Gold eases as dollar recovers; Bitcoin slumps after new year record high (With Trading Strategy)

Gold prices inched lower on Tuesday after hitting an eight-week high as the U.S. dollar halted its slide ahead of Senate runoff elections in Georgia that will decide the future path of fiscal stimulus in the world’s largest economy.

The spot gold fell 0.05% to $1942.18 per ounce by 15:50(GMT+8) on Tuesday.

“The dollar has strengthened overnight from an over two-year low, that is weighing on prices,” said DailyFX strategist Margaret Yang.

“Monday’s rally largely priced in a Democratic win in the Senate election, so we’re seeing some profit-taking as well.”

Bullion jumped as much as 2.5% on Monday after the dollar slipped to its lowest since April 2018, but since then the U.S. currency has bounced back.

The dual runoff elections in Georgia will decide which party controls the U.S. Senate. A win by Democrats would make it easier for President-elect Joe Biden to push policies such as boosting stimulus.

Meanwhile, England went into a new national lockdown to contain a surge in Covid-19 cases, while New York registered its first case of the more contagious, ‘U.K.’ strain of coronavirus.

Market participants now await the minutes of the U.S. Federal Reserve’s last policy meeting due on Wednesday, with expectations policy will remain accommodative as the economy attempts a rebound.

“In view of still accelerating coronavirus crisis in the U.S., the Fed will ... perhaps hint at further monetary support and extension of the extra low interest rate environment beyond 2023,” Yang said.

Gold is considered a hedge against inflation and currency debasement, likely to result from large stimulus measures and lower interest rates.

Bitcoin is pulling back from its record highs. 

The furious rise for bitcoin in recent months has left the the cryptocurrency vulnerable to pullbacks, but new institutional buyers will step in to stop a slide, billionaire investor Michael Novogratz said Monday.

“The most likely explanation for a pullback is short term profit taking by traders, rather than long term investors,” Jason Deane, an analyst at crypto advisory firm Quantum Economics said. “Given the current sentiment and appetite for Bitcoin, it seems likely that any correction will be short lived.”

Bitcoin, the world’s biggest cryptocurrency by market value, had a historic rally in 2020, advancing more than 300%. Created in 2009, it is viewed by advocates as a decentralized digital currency that forgoes the need for any single authority, such as a central bank.

Today, crypto bulls hail bitcoin as an inflation hedge similar to gold in the face of unprecedented government stimulus aimed at tackling the coronavirus pandemic. A number of institutional investors have shown increased interest in bitcoin, allocating a portion of their assets to invest in the digital currency.

“There’s no denying that bitcoin has proven itself as an established and top-performing asset,” said Eric Demuth, CEO of digital asset broker Bitpanda. “Bitcoin’s value grew over 300% last year as more institutional investors took that leap to embrace digital currencies.”

“We’re seeing it emerge as a part of the recommended allocation strategy for institutional investors and investment banks.”

Well-known investors like Paul Tudor Jones and Stanley Druckenmiller came out as believers in bitcoin last year, while large financial companies like PayPal and Fidelity have also made moves in the space. Meanwhile, the likes of Square and MicroStrategy have used their own balance sheets to buy bitcoin.

Still, skeptics see bitcoin as a speculative asset with no intrinsic value and a market bubble that is likely to burst at some point.

Bitcoin’s 2020 performance was reminiscent of its frenzied rally to nearly $20,000 in 2017, which was followed by a sharp pullback the following year. However, crypto fans claim the recent rally is unlike that of 2017 as it’s been driven by institutional demand rather than retail speculation.

Trading Strategy (source: Trading Central)

Pivot: 1930.00

Our preference: long positions above 1930.00 with targets at 1956.00 & 1968.00 in extension.

Alternative scenario: below 1930.00 look for further downside with 1919.00 & 1908.00 as targets.

Comment: the RSI calls for a new upleg.

Supports and resistances:

1973.00

1968.00

1956.00

1947.00 Last

1930.00

1919.00

1908.00

Our pivot point stands at 31588.

Our preference: the downside prevails as long as 31588 is resistance.

Alternative scenario: above 31588, look for 32337 and 32783.

Comment: the RSI is below its neutrality area at 50. The MACD is negative and below its signal line. The configuration is negative. Moreover, the price stands below its 20 and 50 period moving average (respectively at 31600 and 31515).

Supports and resistances:

32783 **

32337 *

31588 **

31294

30919 last

29680

29240 **

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.