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Market picture

The bitcoin price has surpassed $21K, adding around 23% over the week. Ethereum jumped 20% to $1570. Other leading altcoins in the top 10 gained between 9% (BNB) and 50% (Solana). Solana has re-entered the top 10, pushing Polygon aside.

The total crypto market capitalisation rose 18.4% over the week, approaching $1 trillion again, according to CoinMarketCap.

Bitcoin was outperforming altcoins this time, which can easily be attributed to the positivity of the stock market last week.

The first cryptocurrency also responded very well to technical signals. Since securing above the 50-day average on January 4, bitcoin has been closing all days with gains. A consolidation above the previous local high and a break of the downtrend resistance caused an acceleration in growth. BTCUSD closed above the 200-day average on Friday, contributing to the weekend’s positive momentum.

Trading near the $21K level brought quotes back to the area before the FTX crash, and this is a new test of the local highs. Traders might want to be prepared that the market will need a short-term correction towards $19.5K before we see another momentum, as locally, Bitcoin looks overheated.

News background

The US Securities and Exchange Commission (SEC) has charged cryptocurrency exchange Gemini and crypto lending service Genesis with selling unregistered securities.

Crypto lending platform Nexo recorded a significant outflow of customer funds amid reports of searches at its Bulgarian office as part of an investigation into potential AML policy violations. Authorities have accused the crypto bank of money laundering, tax irregularities, fraud and providing banking services without a licence.

The Republican Party, which won a majority in the lower house of the US Congress late last year, has begun forming a subcommittee to regulate cryptocurrencies.

The new CEO of cryptocurrency hardware vendor Trezor, Matej Zak, said the financial independence that bitcoin brings is far more important than its market value. He said there would be a consolidation of the crypto market in 2023 and then a bullish trend, which Trezor plans to prepare for.

The Dax 40 extends gains as markets go risk-on post-US inflation. A bullish MA cross on the daily chart confirms increased risk appetite after a rally above last June’s high of 14650. As the RSI repeatedly flirts with overbought territory, a pullback may catch the eye of bullish followers. Another sign of exhaustion comes from the hourly chart where a bearish RSI divergence shows a loss of momentum. 14960 is the immediate support in case the index takes a breather. 15400 at the start of a sharp sell-off in February is the target. 

The pound recouped losses as the UK’s economy avoided a contraction in November. However, overall sentiment still favours the single currency. A break above the higher band (0.8870) of the consolidation range means that the bulls are still in charge of the price action. A pullback would be seen as an opportunity to stake in and join the trend. The previous low of 0.8830 is the first support and further down 0.8770 on the 20-day moving average is a critical floor. 0.8930 from last September’s sell-off is the target.

The US dollar softened after Fed policymakers cheered the news of easing inflation. On the daily chart, the pair has remained under pressure after a tentative break below last April’s low of 0.9200. The current rebound from this critical level has led to a consolidation. Though the greenback must clear the recent swing high and daily resistance at 0.9400 before it would attract buyers. A bullish reversal could take shape should this happen. Otherwise, renewed selling pressure would send the pair towards 0.9100.

Daily Pivots: (S1) 155.38; (P) 156.74; (R1) 157.83; More...

Intraday bias in GBP/JPY remains on the downside for 155.33 support. Firm break there will resume whole decline from 172.11 to 153.70 fibonacci level. On the upside, above 158.09 minor resistance will turn intraday bias neutral first. But outlook will remain bearish as long as 161.22 resistance holds.

In the bigger picture, as long as 163.02 support turned resistance holds, decline from 172.11 medium term top is expected to continue to 38.2% retracement of 123.94 to 172.11 at 153.70. Sustained break there will raise the change of trend reversal and target 61.8% retracement at 142.34. Nevertheless, break of 163.02 support turned resistance will argue that the decline has completed, and retain medium term bullishness.

Daily Pivots: (S1) 137.55; (P) 138.97; (R1) 139.94; More....

Intraday bias in EUR/JPY stays on the downside for retesting 137.37 support first. Break there will resume whole decline from 148.38 to 135.40 fibonacci level next. On the upside, above 139.54 minor resistance will turn intraday bias neutral first. But outlook will stay bearish as long as 142.84 resistance holds.

In the bigger picture, as long as 55 week EMA (now at 138.64) holds, larger up trend from 114.42 (2020 low) is still in progress for 149.76 long term resistance. However, firm break of 55 week EMA will bring deeper fall to 38.2% retracement of 114.42 to 148.38 at 135.40. Sustained break there will raise the chance of trend reversal, and target 61.8% retracement at 127.39.

Daily Pivots: (S1) 0.8838; (P) 0.8867; (R1) 0.8883; More...

Intraday bias in EUR/GBP remains neutral for consolidation below 0.8896 temporary top. But further rally is expected as long as 0.8768 support holds. On the upside, break of 0.8896 will resume the rally from 0.8545 to 61.8% projection of 0.8545 to 0.8876 from 0.8768 at 0.8973.

In the bigger picture, with 55 week EMA (now at 0.8616) intact, the favored case is that rise from 0.8545 is part of the whole up trend from 0.8201 (2022 low). Sustained trading above 61.8% retracement of 0.9276 to 0.8545 at 0.8997 will pave the way to retest 0.9267 high next. However, break of 0.8768 support will dampen this view and bring retest of 0.8545 low instead.

Daily Pivots: (S1) 1.5494; (P) 1.5551; (R1) 1.5588; More...

Intraday bias in EUR/AUD remains neutral at this point. Another fall cannot be ruled out, but strong support could be seen from 38.2% retracement of 1.4281 to 1.5976 at 1.5329 to complete the correction from 1.5976. Firm break of 1.5614 minor resistance will turn bias back to the upside for retesting 1.5976. However, sustained trading below 1.5329 will carry larger bearish implication and target 61.8% retracement at 1.4928.

In the bigger picture, it's still early to confirm if rise from 1.4281 represents bullish trend reversal. But as long as 1.5271 support holds, such rally is in favor to continue. Break of 1.5976 will target 1.6434 key resistance next. On the other hand, firm break of 1.5271 will retain medium term bearishness instead.

Daily Pivots: (S1) 1.0004; (P) 1.0050; (R1) 1.0081; More....

Intraday bias in EUR/CHF remains neutral for consolidation below 1.0095 temporary top. Downside of retreat should be contained by 0.9953 resistance turned support to bring another rally. On the upside, break of 1.0095 will resume the rise to 100% projection of 0.9407 to 0.9953 from 0.9720 at 1.0266 next.

In the bigger picture, break of 38.2% retracement of 1.1149 to 0.9407 at 1.0072 and 55 week EMA (now at 1.0041) is taken as an initial sign of long term bullish reversal. Further rally is expected as long as 55 days EMA (now at 0.9866) holds. Next target is 1.0505 cluster resistance (2020 low at 1.0505, 61.8% retracement of 1.1149 to 0.9407 at 1.1484). Reactions from there should reveal long term momentum.

USD/JPY falters over Japan’s rising inflation

The Japanese yen extended gains as accelerating inflation may pressure the BoJ to act soon. One of the major themes of 2023 could be Japan finally normalising its monetary policy. Consumer prices have been rising steadily nationwide, with the latest CPI in Tokyo reaching 4%, above the central bank's 2% target for seven months in a row. The US dollar’s reversal from its 32-year peak against the yen suggests that the market believes that inflation is not transitory and has shrugged off Governor Haruhiko Kuroda’s dovish statements. Last May’s lows around 126.50 is the next support and 134.50 is the immediate resistance.

USD/CAD struggles on improved risk sentiment

The Canadian dollar recovers as markets go risk-off. Domestically, a strong December jobs report gives reason for another rate increase by the Bank of Canada, with a 25 bp hike priced in by the market. However, overall sentiment since the start of the year may carry the risk-sensitive loonie. Outflows from the safe haven US dollar means that higher beta counterparts can enjoy a sustained recovery. Meanwhile, the price of oil, one of Canada's major exports, has settled in the green for a few days in a row, offering an effective support to the currency. November’s low at 1.3230 is a key support and 1.3680 is the first resistance.

XAU/USD outperforms softer dollar

Bullion strengthened as the US dollar slipped post-CPI. Traders have been repositioning themselves for a more dovish Fed in the coming months, starting with a 25 basis points hike in February. A cool-off in US CPI at a steady pace would eventually make the central bank reconsider its policy stance. The only billion dollar question is when. The US dollar’s sluggish performance has put gold on a springboard. As the dollar bulls locked in profits, traders are wondering whether the current correction would slide into a reversal, which in turn would benefit the precious metal. The price is pointing towards 1930 with 1830 as a fresh support.

Dow Jones 30 bounces as falling CPI rekindles pivot hope

The Dow Jones 30 rallies as the market raises its bet of a policy pivot soon amid softer inflation. Despite the Fed’s repeated insistence not to lift the tightening prematurely, investors wager on seeing the terminal rate soon, which says a lot about policymakers’ credibility. A steady fall in consumer prices in December further cemented hopes of a dovish turn by the central bank, possibly at its February meeting. The prospect of interest rates plateauing means that equity markets may see the light at the end of the tunnel, or at least that is what the bulls want to believe. 34800 is the next hurdle and 32800 the first support.