. The pair even broke the 50% Fib retracement level of the downward move from the 1.2222 swing high to 1.2053 low.

An immediate resistance is near the 1.2058 level. It is close to the 61.8% Fib retracement level of the downward move from the 1.2222 swing high to 1.2053 low. The main resistance is near the 1.2175, above which EUR/USD is likely to accelerate higher.

Conversely, the pair could start a fresh decline below the 1.2135 support. The first major support is near the 1.2115 zone. If there is a downside break below the 1.2115 support zone, the pair could continue to move down. In the stated case, there are high chances of a retest of the 1.2053 swing low in the near term.

USD/JPY Technical Analysis

The US Dollar seems to be trading in a broad range below the 104.20 and 104.50 resistance levels against the Japanese Yen. The USD/JPY pair formed a high near 104.08, and recently started a fresh decline.

There was a break below the 103.85 support level the 50 hourly simple moving average. The pair also declined below the 50% Fib retracement level of the upward move from the 103.63 low to 104.08 high.


It is now trading near a key support at 103.75. It is close to the 76.4% Fib retracement level of the upward move from the 103.63 low to 104.08 high. If there is a downside break below the 103.75 level, the pair could move towards the main 103.50 support zone.

The stated 103.50 support holds the key, below which the pair could decline heavily in the near term. On the upside, the first major resistance is near the 103.85 level.

There is also a key bearish trend line forming with resistance near 103.98 on the hourly chart. A clear break above the trend line is must for a steady increase.

The next key resistance could be near 104.20, above which USD/JPY could revisit 104.50. Any more gains may possibly increase the chances of a test of the 105.00 level in the near term.

FXOpen Trader:
Litecoin and EOS – Bears are in control


LTC/USD

The price of Litecoin has been in a decline since Tuesday when it was sitting at $166.11 and made a downfall to $130 level today, which was a decrease of 21.74%. Now the price is being traded slightly higher but is still in a downward trajectory.


Looking at the hourly chart, you can see that the price made a breakout below the ascending channel that formed since the 11th of January when the price fell to the $112.33 area. From there a recovery was made all the way up above the $160 level but now another impulsive descending move has been seen which is most likely the continuation of the corrective decrease. If this is the three-wave corrective decline from the 10th of January the move to the downside would be expected to continue and surpass the prior low at $112 and could potentially continue all the way down to $82.9.

However, there is a possibility that this is going to be a triangle formation of the higher degree in which this three-wave move could be its first sub-wave. In that case, the price could make another significant recovery before this move to the $82.9 horizontal level. The price has found support at 0.236 Fib level at least a temporary one, so now we are going to see what happens as if it manages to stay up the recovery might come.

EOS/USD

From its Tuesday’s high at $2.926 the price of EOS has decreased by 12.18% as it came down to $2.579 at its lowest wick today. Now the price is looking like it has stabilized above the $2.62 level and is establishing support.


On the hourly chart, you can see that the price has made a breakout from the ascending channel like in the case of Litecoin but the pattern isn’t as similar as the price of EOS made a more significant decrease from the 10th of January till the 11th then it has now since Tuesday. We have seen a decrease of over 37% till the 11th of January and if this descending move is the continuation of that move, the price could be expected to go significantly lower. But another round of hard-selling like it occurred then isn’t likely to play out.

More likely we are going to see a further decrease to some of the horizontal support levels out of which the first one in line would be the 11th January low, but the next one is just below the $2 mark. The price could make another impulsive move to the vicinity of the lower horizontal level, but like in the case of Litecoin that might not come in a straight line.

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