Janet Yellen Sworn In a US Treasury Secretary. Is it Crypto Bye, or Crypto Buy?
Ethereum edged its way to a new high overnight, although gains were short-lived, closing the session with a bearish hammer which failed to test 1500. Given the choppy nature of Ethereum’s price action at the highs, we are on guard for a spike lower before its trend resumes.
Former Fed Chair, Janet Yellen will be the new US Treasury Secretary for the Biden administration, after the Senate voted her in with a majority. A hot topic surrounding her new role is what impact she will have on cryptocurrency regulations. During her testimony last week, Yellen said that cryptocurrencies are “mainly used for illicit financing” and that ways to curtail its use should be examined. This created a backlash among the crypto community who feared crypto would then become over regulated. Yet these comments appear to have been walked back to a degree, as her subsequent written statement says the government needs to look at how they can “encourage their use for legitimate activities”. Whichever way you look at it, it appears the US want to more closely regulate cryptocurrencies, and the consequences of that are yet to be known. But Yellen’s words on crypto are likely to carry weight from here on.
From a technical perspective, the question on many minds is whether bitcoin’s (BTCUSD) correction has completed or not. Friday’s low of 28,754 stalled almost perfectly at a 100% wave projection (wave equality) as part of a 3-wave decline from the 41,957 high. The low also resides around a 50% retracement level, so its possible we have seen the end of a classic ABC correction. Yet price action remains choppy around the 20-day eMA, which makes predicting its move over the next 24-48 hours feel like a flip of a coin.
Ethereum (ETHUSD) edged its way to a new high overnight, although gains were short-lived, closing the session with a bearish hammer which failed to test 1500. Given the choppy nature of Ethereum’s price action at the highs, we are on guard for a spike lower before its trend resumes.
Moderna Claims Its Vaccine Can Tackle New Coronavirus Variants
If their claims prove correct, the vaccine could curtail the rise in the new strains and help with a a faster recovery for economies across the world.
Wall Street initially began the session under pressure, partially due to the rise of new coronavirus strains from UK and South Africa, but also because investors want to book profits at these highs after a couple of months of strong equity returns. Yet equities rebounded later in the session following claims by Moderna (MRNA) that their new vaccine appears to be affective against the new coronavirus strains. If their claims are correct, the vaccine could curtail the rise in the new strains and help with a a faster recovery for economies across the world.
The S&P 500 (US500) recovered from a session low of around -1.5% lower to close 0.3% higher for the day. Holding above the 20-day eMA either a bullish pinbar or bearish hammer has formed. A break above 3859.80 assumes bullish continuation and new record highs, whist a break below 3797.20 confirms a bearish hammer and near-term reversal from the highs.
ASX 200 futures (AUS200) closed just beneath 11-month highs with a late session rally. We had originally noted its potential to break to fresh highs last week with a break above 6775.84 resistance, and whilst prices initially retreated back below this key level, support has been found at the 10-day eMA and with two buying tails (lower wicks) around 6753. Please note the ASX 200 is closed today due to Australia day. If sentiment on Wall Street improves today, we could see prices gap higher tomorrow.
The Correction in Oil Remains Elevated, Metals Remain Choppy
Metals continue to underwhelm, with both gold and silver confined to choppy ranges as part of a complex correction.
Oil prices remain elevated yet continue to chop around in a sideways correction. In some ways WTI (WTI) and Brent (BRENT) are in a trend traders dream, yet we should also err on the side of caution for further gains, given their strong bullish moves since the April lows.
Brent (BRENT) remains above the 20-day eMA and a 38.2% Fibonacci retracement, and yesterday’s bullish inside which closed near a 2-day high show bulls have not been swashed out yet. A break above the bearish retracement line from the January high brings 75.37 into focus for bulls. A break beneath 54.25 (20-day eMA and 38.2% Fibonacci retracement) signals a deeper correction, although the daily trend remains technically bullish above 50.54.
Metals continue to underwhelm, with both gold (XAU/USD) and silver (XAG/USD) confined to choppy ranges as part of a complex correction. If prices can hold above 1850, then a break above 1875 provides a bullish bias for gold, whereas a break beneath 1837 brings 1806 into focus. Silver appears weak below 26, so range traders could consider fading into minor rallies beneath the kids level and target the lows around 24, or use a break above 26 to switch to a bullish bias.