Daily Market Reports | Amana Capital
Ethereum (ETH/USD) is trading lower in the short-term, with the trend-defining high being Saturday’s high of $1174. This means that the price needs to break the $1174 level for the short-term trend to turn bullish, and until this happens, the price might drift lower and test the January 17 low of $760, followed by the December 24 low of $642.
However, the longer-term trend, which has dominated price since November last year is bullish. This is clear to see as the December 24 low of $642, is a higher low than then the November 29 low of $399. This suggests to me that the two trends will challenge each other between the $642 and $1171 levels. I am not sure which trend will come out on the winning side, but the longer-term trend tends to win.
As for positioning, I suspect most traders will wait until the short-term trend aligns with the longer-term trend, something that should take a week or so.
Check out today’s morning update video for the latest on EUR/USD, WTI crude oil, DAX 30, Bitcoin, and gold prices.
In today’s video:
- EURUSD is trading sideways, but the overall trend remains bullish above the January 9 low of 1.1910.
- Bitcoin remains in a downtrend, and the new trend is defining level is the Saturday high of $13086.
- Crude oil prices are trading sideways in the short-term but a break to last week’s high might trigger a resumption of the bullish trend.
- Gold prices are bullish above $1307, and this exposes last week’s high of $1344.
- The DAX 30 adds to its gains by taking out last year’s high of €13539.
Check out the video for all the details.
Gold prices remain bullish, but caution is warranted as the price is nearing the September high of $1357, followed by the 2016 top of $1375. And as supply exceeds demand, and the price reversed around these levels in the past it is likely that it could happen again.
But for now, the short-term trend remains bullish, and the price bounced from the $1325 level as we anticipated a few days ago. With the trend being bullish above the trend-defining low of January 9 at $1307, gold prices may reach near to the January 14 high of $1345, followed by the September high of $1357 on a successful breach to the January 14 high.
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Bitcoin continues its slide, and from Saturday’s high of $13086, the price is lower by almost 21%. The next support level and potential target of bearish traders is the November 31 low of $8985, followed by the November 21 low of $7766 and the November 12 low of $5630.
For the price trend to turn bullish I estimate that the price as minimum needs to break the latest swing high which is Saturday’s high of $13086, until this happens the short-term trend of bitcoin will remain downwards and bearish traders will remain in control.
The S&P 500 remains bid, as usually is the case in January, and this seasonality pattern tends to last until May. After May, the S&P 500 tends to turn choppy and prone to declines in September and October. This seasonality pattern should hopefully make trading S&P 500 a straightforward process of buying dips in the next few weeks.
I suspect traders will treat the trend as bullish as long as the price trades above last week’s low of 2766, but I am focusing on the 2760 level to give the price some wiggle room.
Above the 2760 level, the S&P 500 might reach the 2850 level in the next few weeks if it maintains the same momentum and volatility as it has lately. But traders that are not already long will probably wait for a correction to obtain a better risk-reward-ratio before buying, and the level I think will trigger new buyers to step in is the 2783 level as it is the current 61.8% correction level of the rally from last week’s low.
As for bearish scenarios, traders hoping for a reversal would need to wait for a break to last week’s low, if this were to happen then I suspect the S&P 500 might slide to the next support level at 2734 formed on January 10.
The retail trader remains net-long the U.S. dollar, and given the contrarian nature of the sentiment indicator, it suggests to me that the U.S. Dollar can continue to soften in the weeks ahead.
However, the average retail trader is not as long the Dollar as they were just a few weeks ago. In GBP/USD and EUR/USD, 66% and 65% of traders are short respectively from 80% and 75% by the end of January 5. This slow change suggests to me that sentiment might flip at one point as it appears that traders are starting to realize that the trend of the EURUSD and GBPUSD is bullish.
Other pairs to watch are the JPY pairs, with traders being aggressively short AUDJPY, EURJPY, and USDJPY.