Bitcoin swings are front and centre of market chatter this morning after yesterday saw the headline cryptocurrency top $11,300 before falling 18% to lows below $9,000. The swings during yesterday’s session cannot be a surprise to many people as anything that puts on such aggressive gains often sees an aggressive retracement. It’s difficult to actually get any rhyme or reason as to the moves, as it remains a very speculative trade, with many retail traders jumping on board as its popularity grows as a get rich quick option. However the selloff could well be attributed to profit takers after such an aggressive upside move this week that saw over $3000 added to the value. This morning 1 Bitcoin is worth $10,270.
Thursday sees a lot of data set for release with a particular focus on the eurozone as CPI and labour market figures are set for release. There will be a particular focus here after news last week that it is expected that the ECB and Mario Draghi will wait until well into 2018 before they consider any policy change. Inflation has been a sticking point to these suggestions as the stubbornly low readings could well see the ECB act a little faster, or at least consider a change. Lower inflationary readings are a global issue (outside of the UK) as both new Fed chairman Jerome Powell and current Chair Janet Yellen have both reiterated this week on their outlook on the US fiscal policy and economy.
Technical Views
As mentioned above the euro is a focus, and this morning EURAUD is a nice chart with some key set up levels in play. We have seen a degree of weakness this morning as we approach the eurozone data this morning, and on EURAUD we have dipped to test trendline support down at 1.5630. On the hourly chart there is a narrowing formation that is squeezing price into a corner at what could be the 1.5650 level, the turnaround has come ever since the pair hit 2 year highs back on Monday. A break below the trendline support could well target 1.5630’s with a further break targeting the lows at 1.5600.
Gold continues to respect the upside 38.2% fib retracement level at 1297.45 while the continued move lower has seen us continuously test the downside trendline, now coming in at 1277.50. A break below this level brings in a further, longer term trendline from the 18/11/2016 and could well give us its third test. The test of this level would also coincide with the 1260 lows from early October, all of which leaves gold set up quite nicely.