Pairs in Focus This Week – BTC/USD, EUR/USD, AUD/USD, GBP/USD, USD/CAD, EUR/JPY, Gold, USD/CHF – 12 February 2023
Bitcoin fell during the past week as we have seen a lot of “risk off” behavior in the markets overall. The risk appetite of traders around the world seems to be waning, and that of course works against the value of Bitcoin. It’s also worth noting that the $25,000 level above is a significant resistance barrier, and we have in fact failed from there. Because of this, I think Bitcoin is getting ready to roll over, and could even find itself below the $20,000 level rather quickly.
The Euro plunged during trading this week, breaking down below the bottom of the shooting star from the previous week. At this point, it looks like the Euro is going to continue to struggle, which does make a certain amount of sense considering that there is a lot of risk aversion out there. Furthermore, the Federal Reserve does everything it can to convince Wall Street that it’s going to stay tight for ages, and because of this the market will more likely than not favor the US dollar going forward.
The Australian dollar initially rallied during the trading week but has also given back almost all of the gains. It looks like the 0.70 level is going to continue to be resistant, not to mention the fact that there is a 200-Week EMA above there near the 0.72 level. In other words, I think every time this market rallies, you have to look at it with suspicion, and perhaps start looking for selling opportunities to pick up “cheap dollars.”
The British pound has had a neutral week, after initially trying to retake the 50-Week EMA. By doing so, it looks as if we are going to continue to dance around the 1.20 level, any market that is trying to figure out whether or not this is a distribution pattern, or if it’s simply a pause on the way to much higher pricing. The 1.25 level above is a massive barrier, and it does not look likely to be broken above in the near term.
The US dollar initially tried to rally against the Canadian dollar this past week but has failed to bid. Because of this, it looks as if the Canadian dollar may continue to be a bit of an outlier against the greenback as we have seen so much in the way of strength for the CAD, which flies in the face of most other currencies against the greenback. Perhaps this has to do with oil, so keep an eye on oil and whether or not it takes off.
The Euro gapped higher against the Japanese yen to kick off the week but ran into a brick wall of selling pressure near the ?143.50 level. The market then plummeted toward the 50-Week EMA, before bouncing a bit. Ultimately, this is a market that I think continues to see a lot of back-and-forth behavior, and therefore think we’ve got a range-bound market just waiting to happen. That does make a certain amount of sense, as there is so much economic uncertainty. If we break down below the ?137.50 level, then this market could unwind quite drastically. Otherwise, I think it’s more or less back and forth.
The gold market initially tried to rally during the week but continues to see quite a bit of resistance above. In fact, we had multiple inverted hammers formed during the week, and now it looks like we are ready to drop. The $1880 level has been important more than once, and therefore it’s likely that we see selling pressure every time we rally, and I do think that we probably have a little bit more to the downside. For what it is worth, the 50-Week EMA is closer to the $1800 level at this point. That could make a nice target, but we will have to wait and see. Alternatively, if we break above the top of the candlestick, then we could get to the $1950 level.
The US dollar fell at the beginning of the week against the Swiss franc but then turned around to show signs of life. At this point, when it of forming a hammer for the second week in a row, therefore it suggests to me that we are ready to go higher, perhaps reaching a 0.94 level. All things being equal, this is a market that is close to the bottom of the overall consolidation area, so I would not be surprised at all to see this market rally from here. The short-term pullback should offer value.