BTC/USD, XAU/USD (Gold): Technical Outlook, Edition #9 (01/06/21)

Post-Memorial Day technical insights on XAU/USD (Gold), BTC/USD. Does an inverse relationship between Gold and BTC exist? Learn more...

The global markets were quiet yesterday due to Memorial Day in the U.S, and Bitcoin did not manage to break above or below its current consolidation pattern. 

Pictured below on the H4 chart, we can see BTC/USD nearing the completion of a symmetrical triangle-like pennant. This formation is still pressurising, coiling tighter and tighter. Implying it will not be long before volatility seeps in, causing an explosive break up to USD 46K or down to USD 30K. 

The bulls have a lot of resistance hanging above them, namely the 1D 200 MA (moving average), which should not be taken lightly in the eyes of a trader. 

Conversely, our bears have a massive order block located around USD 30K which should hold given the depth of its buyers and no coordinated FUD (Fear, Uncertainty, and Doubt). Irrespective, both the bullish and bearish breaks are mapped out above. Given these expectations, the re-test for confirmation has also been depicted. 

Taking on more risk than necessary before the stated break and re-tests is an excellent way to donate your capital to the markets. 

Moving the scope away from Bitcoin and into other asset classes, Gold is now experiencing a fifteenth consecutive green day and is on track for one of its best performing months in a year. 

A clear inverse relationship between Gold and Bitcoin exists, as shown. 

The massive double bottom at USD 1680 per oz also signalled the local top for Bitcoin around USD 65K. Since then, Bitcoin has been bleeding, and Gold has been rising. 

Is that now about to change?

Gold's RSI (relative strength index) is nearing overbought territory after such a bold reversal and will soon be approaching its former August 2020 highs. 

Gold still has the potential to move higher; however, a correction to USD 1850 beforehand would be a great reset for the bulls. Should Gold break higher, we expect Bitcoin will continue bleeding downwards to USD 30K, and vice versa (A XAU/USD pullback to 1850 and a BTC/USD reversal to USD 46k).

See you again for the next update.

- q

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