Daily Review for December 31, 2020
BTC refreshes record high, unstoppable towards 30,000
GBPUSD – test of resistance at 1.3675
Oil keeps positive on significant crude Inventory draw
Gold prices are rising as the dollar weakens
Bitcoin’s price hit a record again on Thursday morning session. A strategist at Fundstrat sees even more upside from current levels in the next six to 12 months.
The cryptocurrency touched $29,304 earlier today, its highest level on record, according to Dow Jones Market Data. Bitcoin has soared more than 500% from its 2020 bottom around $4,857 on March 12.
David Grider, lead digital strategist at Fundstrat, said Bitcoin’s positive momentum is being fueled by institutions and corporations purchasing more of the asset and retail demand driven by the latest wave of stimulus checks, among other factors. He raised his six- to- 12-month target on Bitcoin to $40,000, up from his prior target of $25,000.
- Support 1: 27,530
- Support 2: 26,900
- Support 3: 26,168
- Resistance 1: 29,618
- Resistance 2: 30,000
- Resistance 3: 30,250
- Pivot Point: 28,256
BTCUSD remains directed to the north while refreshing the record top above 29,300, currently up 1.0% near 29,200, during the early Thursday’s trading. The crypto earlier marked 28,373 as the all-time high following its upside break of an ascending trend line from November 30.
Other than the sustained trading beyond the stated resistance line, now support, bullish channel on the four-hour chart and upbeat MACD conditions also favor Bitcoin buyers.
As a result, it’s the run-up to the 30,000 psychological magnet becomes imminent. However, overbought RSI conditions suggest a pullback from the said channel’s resistance line, near 30,150.
Meanwhile, a confluence of the previous resistance line and the lower line of the short-term rising channel, around 26,900, offers strong immediate support.
A downside break of 26,900 will challenge the December 20 high near 24,300 ahead of targeting the sub-22,000 area.
GBPUSD is currently trying to settle above yearly highs at 1.3675 while the U.S. dollar remains under significant pressure against a broad basket of currencies.
Yesterday, UK reported that Nationwide Housing Prices increased by 0.8% month-over-month in December. On a year-over-year basis, Nationwide Housing Prices grew by 7.3%. The UK housing market remains strong, supported by low interest rates. Today, foreign exchange market traders will remain focused on the U.S. stimulus story. While the Senate is not expected to vote on $2,000 stimulus checks this year, traders continue to bet on additional stimulus in 2021, putting pressure on safe haven assets like the U.S. dollar.
- Support 1: 1.3625
- Support 2: 1.3575
- Support 3: 1.3540
- Resistance 1: 1.3665
- Resistance 2: 1.3710
- Resistance 3: 1.3770
- Pivot Point: 27,500
GBPUSD is currently testing the resistance level at 1.3675. RSI is in the moderate territory so there is plenty of room to gain additional momentum.
If GBPUSD manages to settle above 1.3665, it will head towards the next resistance level at 1.3675. A successful test of the resistance at 1.3665 will push GBP/USD towards the next resistance level which is located at 1.3710.
On the support side, a move below 1.3625 will open the way to the test of the support level at 1.3575. In case GBP/USD declines below this level, it will gain downside momentum and head towards the next support at 1.3540. If GBP/USD settles below this level, it will move towards the next support level at 1.3500.
Crude oil prices rose further today after the Energy Information Administration reported an oil inventory draw of 6.1 million barrels for the week to December 25.
A day earlier, the American Petroleum Institute also helped boost prices by estimating a crude oil inventory decline of 4.785 million barrels for the same week.
Even news that vaccination in the US is going much slower than expected, with just over a million people vaccinated as of December 23, compared with a planned 20 million for the month of December, did not affect oil’s rally. This was probably because Congress last week finally agreed on a pandemic stimulus bill that many expect will boost both consumer spending and oil demand.
- Support 1: 47.61
- Support 2: 46.90
- Support 3: 46.26
- Resistance 1: 48.66
- Resistance 2: 49.43
- Resistance 3: 50.00
- Pivot Point: 46.04
The price of WTI crude oil futures are settling at $48.29. That’s up $0.40 or 0.83%.
The high price reached yesterday $48.66. The low price extended to $47.61
Looking at the daily chart for the February contract, the high price for the year was on January 3 at $57.68. The low price was on April 22 at $27.22.
Since the low, the price has increased some of 77.41% (to current levels). The high price has extended to $49.43. That was just below the swing low from early February at $49.50. The last 14 or so days has seen the price close above its 61.8% retracement of the 2020 trading range at $46.04. It would take a move back below that level to tilt the bias a little more to the downside from a technical perspective. On the topside, getting above the $49.43 to $49.50 area would next target the natural resistance at the $50 level.
As expected, gold prices have recovered lost ground in recent weeks, climbing over 7% from multi-month lows at the end of November, on the back of Congress passing a much-needed coronavirus relief package and an ever-weakening US Dollar.
This recovery looks set to endure in the near term, as the anti-fiat metal’s relationship with real yields and inflation expectations appears to have recoupled. After all, as a non-yielding asset, gold tends to benefit from falling real rates of return and is also widely considered a hedge against inflation.
Moreover, the potential provision of further fiscal support under a Biden administration may also put a premium on bullion in the medium term, as the President-elect stated that the recently passed $900 billion stimulus package is “at best only a down payment” on a more comprehensive bill once he is inaugurated.
Nevertheless, the intensifying push for additional support, in tandem with falling real yields and rising consumer price growth expectations, may continue to bolster gold prices in the coming weeks.
- Support 1: 1,880
- Support 2: 1,870
- Support 3: 1,864
- Resistance 1: 1,900
- Resistance 2: 1,933
- Resistance 3: 1,965
- Pivot Point: 1,900
From a technical perspective, gold prices are approaching a key inflection point at the psychologically imposing 1900 mark and Descending Channel downtrend.
A daily close above the December 28 high (1900.19) would probably invalidate the bearish continuation pattern and propel prices back towards the October high (1933.28). Clearing that likely opens the door for buyers to probe resistance at the November high (1965.55).
Alternatively, failing to breach 1900 could inspire a short-term pullback to support at the 61.8% Fibonacci (1864.86).
- Capitalix Market Research
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