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AUD/JPY Price Analysis: Bounces off key support confluence towards 84.00

April 19, 2021 10:40   FXStreet   Market News  

• AUD/JPY picks up bids from intraday low during second consecutive daily drop.
• 100 and 200-SMAs join 50% Fibonacci retracement of late March drop to test sellers.
• Key Fibonacci Retracement, one-month-old horizontal resistance challenge recovery moves.

AUD/JPY takes a U-turn from 83.75 while trimming the intraday losses to 0.30%, around 83.91 by the press time of early Monday.

Following its pullback moves last Thursday, the quote remains pressured. However, a confluence of 50% Fibonacci retracement, 100-SMA and 200-SMA, near 83.85, recently triggered the pair’s bounce.

Even so, downbeat RSI conditions keep challenging the recovery moves before a 61.8% Fibonacci retracement level of 84.23.

It should also be noted that a clear break above the key Fibonacci retracement level will be challenged by the 84.50 horizontal resistance line established on March 19.

Meanwhile, 83.50 and 23.6% Fibonacci retracement level around the 83.000 threshold can lure the AUD/JPY sellers during the fresh declines. However, any further weakness may target March 24 low near 82.30.

AUD/JPY four-hour chart

Trend: Further weakness expected

Bitcoin network hash rate drop may not have caused BTC price crash

April 19, 2021 10:40   FXStreet   Market News  

• China’s prominent regions for Bitcoin mining have suffered an electrical grid blackout, causing Bitcoin’s hash rate to decline.
• Bitcoin price crashed over the weekend, coinciding with the drop of the network’s hash rate.
• However, many analysts believe that Bitcoin’s hash rate only declined by 20% and was not the main reason for the cryptocurrency’s downswing. 

The recent blackout in China’s Xinjiang region has caused a drop in hash rate from several Chinese Bitcoin mining operations. Despite several traders suggesting that the Bitcoin price crash was correlated to the hash rate plunge, some analysts have not reached the same consensus. 

China electrical grid blackouts led to Bitcoin hash rate drop

China’s Xinjiang province faced a major power outage due to a coal mine explosion. According to prominent crypto analysts, Bitcoin’s hash rate dropped by 30% instantly, while Xinjiang and Sichuan provinces together have over 50% of the overall Bitcoin hashrate, according to Dovey Wan, the founding partner at Primitive Crypto.

Thomas Heller, the co-founder at Compass Mining, explained that mining farms in Xinjiang were closed on April 16 in relation to the coal mine accident earlier in the week. 

According to Nic Carter, co-founder of Coin Metrics, based on the recovery of the coming week, estimation could be made of Xinjaing’s share of the Bitcoin network. He added that Xinjiang’s grid going down and its effects on Bitcoin’s hash rate are what economists call a “natural experiment,” which could act as a helpful source of data.

Bitcoin price and hash rate correlation

Prominent analyst Willy Woo suggests that Bitcoin price and hash rate have always been correlated. Woo also looked at the latest hash rate data on a 6h moving average and suggested it has almost been fully recovered. The analyst suggested that this could be a massive buying-the-dip opportunity for those who are looking to enter the market. 

Bitcoin mean hash rate 6h MA

Bitcoin’s network averages around 144 blocks mined per day, and the network’s difficulty adjustment occurs every 2016 blocks. Due to the hash rate drop, blocks would be minted slower, and it would take more time to reach 2016 blocks before the difficulty adjustment occurs. 

Bitcoin corrections are not monocausal 

Bitcoin price suffered a massive drop over the weekend, erasing most of its gains when it reached its all-time high. Woo also suggested that the Bitcoin sell-off was also due to the anticipation of miners going offline in China, which triggered the liquidation of short-term speculator positions. 9000 Bitcoin were sent to Binance, which Woo pointed out as a sell-off from those with closer knowledge of the happenings in China. 

Bitcoin net transfer volume from Binance

The on-chain analyst further noted that Binance serves more volume in Asia than the West. Quarterly futures on derivatives markets also contributed to the Bitcoin price crash.

Despite the steep Bitcoin price drop, Woo indicated that longer-term fundamentals are strong. 

Larry Cermak, the director of research at The Block, dismisses the argument that the hash rate plunge was the reason for the recent BTC price crash. However, he acknowledged that the hash rate could have dropped by around 20% due to the electrical gird blackouts in China. He said:

What’s hilarious that hashrate is actually at exactly the same level as when people were saying it’s down 40%. There has been no change whatsoever, just statistical inaccuracy connected to the calculation. Still down about 20% from the peak.

Cermak explained that corrections are natural after massive rallies, especially when weekends are usually met with low liquidity in the market. Bitcoin price rally was fueled by positive sentiment around the Coinbase direct listing last week. Cermak added:

The best advice in this market is to stop looking for reasons and always be ready for large 20% down moves that have always happened.

It was also due to market exhaustion that led to the latest Bitcoin price drop. He concluded that markets have been running up for weeks, traders have been overleveraged, and “a lot of negatives narratives converge.” 

Adam Back, the CEO of Blockstream, indicated that many people have misread and relied on graphs that are “wrongly extrapolating too short sample periods from high variance block-interval.” He added that some graphs are under-reporting hash rate due to low sample rate bias. 

Goldman Sachs expect US stock market volatility to climb much higher in the weeks ahead

April 19, 2021 10:35   Forexlive Latest News   Market News  

GS is looking for the VIX to revisit its earlier 2021 highs in coming weeks.

The recent fall due to:

GS also suggest (to paraphrase) that the reflation trade bounce may be running out of momentum. Separately, ‘insider’ selling of US stocks is hitting record highs. The stage might very well be set for a VIX spike. 

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S&P 500 Futures ease from record top above 4,150 amid market consolidation

April 19, 2021 10:21   FXStreet   Market News  

• S&P 500 Futures trim the intraday losses during the pullback moves from all-time high.
• Challenges to US President Joe Biden’s infrastructure spending, covid fears seem to weigh on sentiment amid quiet session.

S&P 500 Futures pick-up bids from intraday low around 4,161 to trim the day’s losses to 0.20% while flashing 4,168 as a quote during early Monday.

In doing so, the risk barometer takes clues from chatters surrounding US President Joe Biden’s $2.25 trillion infrastructure spending as well as the coronavirus (COVID-19) infection fears, mainly emanating from Europe and Asia.

US Republicans recently reiterate their dislike for President Biden’s tax hike while showing readiness to asset the infrastructure spending if the Democratic Party member steps back on the outlays. Unconfirmed rumors also swirled that Biden is up for stepping back tax proposal of 28% to 24%.

Elsewhere, the global covid death toll jumped past three million, per Bloomberg, as the pandemic’s resurgence in Europe, India and some other Asian nations like the Philippines highlight the COVID-19 fears. Furthermore, the US-China and the Washington-Kremlin tussles add to the risk-off mood.

However, pessimists are questioned over the upbeat US data and faster vaccinations in the US and the UK, as well as the opening up of the trans-Tasman travel bubble.

Amid these plays, the US 10-year Treasury yield drops 1.1 basis points (bps) to 1.56% whereas the US dollar index (DXY) bounces off a one-month low to 91.68, up 0.15% intraday by the press time.

Given the lack of major data/events, except for Canada’s annual budget and Japanese Industrial Production for February, market players need to pay attention to the risk headlines for fresh impulse.

China’s State Planner says in Q1 approved 16 fixed-asset investment schemes worth 45.4 billion yuan

April 19, 2021 10:17   Forexlive Latest News   Market News  

The National Development and Reform Commission of the People’s Republic of China (NDRC) is the state planner

Infrastrucutre investment in China continues apace. A positive for local business and also countries exporting products used in the projects. 

US dollar: Looks firmer amid upbeat economic data, vaccine rollout – JP Morgan

April 19, 2021 10:17   FXStreet   Market News  

Analysts at JP Morgan believe that the recent behavior in the US dollar and rates is largely technical and temporary, adding that the greenback is seen higher in the coming months.

Key quotes

“Citing solid domestic economic data.”

“The Federal Reserve should start formally talking about tapering communication in the April minutes.”

“An announcement of Biden’s next circa $2 trillion in fiscal spending later this month.”

“US vaccination rollout acceleration to help maintain a US gap with the rest of the world.”

“Recommend remaining long USD vs. currencies where central banks are likely to remain dovish or growth-challenged, including euro, yen, Swiss franc and GBP.”

Cosmos Price Prediction: ATOM to restart its 85% advance

April 19, 2021 10:12   FXStreet   Market News  

• Cosmos price is consolidating inside a bullish pennant pattern, targeting an 85% upswing.
• ATOM needs to clear the 12-hour supply zone ranging from $26.18 to $28.64 to establish a bullish outlook.
• A decisive close below $16.37 will invalidate the bullish outlook.

Cosmos price delayed its advance due to the recent market crash, but bulls are resilient and have already begun the upswing.

Cosmos price on the verge of confirming another rally

Cosmos price began its multi-month consolidation forming lower highs and higher lows after surging nearly 530% since 2021. While the initial spike in ATOM’s market value created the flagpole, the range-bound move that followed is known as the pennant.

Together, the technical formation is known as a bullish pennant and forecasts an 85% bull rally, determined by adding the flagpole’s height to the breakout point at $22.62.

This move places Cosmos price at $41.66, a new all-time high.

Supporting this optimistic outlook is a 38% surge in ATOM price after yesterday’s dip. Such a quick reversion indicates that buyers are scooping the altcoin at a discount. 

Although a decisive close above the upper trend line of the pennant at $22.62 will signal a breakout, a secondary confirmation will arrive after ATOM price clears the supply zone that extends from $26.18 to $28.64.

Surpassing the resistance level at $35.2 is crucial for Cosmos price to hit the intended target at $41.66.

ATOM/USDT 1-day chart

On the flip side, if the buyers get rejected at the pennant’s upper trend line or the supply zone, a move into the consolidation phase’s lower boundary seems likely. If ATOM slices through the demand zone stretching from $16.37 to $18.02 to produce a daily candlestick close below it, the bullish thesis will face invalidation.

Under these conditions, market participants can expect Cosmos price to start a new downtrend to $15.7, which is the low of yesterday’s crash or $15.10.

DXY at critical support opens prospects of significant upside correction

April 19, 2021 10:09   FXStreet   Market News  

• The US dollar has gotten off to a solid start in Asia.
• DXY is correcting from the daily support structure. 
• The focus for the week ahead will be correlations, US yields, the ECB and stocks. 

The US dollar has been under pressure since the turn around in US yields following a solid first quarter. 

The DXY has dropped 2.1% from a high of 93.4370 to a recent low of 91.4860.  

The US10-year yields have been the main driver of US dollar weakness after losing around 14% since the 2021 tops to test the weekly 10-EMA where the price would be expected to hold and correct higher.

As for the DXY, the same could be said in terms of market structure. 

DXY daily chart

4-hour chart

The 4-hour conditions are starting to turn bullish according to the Momentum indicator and a break of the 21-EMA would also be encouraging. 

ECB in focus

There’s not a lot for the markets in terms of guidance for the week ahead and the Federal Reserve media embargo kicked in at midnight last Friday.

This means that traders will get no more Fed speakers until Chair Powell’s post-decision press conference next Wednesday, April 28.

Meanwhile, this puts the focus on the European Central Bank is on the market’s radar. 

Although the meeting itself is unlikely to throw up anything new into the picture, it may well encourage an emphasis back onto the decoupling between the US and EU’s economic recoveries. 

The US economic recovery is gaining momentum bolstered by a sizable fiscal stimulus and a rapid vaccine rollout while the eurozone is still struggling with third Covid waves.

The Atlanta Fed’s GDPNow model suggests Q1 growth is 8.3% SAAR, while the New York Fed’s Nowcast model suggests Q1 and Q2 growth of 6.8% and 4.4% SAAR, respectively.

Headline inflation has already breached the Fed’s 2% target and core inflation is set to join shortly which could spark up a flurry in the bond markets and see yields regain a northerly trajectory again soon, prp[elling the US dollar higher. 

EUR/USD fails to justify fourth weekly jump in risk reversal on technical selling around 1.1950

April 19, 2021 09:49   FXStreet   Market News  

• EUR/USD prints heaviest daily losses in April, recently offered near intraday low.
• Risk-off mood, US dollar bounce back the consolidation.

EUR/USD refreshes intraday low to 1.1951, down 0.33% on a day by the press time of early Monday. In doing so, the currency major pair refrains from respecting the options market’s bullish bias.

One-month risk reversals of EUR/USD, a gauge of calls to puts, rose for the four consecutive weeks by the end of last Friday.

Risk reversals flashed the +0.025 level, favoring EUR/USD bulls, according to data provided by Reuters. The positive reading indicates call options are drawing higher premium (option price) than put or bearish bets.

While searching for catalysts, the risk-off mood could be traced for the pair’s latest losses. Among the risk-negative factors, challenges to US President Joe Biden’s $2.25 trillion infrastructure spending and the coronavirus (COVID-19) worries in Europe and Asia back the downbeat mood.

Against this backdrop, S&P 500 Futures drop 0.25% while the US 10-year Treasury yield drops 1.2 basis points to 1.562% by the press time.

Given the lack of major data/events, EUR/USD may respect the US dollar’s bounce. Moving on, traders should keep their eyes on the risk catalysts for fresh impulse.

Double-top confirmation backs intraday sellers…

Technically, the pair confirms “double-top” bearish chart formation on the hourly play and directs EUR/USD sellers toward the 1.1900 threshold.

Read: EUR/USD Price Analysis: Teases double-top bearish formation below 1.2000

EUR/USD losing ground

April 19, 2021 09:33   Forexlive Latest News   Market News  

Euro is selling off to lows circa 1.1950 (as I post) with nothing obvious on the wires as a catalyst to prompt the sell.

Apart from the times already posted there is no fresh news nor data

Other major FX is a weaker also against the dollar, AUD NZD stand out losers also. EUR the biggest loser in the past hour or so. 

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JP Morgan still like the US dollar higher

April 19, 2021 09:27   Forexlive Latest News   Market News  

Via a late last week note from analysts at JPM on the USD 

The fall for the USD alongside US yields is just a countertrend move in a higher trend. JPM argues that the recent behaviour in rates is largely technical and temporary, citing

to help maintain a US gap with the rest of the world.

Bank recommends remaining long USD vs. currencies where central banks are likely to remain dovish or growth-challenged

NZD/USD bears the burden of US dollar bounce above 0.7100

April 19, 2021 09:26   FXStreet   Market News  

• NZD/USD extends Friday’s pullback from the highest in four weeks, teases intraday low off-late.
• Market sentiment dwindles amid quiet Asian session.
• Chatters surrounding US infrastructure spending, trans-Tasman travel bubble and covid gain major attention.
• Risk catalysts to remain as the key amid a light calendar on Monday.

NZD/USD takes offers around 0.7127, down 0.10% intraday, during early Monday. In doing so, the kiwi pair respects the US dollar rebound, amid a risk-off mood, while declining for the second consecutive day.

The US dollar index (DXY) portrays a corrective pullback from the lowest in a month, flashed on Friday, while picking up bids near 91.68, up 0.16% on a day. The greenback’s latest gains could be traced from the downbeat performance of S&P 500 Futures, -0.24% intraday by the press time, as well as mildly offered US Treasury yields.

Although the Asian trading session remains quiet amid a lack of major catalysts, talks that US President Joe Biden will have to lower his tax hike target for the bipartisan approval to his $2.25 trillion infrastructure spending plan seemed to have weighed on the sentiment. Also on the risk-negative side could be the coronavirus (COVID-19) fears in Europe and Asia.

Alternatively, the opening of national boundaries between Australia and New Zealand, coupled with the return of no quarantine rule for travelers of the key Pacific trading partners, should have challenged the risk-off mood. Also on the positive side are the upbeat US data and faster vaccinations in the US and the UK, which in turn propel the economic recovery hopes.

Earlier in the day, New Zealand’s Business NZ PSI grew beyond upwardly revised 49.7 prior readings to 52.4 in March.

Moving on, a lack of major data/events on the calendar will keep NZD/USD traders directed towards the risk news for fresh impulse. Among them, US infrastructure spending and the covid will be the key to watch.

Technical analysis

A clear break below the confluence of 50-day and 100-day SMA, around 0.7150-55, keeps NZD/USD sellers hopeful.