Cryptocurrencies in a relief rally as investors buy the dip

Cryptocurrency prices bounced back as investors rushed to buy the dips after yesterday’s crash. Bitcoin surged to more than $34,000 while Ether, Binance Coin, and Cardano rose by more than 10%. The total market cap of cryptocurrencies tracked by CoinMarketCap rose by more than 8%. The recent weakness came after China started a major crackdown on the coins. The country asked financial companies in the country to identify and lock all accounts dealing with the currencies. It has also intensified its crackdown on mining operations. Analysts expect that many Chinese dealing with the coins will shift their operations to other countries. Still, it is unclear whether the relief rally will hold since Bitcoin failed to move above $40,000 last week.

Global equities were relatively mixed today. In the United States, futures tied to the Dow Jones, S&P 500, and Nasdaq 100 index rose slightly after they closed at record highs yesterday. In Europe, the DAX, FTSE 100 and CAC 40 indices dropped by more than 0.20%. Elsewhere, in Asia, the Nikkei 225 index retreated by 0.15% while the Hang Seng rose by almost 2%. This price action converged with the overall rally of commodity prices. Crude oil, gold, and copper rose by almost 1%. Investors are likely reacting to the mixed signals by the Fed. Last week, the bank sounded hawkish when it brought forward the potential date for a rate hike. And on Tuesday, Powell sounded dovish when he said that the bank will continue supporting the economy for longer. In a note, analysts at Blackrock said:

“We believe the Fed’s new outlook will not translate into significantly higher policy rates any time soon. This, combined with the powerful restart, underpins our pro-risk stance.”

European currencies were mostly unchanged after the relatively mixed flash manufacturing and service PMI numbers. In the UK, the manufacturing PMI declined to 64.2 while the services PMI fell to 61.7. In the Eurozone, the two PMIs increased to 63.1 and 58.0, respectively, as countries continued to reopen. A PMI figure of 50 and above is a positive sign. This growth will likely continue barring further lockdowns. According to Bloomberg, the UK government is considering easing travel restrictions for Britons who have been fully vaccinated. The British pound will next react to the Bank of England decision.

EUR/USD

The EURUSD was in a tight range after the relatively strong manufacturing and services PMIs. On the four-hour chart, the pair is at the 61.8% Fibonacci retracement level. It also seems to be forming a bearish flag pattern that is shown in pink. The Relative Strength Index (RSI) has also moved above the oversold level. Still, the pair will likely break out lower as bears target the next key support at 1.1850, which was the lowest level last week.

GBP/USD

The GBPUSD pair was little changed after the UK flash manufacturing and services numbers. On the four-hour chart, the pair is at the 50% Fibonacci retracement level. It has moved above the 14-day fractal adaptive moving average that is shown in blue. The Relative Strength Index and other oscillators have kept rising. Therefore, a complete bullish breakout will be confirmed if the price manages to move above the 38.2% Fibonacci retracement level at 1.4027.

BTC/USD

The BTCUSD pair rose to an intraday high of 33,880, which was substantially high than yesterday’s low of 29,312. On the four-hour chart, the pair formed a double-bottom pattern whose neckline is at 40,000. The pair’s price is between the 25-day and 15-day exponential moving averages while the RSI has moved to 46. Therefore, the pair may keep rising, as bulls target the important resistance at 40,000. This prediction will be confirmed when the price manages to move above 36,000.