Traders sold risky assets in the wake of Silicon Valley Bank’s crisis and failure. In this environment, Bitcoin has dropped about 9% in the last week. However, with the intervention of the Federal Reserve, the momentum in the gold and Bitcoin market reversed. Crypto analyst Rakesh Upadhyay assesses the technical outlook for Bitcoin. Technical analyst Ross Burland, on the other hand, gives direction from the gold charts.
“The market may have exaggerated its hand!”
As you follow on cryptokoin.com, the gold price rose sharply on Friday as the US dollar sold on a mixed labor market report that showed the overall US economy was still warm despite a series of rate hikes by the Federal Reserve. However, as more people entered the labor market, wage growth slowed and the unemployment rate rose.
Still, significant repricing along the curve and in the terminal interest rate weighed on the US dollar due to weaker-than-expected wages. The Fed funds rate fell from the implied cap of 5.89% to 5.5%, and the probability of a 50 basis point increase in March was significantly reduced. However, as analysts at TD Securities point out, ‘the market may still have overestimated its hand. In this context, analysts make the following assessment:
With the fragile risk sentiment and our newly revised (higher) terminal forecast, continued US Dollar easing seems premature (especially ahead of CPI data). While the market is pricing in a soft landing, the Fed will continue the march and remain in the restrictive territory.
“Both scenarios are bullish for gold price”
The weekly DXY chart is as follows. This chart analysis, meanwhile, forecasts a soft US Dollar that could potentially find continued demand for a bearish correction at a 50% average retracement to 103.35. This results in a move in line with the broader longer-term uptrend.
The daily chart shows a slightly different probability of a breakout in structures as 104.09, 103.76 and 102.64 lows. Second, it points to the 61.8% Fibonacci retracement level meeting the previous resistance.
Meanwhile, both scenarios are bullish for the gold price.
The weekly and daily charts analyzed respectively above offer room for upward movement before any meaningful resistance is anticipated.
However, on the 4-hour timeframe, meanwhile, there is a possibility of a correction for the opening balance in the Friday rally as follows.
Ultimately, the bearish target for the bears is the 200 DMA near $1,770.
Bitcoin (BTC) technical view
BTC corrected back to the 200-day SMA ($20,389). Buyers are expected to defend the level with all their might. Because a break below this could intensify the sale.
BTC daily chart / Source: TradingViewOn the upside, the 20-day exponential moving average ($22,042) is likely to act as a major hurdle. If the price drops sharply from the 20-day EMA, BTC could retest support at the 200-day SMA. If this level is broken, Bitcoin could slide to $18,400 and then to $16,300.
If the bulls want to avoid the decline, they will have to push the price above the 20-day EMA. If they manage to do so, BTC could gain momentum and rally towards the overhead resistance of $25,250.
BTC 4-hour chart / Source: TradingViewThe four-hour chart shows that the bulls are trying to recover from $19,550 but the bears are defending the 20-EMA aggressively. If the price drops from the current level, the bears will try to push BTC back below $19,950. If they are successful, BTC could drop to $18,400.
On the contrary, if the price rises and breaks above the 20-EMA, it will suggest that short-term selling pressure may be easing. This could start a recovery towards $21,480 where the bears will again pose a strong challenge. If this level scales, BTC could reach $22,800.
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