Cryptocurrencies and Forex Analysis February 9th: More gold and euro weakness
EURUSD, Daily timeframe
Bias: Currently retracing (within a Bull trend)
Yesterday, price continued to drop. It managed to close the day with a little change, only 17 pips down and trading below 1.2300. Traders have to be aware that due to the increased levels of volatility, the market could be moving wildly in both directions before continuing to move in the same direction as the market flow.
How do we manage increased volatility like that- usually, the stop losses should be wider. Otherwise, even if you’re trading in the correct direction, if the stop loss is too tight that could result in a loss (which could be potentially avoided with the right exit level).
Price could test the immediate resistance at 1.2300 by probing it and then losing below with a bearish candle. If this takes place, we could sell (this would be a short-term position). Target level is next immediate support at 1.2065.
If Friday surprises us and the day closes above 1.2300, this could result into bullish price action starting next week. This would be in agreement with the established uptrend as well. Target level is 1.2530.
We could also be in for a ranging development where the pair trades between the immediate resistance at 1.2300 and the support at 1.2065. We would know more and have a confirmation if price bounces back from the support at 1.2300 and starts to move up again.
The precious metal continues to fall. Yesterday, price dropped below the support at 1320.00. What does this mean and how can we interpret it? We have to keep in mind that the resistance level at 1350.00 stood strong and was respected by price. Traders are currently seeing the results.
Gold could increase its price in during the day to test the now fresh resistance level at 1320.00. Traders would orient themselves if price closes the day below it with a bearish daily candle. Immediate target below would be 1300.00.
Price could also recover. That would be the case if the day closes significantly above 1320.00 with about 90 to a 100 pips. Immediate target is located at 1350.00
If there is a new wave of volatility hitting the market and price moves forcefully faster than usual, we could see bearishness below 1300.00. A break and closure below that level could give us a green light to add to our shorts. Next target level is located at 1240.00.
Bias: Downtrending, 4-Hour timeframe
Market analysts try to be optimistic about Bitcoin’s price and the brief strength we saw. However, we also have to take a stern look at the chart and see it for what it is. As previously discussed, traders could be seeing a recovery if price closes above the resistance at the $13, 000 level. Before that, price could jiggle back and forth. We’re interested in meaningful price action and concrete levels reached so we can trade off of them.
We’re on the 4-hour time frame and the past four 4-hour candles show bearishness. Price is currently below $8000 once again. If Bitcoin closes below $5,700, then more we could see a lot more weakness coming in. Next target level is $5,000 and then $4500 and $4000.
The jiggle we talked about would be just noise from the market. We do not trade noise- as its purpose is to mainly distract and it could result in unwanted misdirected trades. A jiggle would be movement between 9,500 and the resistance at 12,000.
Long trades would make sense if the digital currency moves aggressively up to close above 13,000. In that case, we could aim for the peak level reached at 19,400. Make sure you have your stop losses in place. Those are usually placed below the trigger candle. More conservative ones are on the daily timeframe. Less ones are on the 4-hour frame.
Bias: Downtrending, 4-Hour timeframe
Interestingly enough, Ether moves once again in a similar fashion to Bitcoin. Here, levels of immediate resistance are respected and it’s evident from the pull back at $860 resistance level. Very much in the same mode- we should not jump to conclusions that price has recovered from weakness because as of the time being it hasn’t.
Due to the rejection of the immediate resistance at $860 would could go short. Immediate target level is located at the $600 support level.
Price closure below $600 on the daily timeframe could throw price into more aggressive bearishness. Keep in mind that the floor is not that far away. Price could bottom all the way down to zero.
A recovery that is to be taken seriously is price action moving up and closing above $1000 for the week. We could enter on the long side and place stop losses below a 4-hour candle that marks strong bullishness. This would be only an attemptive long. As you can see this is evident from the potential tight stop loss. Target level is the record high the market made at 1300 level.
Wishing you Happy and Successful Trading!
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