Asset Index

Cryptocurrencies and Forex Analysis February: Temporary bullishness in the U.S. dollar

EURUSD, Daily timeframe

Bias: Uptrend

On Tuesday, the euro dollar continued to retrace. The pair fell another 72 pips and traded around 1.2330. Since this movement is against the established trend, we’d have to wait for specific levels to be reached. The scenarios we’re monitoring are:

Scenario 1:

Price continues to drop until it reaches the immediate support level at 1.2200. This level could be probed and potentially rejected. If a daily price bounces and pushes off it to close above 1.2200, this could be our signal to go long. Targets are: 1.2530 and 1.2600, 1.2650.

Scenario 2:

The euro could advance to test the immediate resistance at 1.2530. This level could serve only as a temporary barrier, especially in the context on the uptrend. In order to initiate potential longs, we need to see price closing the day above 1.2530 for the day. See targets above.

Scenario 3:

Due to volatility today, traders could see price retesting levels way below immediate supports. Farther support levels that the euro dollar could attempt to test are: 1.2065 and 1.1900. We’d have to wait for potential rejection around one of those levels. Prior to that no long trades.

 

Gold, Daily timeframe

Bias: Uptrend

Similarly to the euro dollar, gold is falling due to a corrective movement. The correlation between the two markets has been largely positive. One could move ahead of the other which is useful of those of you who are interested in trading the market that usually follows. Gold is, of course more volatile than the euro dollar.

Scenario 1:

The immediate support level is around 1300.00 levels. This area could potentially offer a point of entry on the long side. Traders would know if they see a bullish reaction from the market (a rejection of a candle that pushes with at least 90-100 pips off of that level). Targets above are 1350.00 and 1400.00

Scenario 2:

Another possible scenario is that temporarily price gets trapped between the immediate support at 1300.00 and the resistance at 1350.00. This will be a situation that will reveal itself if price once again drops from the resistance at 1350.00 and closes the day underneath it. Then again, potential target would be the support level that price came from.

Scenario 3:

A closure below 1300.00 would signal that the U.S. dollar is gaining leverage against major asset classes, gold included. This could also be checked if the basket of major pairs is trending lower against the U.S. greenback. Next target in that scenario would be the support at 1260.00

Bitcoin

Bias: Neutral, 4-Hour timeframe

The digital currency reached the discussed target level at $12,000 and is currently retracing from it on the 4-hour timeframe (as of Wednesday, 03:20a.m. GMT). The retracement is coming from a 4-hour weakness. It is interesting to see what happens next so we know how to respond accordingly.

Scenario 1:

Price could continue to drop to test the immediate support level at $9,500. If this level is to be respected, there could be a reaction from price (rejecting the level). It this case it would be better to see a whole bullish rejection candle on the daily timeframe before proceeding. Targets are $ 12,000 and $13,000.

Scenario 2:

We have previously mentioned a couple of times that the $13,000 level is crucial. If price overcomes it, then we could see a lot more bullishness coming into the market. Targets are:$15,500, $17,000 and $19,400.

Scenario 3:

It could turn out that price was making a corrective move (indeed a sizeable one). If this is the case, then we could see price continuing to drop in the next few weeks. The cliff we should be paying close attention to is the level at $5,800. If price crosses that level, it would be a whole another story of more bearishness that could be expansive in nature. Below that level, we could attempt more short positions.

 

Ethereum

Bias: Recovering 4-Hour timeframe

Ether has been dropping and we’ll know more if the upcoming days continue to show weakness. Currently, the market is trading around $886. Traders should take the movement with caution. Those could be the initial signs that bearishness is coming back. More price action is needed for confirmation.

Scenario 1:

The support level at $860 could become a level for doing business. If the day pushes back from it and closes way above, that could become a trigger to go long. Targets are: $1,000 and $1,143. Mind you that Ether is slower than Bitcoin and so are the movements made across price levels.

Scenario 2:

Another development is price smashing through the support at $860. This could lead to more short trades getting triggered. Immediate levels below that could be reached by price are: $740 and $600.

Scenario 3:

The level to watch out for is the farthest support at $600. Any price action below it should signal a potential selloff the magnitude of which could reach even zero. No longs to be attempted.

 

Wishing you Happy and Successful Trading!