Cryptocurrencies and Forex Analysis May 25th: Gold probes 1300.00 level
EURUSD, Daily timeframe
On Thursday, the major pair formed an inside bar on the daily timeframe. This candle takes place in the context of a previous day of a 90-pip bearish daily candle. The scenario and alternatives for price action we’re monitoring are the following:
German Ifo Business Climate is today’s market catalyst with a significant sway over the euro is due at 09:00 a.m. GMT +1. Expectations are for an increase compared to the previous month. If, however, the reading is reported weaker than projected or the market reacts negatively to the result, the euro could plummet to lower lows. Target level is the support at 1.1500.
The source of potential euro bullishness could come from optimistic result from German Ifo. If so, we’re interested in seeing a clear solid rejection of that level. If price closes the day above 1.1850, this could be a trigger candle to go long on the euro. Target level is the resistance at 1.2200.
Price is still currently trading at the 1.1700 support area. It will be interesting to see if this level has a chance of holding back price and serving as a level where interest flips. If traders agree on price of the market, this could temporarily result in a sideways motion from the market.
Gold, Daily timeframe
The precious metal surprised with a bullish movement of about 110 pips yesterday. Price traded above the resistance area at 1300.00 in the late afternoon on Thursday night. We have discussed this specific level in previous posts as a pivotal point. The scenarios mapped out are:
Gold could continue to advance in positive direction. This will place the market back within the boundaries of the range where it used to trade (the level of support which was at 1300.00 and the resistance area at 1350.00). Another 90-100 pips today could serve as a confirmation that we could see a reversal. Target level would be the 1350.00 resistance.
If price retests 1290.00 this could send a warning signal that the market might be ripe to plummet again. This would be quite an adverse reaction and one option to potentially avoid it is to see how the week ends. Plus, we have to keep in mind that today is Friday; a day when trades often close positions prior to the weekend coming. Some traders do this practice as they don’t want to hold any risk over the weekend. Stay put.
A collapse today below 1290.00 could set off a new wave of short interest in the market. The week would close in the negative. Market flow would tilt the scales to the bearish side as well. Targets to aim for are located at 1260.00. Next in order is the support level at 1240.00.
Bias: Bearish, Daily timeframe
Bitcoin continues to drop under the pressure of bearish market bias. This is truly more of a potential opportunity to traders as the market allows to both go long the market and short it. The trend that dominates is clearly a playing field of the bears. Consequently, we’d be looking for levels to go short from (until the market shows signs of reversal). Market developments on our watch list are:
More bearishness could follow. If you take a scrutinizing look at the daily chart of the market, you will see that an immediate support level is the area at $5,800. Currently price trades around $7,600 so there are plenty of points in between.
There is a probability that the market edges up toward the immediate resistance level at $9,500. This level could offer another opportunity to short the market from better prices. A mandatory element is a trigger candle. The signal has to be at least one daily bearish candle showing clear rejection of the $9,500 resistance.
A collapse below $5,800 could become a green light for holding onto short positions with a long-term perspective. Especially, if news reports that confidence in the crypto currency is declining that could add up to traders intensifying their efforts to sell the market.
Bias: Bearish, Daily timeframe
Ether formed a bearish daily pin bar candle on Thursday around a concrete support level, the area at $600. This candle could offer an early signal showing rejection. For more conservative traders, awaiting today’s daily candle to conclude the day would be a more reasonable approach to the market. The trend is still very much bearish and market pressure is to the downside. Scenarios we’re monitoring are:
Today, the market could form a valid rejection from the support mentioned around the $600 level. Another point to keep in mind is that prices on Friday sometimes move in the opposite direction of the trend as traders abstain from holding any risk over the weekend, and closing short trades results in someone buying. Target level is the retracement level at $740.
Should the market close below $600 today, this would be a movement in line with the already established down trend. Next level to aim for is the farthest support at $360. This area could offer a springboard for demand or the market may run through it and continue to fall.
The two levels that are hot areas to watch out for are the support at $360 (if broken Ether may accelerate aggressively lower) and the distant resistance at $1,180 (if price advances beyond it, we would witness a bullish reversal and from that area upwards, bias would be positive with traders aiming for $1380 peak levels).
Wishing you Happy and Successful Trading!
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