Cryptocurrencies and Forex Analysis May 31st: Euro reacts from pivotal support 1.1500
EURUSD, Daily timeframe
Yesterday, the euro advanced more than 130 pips. The more important point is that the bullish engulfment formation took place as a rejection from the pivotal support level at 1.1500 that we’ve been discussing as a key level. There are three scenarios on our watch list and those are:
Price could continue to advance in northern direction. If the market breaks above the retracement at 1.1700 and closes the day above it, we could see starting signs of recovery from the correction in the euro. Target level is the resistance at 1.2200.
The euro could go for a retest of the pivotal support level at 1.1500. This price action could take place around the Nonfarm payrolls on Friday. Whether an hourly or 15-min timeframe, the euro may get down to that point prior to taking off in positive direction
Should the market tank below the 1.1500 level that would be a clear sign from the market that the euro is officially in a bear trend. It would be important to see this taking place on the weekly chart. The approach is more conservative but grant clarity to in terms of signals. Target level is 1.1300.
Gold, Daily timeframe
The precious metal moves in unison with the euro which is currently a slightly bullish attempt off of support levels. Gold, interestingly, is above the major and highly discussed 1300.00 level. It would be better if traders await the closure of the week and see how price develops and whether indeed this is a bullish rejection of 1300.00 or not. Market developments we’ve mapped out are the following:
If the week closes above 1310.00 this would potentially mark a second week of bullish price action. Gold would still not be out of the woods but movement could suggest investor confidence slightly re-surging. Market would be back within the limits of the range and we’d target the resistance at 1350.00.
During the news event coming out on Friday, the Nonfarm payrolls, chances are that levels of volatility will increase significantly. This could result in a retest of the immediate support level at 1300.00 once again. That would be the time to just monitor the market and stay away from it until further market movement shows some stability of price action.
If gold plummets through and below 1300.00 to close around 1280.00, this would suggest major potential for shorting the market. The target to aim for is next support level at 1260.00. As you can see, the potential to both sides is significant.
Bias: Bearish, Daily timeframe
Bitcoin struggles to crawl up and it seems like the efforts of the crypto currency are indeed huge. Price action is currently eyeing to reach $7,500. The process seems to be slow and market is almost stagnant. For the time being, we could see retail interest flow toward markets that exhibit clear movements spurred by volatility. Scenarios under observation in Bitcoin are:
There could be a more active movement toward the immediate resistance and retracement level at $9,500. If the market rejects that area with a bearish daily candle, this would be in line with the established bear trend. That could become a trigger candle to go short. Target would respectively be the farthest support at $5,800.
If price reaches the support at $5,800, this could be a point of rejection where the market sees in influx of investor confidence on the rise. It is, however, absolutely obligatory that bullishness comes as a result of fundamental nature that drives price action up. Target levels are the following: $10,000 and $12,000.
If there is a sudden movement where price simply tanks below $5,800, this could mean a lot further negative pressure affecting the crypto currency. This, however, would present an opportunity to short the market. Strategy would be to hold for as long as the market continues to fall (which could be a long-term trade).
Bias: Bearish, Daily timeframe
Here price volatility is similar to that in Bitcoin. Ether is moving but we can see that the market could use some serious boost from a news catalyst to drive it forward. Currently, trading around $550 the market is very much in a down trend and we’d be looking for spots to go short from until the bias changes. Market developments we’ve mapped out are:
Ether continues to gain in price only to reach the immediate resistance level at $600. If Ether surpasses that level to close the day above it, we might see more positive price action targeting at higher levels of retracement. In particular, those levels are: $740, $860 and $1,000.
Ether could pull back from each of the target slash resistance levels discussed above. If there is a bearish signal, specifically on the daily timeframe, this would be the green light to go short the market and target lower levels of support. The $360 support level is especially key in separating what could happen next and current price movements.
Should Ether plunge below $360 level and close on a 4-hour timeframe below it, then this could offer an opportunity to add onto already existing short trades or potentially initiate new ones. The distance from $360 to next stop could be the very starting point of the market.
Wishing you Happy and Successful Trading!
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