Cryptocurrencies and Forex Analysis May 14th: Cryptos react from Resistance levels
EURUSD, Daily timeframe
The euro gained no more than 45 pips on Friday. The major pair is, however, above the 1.1900 level. There are a couple of things we should take into consideration. One, is that there is news events on Tuesday, Gross Domestic Product for Germany (first quarter of 2018). The projections could potentially be traded by retail participants in the market. This is the so-called “trade the rumors” strategy where traders trade based on market expectations for the specific market. The scenarios that we’ve mapped out are:
With the expected slow-down in growth for the most influential economy in the EU, Germany, price may fall down and test previous levels prior to the result coming out. This could go as far as the 1.1800 area or even lower. It would be better to await and potentially trade after the report unless traders are looking to trade expectations.
It is possible that price doesn’t look back and continues to advance toward the immediate resistance level at 1.2200. If GDP surprises and it actually is higher than projections, this could spur a bullish reaction from the euro.
A drop below 1.1800 could send the market plummeting. We also have to keep in mind that on Tuesday there is another important market catalyst that will hit the wires. We’re talking about the German ZEW economic sentiment for the month of May. The result will become clear at 10:00 a.m. GMT+1 and will likely create increased levels of volatility. a drop below 1.1800 could continue into next support level at 1.1700.
Gold, Daily timeframe
The precious metal fell on Friday. This weakness, however, could be contributed to the fact that it was the last business day of the week when a lot of short-term speculators prefer to close positions and not carry any risk over the weekend. If those were long positions, as you know by closing a long trade, when you hit the button, it’s the button that sells and thus price falls if big players do this, especially banks and other financial institutions. The scenarios that we’re monitoring are:
When you take a look at the weekly timeframe, you can clearly see that gold is still not quite out of the woods and bulls still seem somewhat hesitant. If we see a daily recovery of more than 100 pips that could give more peace of mind that price is again moving in upward direction toward the target level located at 1350.00
By taking a look at the daily timeframe, the precious metal can be seen moving within the limits of the range we’ve been in more quite some time. If, price, however, drops below the 1300.00 support and closes there, this would be a time to go short. Target level is next support at 1260.00
Sideways movement may come into play once again. That would be an unfavorable situation since we’re looking to trade directional moves where price is consistently advancing or dropping with the establish movement. Stay put in this scenario.
Bias: Bearish, Daily timeframe
The crypto currency continues to attract a huge amount of interest. Price is moving on the short side and it can be clearly seen that the resistance located at $9,500 has been rejected. The scenarios on the watchlist are as follows:
This current bearish movement is in agreement with the established downtrend. The immediate target and support level that we’re targeting is $5,800. If that support gets broken, hold onto your shorts, there could be a lot more negative sentiment flooding the market.
If the market resumes bullishness and strengthens to trade above $9,500, that would be a sign for previous retracement levels to be potentially tested. These levels are $10,000, $12, 000 and $13,000. Remember, those areas are in-between points and could provide only short-term opportunities for trading. Do not hold onto short-term trades for too long so that the market doesn’t take back what has been made as a profit.
A break and closure above $13,000 should be viewed more seriously. After that point, the bear trend would be potentially over and bulls would take their place instead. Only long trades above that area. Target is the peak at $19,400.
Bias: Bearish, 4-Hour timeframe
Ether looks similar to Bitcoin. Direction of the moves is almost identical, it’s just levels and prices that are different. The crypto currency is now trading below the $740 resistance. Where could price go and more importantly, how far can it go?
If bearishness persists, the action that we’ve seen so far could serve as a trigger for a short positions. Again, much like Bitcoin, the trend established is a Downtrend. Next target level is located at the $600 support. Should Ether break and close below it, we could aim for next target level at $360.
Ether could go for a retest of the immediate resistance at $740. Not only that but it could also break and close above it. If a bullish movement takes place and crucially it is on the daily timeframe, then it could be a time for retests of upward resistance levels. Those are $860 and then $900.
The clear cut clarity that we’re looking for for the sake of quality trades where probabilities are tilted on our side (due to the pre-planned courses of action) are two levels. If price closes above $1,180 then it is long trades only targeting higher highs. However, if Ether closes below $360, then the market is likely to continue trading in the red.
Wishing you Happy and Successful Trading!
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