By : David Scutt, Market Analyst
- Gold and bitcoin have not been overly correlated with any market over the past month
- Given the quiet data calendar this week, price signals may be more useful when assessing potential trade setups
Overview
Gold and bitcoin are not particularly correlated with any market right now, suggesting increased emphasis should be put on price signals when assessing trade setups in the week ahead. Having broken minor downtrends on Friday with gusto, the bias for both is higher near-term.
Gold, bitcoin not influenced by macro environment
The correlation analysis below tracking the rolling 20-day relationship with a variety of market variables shows both gold (LHS) and bitcoin (RHS) have been doing their own thing recently, showing little to no relationship with the US dollar, real or nominal US bond yields, US inflation expectations or other long duration assets like tech stocks.
The lack of any meaningful correlation suggests that rather than trying to assess setups using macro events, the price action in these markets may be more useful for traders to consider.
Click the website link below to get our exclusive Guide to bitcoin trading in Q4 2024.
https://www.cityindex.com/en-au/market-outlooks-2024/Q4-bitcoin-outlook/
Gold breaks downtrend, bearish momentum may be turning
The key reversal candle that I wrote about late last week proved to be a reliable signal for the price action on Friday, seeing gold break downtrend resistance dating back to the record high of late September.
With RSI (14) also breaking its downtrend, it looks like the mildly bearish picture of the past month is turning brighter for bulls, putting a retest of the record highs on the radar for traders. MACD is yet to confirm the signal, although it’s showing signs of bottoming.
We’ve seen a minor pullback in early Asia trade on Monday, seeing the price retest the minor uptrend from mid-September that provided support until broken early last week.
If the price holds above this level, consider buying above with a tight stop below for protection targeting a push towards the record high of $2685.7. If it were to be taken out, traders may look for a push towards $2700.
Bitcoin dip-buying preferred near-term
Bitcoin had a strong end to last week, bouncing from the 50 and 200-day moving averages after falling below them Thursday, completing a morning star pattern in the process.
The push higher saw the price break downtrend resistance dating back to late September, pushing above $62352.50 which acted as both support and resistance during periods over the past month.
Like price, RSI (14) also broke its downtrend, signalling a potential turn in bearish momentum. As yet, MACD has not confirmed the bullish signal, but it’s getting close.
Given the price action and momentum signals, buying dips is favoured in the near-term.
Those considering longs could buy around these levels or wait for a potential pullback towards $62352.50, allowing for a stop to be placed below the level for protection. Topside targets include $64458.70, $66480.80 and major downtrend resistance currently located around $68000.
-- Written by David Scutt
Follow David on Twitter @scutty
From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.
No comments:
Post a Comment