In-depth technical anaylsis for Forex, Commodities and Crypto Currency!
BTC/USD has been on a steady downtrend since July 2019, although it appears that the New Year has raised its spirits.
On January 7th BTC/USD broke through and consolidated above the channel resistance for the first time since mid-2019. If price can bring in further momentum, then is likely that the local bottom at $6431 has already been found.
The broken resistance level was met with supporting volume, suggesting that the market wants to move higher. Price broke and consolidated above the supply zone between $7800 and $8000, before reaching higher. BTC/USD is currently ranging between $8500 and $9000.
If the support level holds, bulls would see it break through and close 200 daily moving average to indicate continuation, given it is a strong supply zone (in the form of resistance from flipped support and resistance levels, and the 200 daily moving average).
But it could also fall through the support area in green. If this happens, a retest of $7500 – $7800 is likely. If this support does not hold either, risk-averse traders should looking to long from a retest of the channel bottom.
An important consideration at this point is the potential cup and handle formation. If price successfully retests the demand zone at $8250 following a rejection at $9800, traders will be looking for a breakout of the formation to continue the uptrend.
Also, from a cyclical it appears that BTC is in a relatively low-risk investment period. It is currently sitting at the bottom of the channel where it has historically always found support. Although since tops and bottoms are generally met with large volume, especially in crypto markets, risk-averse traders would wait for supporting volume for further confirmation.
Gold has spiked up to its highest level for 6 years! The market has been in a bullish trend since the middle of 2018, but recent political events with Iran have caused fear among traders leading them to rapidly push the price of Gold up due to its “safe-haven” reputation. It will now be interesting to see what happens next. Let’s take a look at some technical analysis.
Starting with the daily time-frame, there had been a period of consolidation from September right up until the middle of December when the price began to rise significantly. The market broke out of the Bollinger band on 26th December, followed by a few days of small gains. These were likely due to the low volume over the Christmas to New Year period. As soon as January arrived, the volume greatly increased and with that the price smashed higher. On the way up it has broken through the significant level of 1540 from 2012 lows (pink line on the chart) and the high of the year 2019 at 1560 (circled in black). Looking at the moving averages, we see that the more reactive 45 day moving average is slightly below the longer-term 60 day moving average; this gives an indication that the market sentiment may be in transition from bearish to bullish, as the shorter moving average is likely to cross the longer one in the coming days. The third circle on the chart highlights the big wick on the candle of the 8th January. This is a sign of caution for bulls, with the price seeming not to want to push higher than around the 1600 level.
It’s important to check the price action on higher time-frames. Switching to the weekly chart shows us that the recent high at 1600 corresponds with a small peak from March 2013. It is also clear to see that the pink support line at 1540 was formed from three separate tests of that level in 2012; when the price broke below this support it rocketed down. It is also interesting to note that, even though there’s a big wick, the past week’s candle has still been in the green, with a 0.42% rise. One thing to remember in swing trading is that the trend is your friend, and historically the biggest moves occur after the longest consolidation periods. The weekly gold chart shows a consolidation zone from 1050 to 1400 that has been adhered to for the past 6 years; the fact that this has now been broken is very significant from a technical perspective.
Although our focus is always on the price action and technical analysis, it’s important not to forget the fundamentals that also drive trader bias. In the past week, fear of escalation of the situation in the Middle East contributed to a rush in buying Gold. When the tensions had relaxed, the price pulled back to around 1540. The USD weakness from a disappointing Non-Farm Payroll (NFP) on Friday allowed buying power to respond at the end of the week; Gold typically follows the inverse trend to the dollar. With the revelation that Iran did shoot down the passenger plane killing hundreds of civilians, could the tensions be again increased and subsequently Gold price be pushed higher?
If we look ahead, there are a couple of key considerations. The weekly price closed above two significant levels, being the pink long-term support from 2012 and also the recent 2019 high at 1560. This is positive for the outlook to the week ahead, but concerns arise from the large wick on the 8th. As usual, confirmation is key; the market still looks bullish overall but how much further can it really go? I would look to the orange line at 1617 as the next significant level on the upside, and the pink support line as the next significant level on the downside. Have a great week, happy trading!
Coffee analysis 23/12/19
Trading made simple, if only these trades were available everyday! If you’ve got the discipline then you could sit back and just pick trades like this! Don’t get caught trading a sideways market!
I spoke about Coffee earlier today and mentioned I fully expect the price to drop so I’ll bring you some analysis on the reasoning behind it!
Let’s start by looking at Coffee on the weekly chart, it really doesn’t get much clearer when it comes to trading. Just take a look at the previous 2 weeks, those rejection candles are huge! Why did we have these 2 rejection candles and where were they rejecting from? Well take a look at the chart and you’ll see they were rejecting from the 145-150 supply zone. When you see 2 huge rejections like this I’d say there is at least a 80% probability we will see a change in direction.
We have now headed back into the 126-129 demand zone where we could see price stay for a couple of days or we may see momentum carry price down to the 120 demand zone.
So why did I take on today’s trade? Well it’s simple really! When you check out the opening 30m candle there was clear intent from sellers that they want to take price lower, just check it out! Also check the volume!
Not only did we have intent on direction from sellers early on we also had a rejection of the 130 area! We also had the weekly rejections along with our daily moving average cross!
Check out this nice clean Copper chart!
We have seen Copper rally ever since price headed lower in August and on 3 attempts failed to break through the lower demand zone throughout September and October. We have now reached a key supply area at the 2.80 level, I believe if we see a weekly close above this zone then price will rise and test that all important psychological level @3.00 however on the other hand if we fail to break and hold then I see price falling back down to the lower demand zone over the coming weeks.
Remember to only take a trade when the level gets rejected or broken. Keep risk to reward in mind at all time and don’t take a trade for the sake of it!
Since BTC dropped quite significantly in the past it has regained some strength breaking above the support area marked in green. It found support on the lower boundary of the channel, and by the looks of recent price movement, a retest of the upper boundary seems likely.
Many people are saying BTC is in a bear trend and they are right, since price has corrected over 50% in the past few months. But it cannot be discarded that the descending channel does support a maintain market structure, in the sense that price is in a ‘healthy’ correction. I say ‘healthy’ because BTC broke out of the accumulation phase in 4/5 months and exploded 250%, and at the current standing BTC is still +50% in up.
So the way I see it is that BTC has dipped into a key pivot point which served as a support level through the bear market. If the zone holds, then we will likely test the top of the channel again (and the 50 and 100 DMA marked in green and yellow, respectively).
If it breaks and there is a daily close below the zone, I will be looking to short.
Here is an update on the Soybeans trade that I mentioned first a week ago. This is a daily time-frame with a 45 Simple Moving Average and 60 Bollinger Band. As you can see, the price has continued to rise in the last couple of days and is now trading at the 9.2 level in the range of the candles from mid-October / early-November. I’ve highlighted the key points that signalled the start of this mean reversion. First we saw the breakdown of the bear market with the undecided candle with a large wick on 2nd December and the subsequent ‘Doji’ neutral candle on 3rd December. Then, on 4th December the bullish candle closed the day back inside the Bollinger Bands. Added to this, the shorter term 45 MA was above the 60 MA; this is the sign of the start of a mean reversion. Sure enough, we have since pushed up to and beyond the mean, a great trade and perfect example of this type of trend!
We have just tested a key daily timeframe supply area and seen a nice rejection of the 1.34 psychological area with an increase in volume. I believe we will now more than likely see a shift in momentum and turn bearish. I’m now expecting price to head down to 1.29700 before heading even further to the 1.26/1.26500 demand zone.
Something for you all to look out for…. Volume will play a big part in determining when a trend starts and ends, now its not going to be 100% fool proof but it gives a huge indication. Just look at this audjpy chart, when the volume begins to drop so does the trend, we then have a huge increase in volume when we change direction.
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The week ahead 4/8/19 – GBPAUD, GOLD, NDQ100, DAX, EURAUD
Gold NFP 2/8/19
AUDUSD Analysis 30/07/2019
EURCHF Analysis 22.05.2019