Cryptocurrencies and Forex Analysis May 16th: Cryptos resume bearishness
EURUSD, Daily timeframe
Bias: Uptrend challenged
The European Union was hit by bad news on Tuesday. First, GDP came out lower at 0.3% versus the 0.4 expected and then German ZEW Economic Sentiment brought in lower than projected news as well. To be specific, the actual result was at -8.2 compared to the negative projection at -8.0. What this shows is poor confidence in the euro for the next six months, as the indicator is a leading one. To give you an accurate picture of what a healthy ZEW Sentiment looks like, that would be a performance above 0. And, the reading is way below that number.
We might have to reposition our stance as both the fundamentals and technicals are pointing south. The most traded pair lost about 90 pips of its value against the dollar and it also tested the 1.1800 level that we discussed as a possible point of retest. We could see price go for 1.1900 and if it starts to drop and closes on the 4-hour with a bearish engulfment, we could go short. Target level is at 1.1700 and 1.1500.
Price may fall straight to the above mentioned support levels (1.1700 and 1.1500). Upon placing trades make sure that they have a stop loss attached to them. The trend could be challenged and if the euro falls below 1. 1500, then more short trades could be initiated as that is the level that separates bulls from the bears.
A recovery would be price advancing back toward the resistance at 1.2200. That, however, would not be enough. The euro has to actually close the day above that level for us to be targeting 1.2500 and beyond.
Gold, Daily timeframe
The precious metal experienced a massive drop of about 230 pips. Price has now left the boundaries of the range located between 1300.00 support level and the resistance at 1350.00. Bias and sentiment are bearish. The scenarios we’re monitoring are:
The level that was once support at 1300.00 could now turn into a short-term resistance for price. Gold may actually advance and test that level prior to resuming its southern movement. Only upon a 4-hour rejection of the 1300.00 resistance, we could go short. Target level is the support at 1260.00
Price may not look back toward the 1300.00 resistance level. Instead, it could continue to drop and feel further downward pressure. As you can see, the USD index has advanced against the basket of major currencies and Gold reacts accordingly with weakness.
There could be a reversal of events if price spikes back upward and above the resistance at 1300.00. Importantly, that should be on the daily timeframe. The movement would position gold back into the limits of the range we’ve been trading within quite recently.
Bias: Bearish, Daily timeframe
Bitcoin sees further downward pressure and is now below the $9000 area. The different scenario developments that we’ve mapped out are:
Price continues to fall and makes a deep dive toward next support level at $5,800. From this price, the market could either react with a bounce from the support (if the bullish candle is on the daily timeframe) we could go long again. Target level would be back at $9,500.
Bitcoin could advance back toward the resistance at $9,500 for a retest. From that level, if weakness ensues again, we could go short and target the farthest support level that the market has made so far.
If there is unexpected event that gives a strong shoulder to Bitcoin, we could see upper retracement levels getting tested. These are $10,000, $12,000, and $13,000.
Bias: Bearish, 4-Hour timeframe
Ether followed suit and is also down. The market reacted from the resistance located at $740. The movement that we see is in line with the established downtrend. This being said, we’d be looking for levels and opportunities to go short until the market makes a clear reversal:
From the point where we see Ether trading, there are two daily bearish candles so far. Those could provide a signal to go short. Target level is the support at $600. Next level is the farthest area of support at 360.00.
Price could be trapped between the immediate resistance level at $740 and the support at $600. This could be a ranging motion and it would be better if we wait for a breakout to either side of those two.
The major focus should be two levels – $360- should price start falling below, we’d have to prepare more significantly more weakness following. It could reach as far as the bottom of the market. A breakout away from the $1180 (price has a long way to go until it reaches that level) would be a green light to bullish sentiment as the level marks the uptrend would be kicking in again. Target is the peak at $1,380.
Wishing you Happy and Successful Trading!
Risk Warning: The information above constitutes Marketing Communication and does not constitute Investment Advice or Investment Research. The content of the analysis represents the view of our experts on a generic basis, and do not take into consideration individual readers personal circumstances, investment experience or current financial situation. In addition, the analysis above has not been prepared in accordance with legal requirements designed to promote the independence of Investment Research. Readers using the above information should consider the possibility of encountering substantial losses. Therefore, UR Trade Fix Ltd shall not accept any responsibility for any losses of traders due to the use and the content of the above analysis.” Further to the above ,Forex Trading involves a substantial Risk of Loss and may not be suitable for all Investors. Please see our Website for details regarding UR Trade Fix Limited’s Trading Terms, Policies and Offerings.Read more.