Bitcoin drops $1,000 in the short-term, gold eases as strong equities, dollar weigh (With Trading Strategy)

Gold prices fell on Tuesday, dragged down by gains in equity markets and the dollar, although concerns around fresh coronavirus cases across Europe limited losses.

The spot gold fell 0.05% to $1737.60 per ounce by 15:50(GMT+8) on Monday.

A collapse in the Turkish lira also contributed to losses for gold, with the weaker currency likely to dull the yellow metal's demand from Turkey, which is a major buyer, analysts said. A report from the World Gold Council in January showed that Turkey was the biggest annual gold buyer in 2020, adding 134.5 metric tons to its official gold reserves.

Bullion's move lower to start the week comes even as U.S. Treasury yields and the dollar are staging a modest pullback that would ordinarily offer a runway for gold prices.

Asian stocks were set to track overnight Wall Street gains, as bond yields pulled back, easing concerns about inflation. 

The dollar gained slightly, after it stumbled from four-month highs against a basket of currencies in the preceding session in line with a dip in U.S. Treasury yields.

Commodity experts speculated that gold prices were facing selling pressure, nonetheless, because investors were favoring equities as the rise in bond yields appeared to stabilize somewhat. 

Broader commodity markets rallied "after taking fright at the rise in borrowing costs spurred by their own bull market," Adrian Ash, director of research at BullionVault, said. That can contribute to losses for haven gold.

Limiting the safe-haven metal's losses, however, was a third wave of COVID-19 across Europe due to highly contagious coronavirus variants. 

This has raised concerns about another round of restrictions, with Paris going into a four-week lockdown late last week. 

AstraZeneca's COVID-19 vaccine performed better than expected in a major late-stage trial, paving the way for its potential emergency authorization in the United States and boosting confidence in the shot after setbacks in Europe.

Bitcoin drops $1,000 in short-term on Tuesday. Bitcoin fell 1.37% to $53869.0 by 15:50(GMT+8).

Federal Reserve Chair Jerome Powell said Monday that, while the central bank is still exploring the potential for a central bank digital currency, cryptocurrencies like bitcoin can't serve as an effective replacement to the U.S. dollar.

Powell has his doubts about cryptocurrencies and their supposed use cases. The tokens might be a substitute for gold, but their wild price swings make them unfit to replace the dollar, the central bank chief said during a teleconference hosted by the Bank of International Settlements.

"Crypto assets are highly volatile - see bitcoin - and therefore not really useful as a store of value," Powell said.

Powell reiterated that, though the bank is still studying the potential for a digital dollar, serious vetting is necessary before such a currency is implemented.

Bitcoin could soar as high as $300,000 in the current bull market based on its historical patterns, according to Bobby Lee, co-founder and former CEO of crypto exchange BTCC.

However, he warned that the bubble will burst after peaking and the cryptocurrency could see declines for years.

"Bitcoin bull market cycles come every four years and this is a big one," said Lee, who is currently the chief executive of crypto wallet Ballet. "I think it could really go up to over $100,000 this summer."

Two of these "mega bull market cycles" have occurred over the last eight years, he told CNBC's "Squawk Box Asia" on Monday, pointing out that the last one was in 2017, when the price of bitcoin surged to nearly $20,000 by the year end from about $1,000 earlier that year.

With bitcoin entering 2021 at around $30,000, Lee said "even just a 10x value from that" would bring the price of the cryptocurrency to $300,000. He clarified that he was not sure if history would repeat itself.

Bitcoin has had a blockbuster 2021 so far, with the cryptocurrency breaking multiple record levels this year, and surpassing the $60,000 mark earlier in March. It last traded at $57,660.24, according to data from Coin Metrics.

Still, a "bitcoin winter" that could last for years may hit the crypto currency following its bull run, warns Lee.

"It could go down by quite a bit and that's when the bubble bursts," he said. "In the bitcoin crypto industry, we call it 'bitcoin winter' and it can last from two to three years."

Investors should be aware that bitcoin's value could fall as much as 80% to 90% of its value from the all-time peak, the entrepreneur said.

"Bitcoin is very volatile, but the rewards are risk-adjusted, I think," Lee said.

Trading Strategy (source: Trading Central)

Pivot: 1742.00

Our preference: short positions below 1742.00 with targets at 1729.00 & 1719.00 in extension.

Alternative scenario: above 1742.00 look for further upside with 1749.00 & 1756.00 as targets.

Comment: as long as 1742.00 is resistance, look for choppy price action with a bearish bias.

Supports and resistances:

1756.00

1749.00

1742.00

1739.70 Last

1729.00

1719.00

1711.00

Our pivot point is at 54910.

Our preference: the downside prevails as long as 54910 is resistance.

Alternative scenario: the upside breakout of 54910, would call for 56537 and 57506.

Comment: the RSI is trading below 30. This could mean that either the pair is in a lasting downtrend or just oversold and that therefore a rebound could shape (look for bullish divergence in this case). The MACD is negative and below its signal line. The configuration is negative. Moreover, the price is trading under both its 20 and 50 period moving average (respectively at 54400 and 56048). Finally, the Bitcoin / Dollar is trading below its lower Bollinger band (standing at 53414).

Supports and resistances:

57506 **

56537 *

54910 **

54270

53316 last

51096

50139 **

Guideline for Trading Central strategy 

Trend chart reading guideline

1. First look at the time period in the upper left corner of the chart: ·30MIN and 1H chart shows the trading suggestions for intraday ·Daily chart shows the market trend analysis in next 2-3 days

2. The blue horizontal line on the chart marks the pivot: pivot indicates the reversal of the market. When the price is above the pivot, it indicates an upward trend, when the price is below the pivot , it indicates a downward trend. When the price breaks through the pivot, the trend is reversed.

3. The red and blue thin curves in the Candlestick chart chart are technical indicators: Red line is MA20+Bollinger bands, Blue line is MA50. under the Candlestick chart chart are also the technical indicators: Blue line is RSI, Red line is 9MA;

4. The green horizontal line is the resistance level for a price increase, and is also the profit target for long orders; the red horizontal line is the support level for a price decrease, and is also the profit target for short orders.

How to use TC strategy？

1.[Pivot] is the reversal line of the market trend. When the price up the pivot line which means in Bullish, you can open a long position or Buy. on the contrary, when the price under pivot line which means in bearish. You ‘d better make short positions or Sell. 

2. [our preference] is the main trading suggestion for your reference. You can exit your trading refer to this target or close positions before it.

3. [Alternative scenario] is the plan B for your reference. 

4. [Comment] is the technical analysis of market trends and technical support for trading strategies. 

5. [Supports and resistance] Supports are levels where the price tend to find support as it falls.

Resistances are levels where the price tend to find resistance as it rises. So, exit before the trend reverse.