Jumping right in with this edition of Monday Madness, we first take a look at the British market and, more specifically, the GBP/USD forex pair.
Looking at the chart, we can see that GBP/USD continues to stay mostly flat, trading between 1.3010 and 1.3110. We can see that this resistance level of 1.3110 lines up with the 200 Week EMA, which is quite a significant moving average on the macro scale, representing more than four years of trading activity. On a fundamental level, we can see that GBP/USD appears sandwiched in this range due to the continuing uncertainty over the U.S. situation, including its coronavirus aid package as well as bond rates. With that said, a strong move above 1.3110, will certainly lead to GBP/USD testing its yearly highs at 1.32. However, given how strong both the current support and resistances are acting, it will take a significant catalyst to propel GBP/USD in either direction.
Moving onto the EUR/USD pair, the first obvious insight is how much the recent bullish uptrend has been dampened. Political turmoil, and more specifically pandemic-related panic, seem to have brought on an abundance of caution amongst EUR/USD traders. For the second consecutive week, the pair closes only a few pips above the 1.1800 level. Traders and investors should keep an eye on any updates from both the Federal Reserve and the European Central Bank, as both are expected to release their minutes this upcoming week. Despite the current short-term deviations, the bullish macro trend of EUR/USD seems to be mostly intact. The weekly chart is holding above several significant levels, such as the 20 Day SMA, the 100 Day SMA, and the .236 Fibonacci level. Though, momentum indicators such as RSI and MACD do point to oversold conditions. This fact means traders can expect to see a bit more downward consolidation before any sort of resumption of the bullish uptrend.
We close out our section on forex pairs like we usually do, by covering the USD/JPY. Last Friday, we saw the USD dollar struggle against the Japanese Yen. This struggle should come to no surprise trading USD/JPY as of late, considering the overall trend has been downward for months, if not years. It is reassuring for USD/JPY to continue to move upwards from its July 31 bottom at 101.80. The pair sits at 106.541 at the time of writing, with the 50 day EMA slicing through the current candlestick. Taking a look at support and resistance, this pair certainly has room to move before the next significant resistance at 109. However, all things being equal, this move-up could be just another relief rally that the market will fade. Either way, the reaction at the 107 level will be crucial for traders and investors to keep an eye on.
Moving onto the cryptocurrency market, we first take a look at BTC/USD. After several days of consolidation, we can see that Bitcoin is closing in on the $12,000 resistance level after posting modest gains on Saturday. The weekly candle is still open at the time of writing, so it's too early to tell, but a weekly close above $12,000 would certainly open the door for a continuation of the bullish uptrend. Bitcoin climbed above the $12,000 resistance level last week, but it could not manage to remain above this level. It quickly dropped to the lower range on August 13, 2020, closing just above the $11,000 mark. Such price action indicates that the current resistance is quite significant, especially considering BTC/USD has only managed to make one weekly close above it.
We close out this week by covering Ethereum and ETHUSD. Despite being the number two asset in the space, we've seen Ethereum lead the way for the past few days in terms of price action. In just the past 24 hours alone, ETH/USD has rallied over 10%. The rally began on August 13 and started with Ethereum blowing past the psychological resistance of $400. Currently sitting at $430, ETH/USD is trading at its highest point since August 2018. If this bullish momentum can be sustained, the next key levels are $485 and $534. However, if ETH/USD does indeed reach these levels, it might be worth considering a runup to new all-time highs, especially given the nearly three-year bear market, which preceded this.
A look back on Finance History:
On August 8, 2011 (Black Monday), the U.S. and global stock markets crashed following a credit rating downgrade by Standard and Poor's. The Dow Jones Industrial Average lost 634.76 points (-5.55%) to close at 10,809.85, making it the 6th most significant drop of the index in History. It was the first time in History the United States credit rating was downgraded.
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