At the moment, we are still experiencing a selloff in the Dollar as it trends lower toward the key support level. The market is still trying to predict the long-term strategy of the Bank of Japan, which in turn, could help analysts forecast moves out of the Dollar.
We do anticipate seeing the BoJ become less dovish as we enter 2023 as they may begin to tighten with more intent. This will be bullish for the Japanese Yen and inversely negative for the Dollar in the long term.
As we saw the Dollar fall in early morning trading, we have seen Gold hit resistance levels as it trades at the top of the range.
Gold has been falling over the course of 2022 due to Dollar strength, however, now we are seeing the opposite with Gold rising due to Dollar weakness.
EUR/USD is at the top of its range as well and RSI is reading at 56 on the 4-hour chart, signaling bullish momentum picking up. We did predict that EUR/USD would see some gains before the reversal down and traders can keep an eye on this range as a good entry.
The crypto markets have stagnated of late which can be attributed to various factors. Crypto in a bear market is heavily dominated by the value of the Dollar and as we see the Dollar consolidate we have also seen Bitcoin trade sideways.
In today’s DIFX Analytics, we’re going to look into the following assets:
The Dollar is sliding to support levels
The Dollar bounced off the 50-day EMA on the 4-hour chart as it trended lower. The key support level at $103.6 is about to be hit and traders should keep an eye on price action around this range.
RSI is trading within an asymmetric triangle yet bearish as the reading is below 50. Any break out of this range will signal volume to either side.
If we see RSI break to the upside, we can expect a bullish reaction in price, otherwise, we shall see bearish moves toward the support.
Bitcoin is currently trading within the $16,600 – $17,400 range. Price action is beneath the Exponential Moving Averages displayed by the green and blue lines on the chart. This is bearish sentiment and we need to see Bitcoin break above these lines for any upside momentum to enter the market.
RSI has been giving readings below 50 since $18,000 was rejected last week after the FOMC minutes were released. Traders need to wait and see what happens in the Dollar in order to forecast moves in Bitcoin accurately.
EUR/USD is at the top of the range
EUR/USD is trading at $1.0643 at the time of writing. This is at the top of the recent trending range which has been followed for the past week.
We previously forecasted the dotted trend line to be broken to the downside, however, with the recent yield change out of the BoJ, we have seen the Euro gain against the Dollar.
If this range is broken, the pair may reach $1.07 in the near term. If the Dollar manages to regain some strength, then analysts predict price action to fall to $1.05.
Gold has touched this resistance level twice in the past 2 weeks of trading. Usually, when the price hits a resistance level twice, it experiences some rejection downwards.
Analysts are expecting Gold to continue to trade within this range and we should see some bearish momentum toward $1800.
There is an inverse relationship between Gold and the Dollar so we can expect Gold to rise out of this range if the Dollar weakens further. If the Dollar manages to gain some momentum to the upside, we should see Gold fall.
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DIFX shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee, or implication by DIFX that the forecast information will eventuate, that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses in particular if the conditions or assumptions used for the forecast or mentioned in the analysis do not eventuate as anticipated and the forecast is not realized.