In this week's edition of "Monday Madness," we start off with covering the British Pound. Earlier last week, GBP/USD rallied towards and broke above the 1.2650 level. Since then, however, the pair has fallen nearly 1% and is trading at the 1.2563 level at the time of writing. The 1.25 level for the GBP/USD pair has been one of importance, historically speaking, serving at several points as a key support and resistance. Going forward, it will be essential to see how the Pound reacts at this level. It will act as a key pivotal point for traders, which, if broken, might turn the GBP/USD pair vulnerable to break through the weekly lows support near the 1.2480 region.
Moving on to the rest of European finance, we take a look at the Euro. The EUR/USD pair has continued to grind higher for the past week, like it mostly has since the end of June. The Euro has broken through several key technical levels recently, such as the 200 week EMA. At the time of writing, EUR/USD sits at 1.14282. For many analysts, the next logical significant level will be at 1.15, which is only a few pips away from its current price. Given its price action in the past few months, breaking a critical level like 1.15 may signal a significant trend change. For traders, one should keep an eye on the 200 week EMA. A break below this moving average would also mark an important trend change, albeit in the opposite direction.
Switching hemispheres, the next pair we will cover is USD/JPY. As one can surmise from a quick glance at the chart, the US dollar continues to trade in the same tight range, showing itself to be resilient (or rather flat) against the Japanese yen. At the time of writing, USDJPY sits at 107.014, just a few pips away from the 107.5 level. Dating back to early April, this 107.5 level has served as a pivotal spot for USDJPY, flipping between support and resistance over the past few months. Given the relative lack of enthusiasm for either country's economic & fiscal response, as well as the burgeoning issue of coronavirus, we may see the USDJPY pair continue to grind along in this range.
Jumping right into BTC/USD, all eyes were on Bitcoin this week after the infamous Twitter scam last week, dropping BTC/USD to $9,000 on Thursday - a 10 day low. Bouncing from that low, it closed at $9,150 on Friday and again, ranging over the weekend. Technical indicators such as RSI, show that Bitcoin is moving sideways or neutral. A break out of this sideways range could see BTC/USD heading down to the 200 SMA of $8,500, but if time has shown crypto traders anything, BTC/USD, even when "sideways," can be incredibly volatile with $1000 price movements in a single 1hr candle. As always, focus on Bitcoin's fundamentals and technical analysis, but buyer beware, this can change anytime.
Lastly, we're going to head into ETH/USD, the second most traded digital asset. ETHUSD is currently trading below the 20day and 50day SMA, after falling 3 straight days this week and a 10 day low, which puts it at a sideways move with an RSI around 50, another neutral outlook similar to Bitcoin. This immense selling pressure on ETH/USD underlines the volatile nature of ETH/USD and the opportunity for traders. Zooming out on a macro scale, digital assets such as BTC/USD and ETH/USD, seem to continue to grow in popularity compared to traditional assets, even as they trade in a tight range.
A Week In Finance History:
On this day in 1861, the US Government issued the first US dollar bills. The United States Demand Note was authorized by Congress on 17 July 1861 and issued on 10 August 1861. Greenbacks were paper currency (printed in green on the back) issued by the United States during the American Civil War. They were in two forms: Demand Notes, issued in 1861–1862, and United States Notes issued in 1862–1865. They were legal tender by law but were not backed by gold or silver, only the US government's credibility.