Charts Of The Week: Crypto volatility remains

Market Analysis / 4 Min Read
Milan Cutkovic / 24 May 2021

HIGHLIGHTS:

  • Crypto markets to remain highly volatile in the short-term
  • European equity markets proving resilient with investors increasingly optimistic on the general EU outlook
  • RBNZ may signal pick up in NZD volatility; NZD/JPY is a currency pair worth watching

Bitcoin

Cryptocurrencies stole the spotlight in the previous trading week, as the dramatic crash in Bitcoin & co. attracted a lot of interest. And judging by the price action over the weekend, crypto markets will remain highly volatile in the short-term; the wave of negative news triggered panic selling, and with investor confidence waning, the recovery rally might not follow as quickly as crypto bulls would have hoped for. Market participants are as nervous as ever, with many looking for opportunities to sell the rally rather than buy the dip.

Bitcoin traders will keep a close eye on the $30,000 figure – a psychologically important support level. A daily close below this level could spell trouble for the world´s most popular cryptocurrency and pave the way for an even deeper correction. Immediate support is seen at the 200 DMA, which currently lies around $27,900. For Bitcoin bulls to regain the upper hand, BTC/USD would have to clear the $46,720 resistance level – something which currently seems out of reach.

EU50

While cryptocurrencies might continue to steal the stock market´s limelight in the coming days, volatility has been on the rise as well. European equity markets proved to be quite resilient in the past few weeks, with investors becoming increasingly optimistic on the outlook for Euro equities as more EU countries are preparing to reopen their economies ahead of the summer. Recent economic data shows that the economic recovery is picking up momentum and market participants are hopeful that the vaccination campaign will prevent another tough winter dominated by lockdowns and back-and-forth COVID-19 restrictions.

The EU50 index is likely to test 4053 resistance again in the near-term, and a daily close above that level would pave the way for an extension of the rally towards 4200 points. Support is seen at 3932 and 3887 points, with 3852 the key level EU50 bulls will need to defend to keep the short-term uptrend intact.

NZD/USD

With the RBNZ meeting scheduled for Wednesday, NZD volatility might pick up in the coming days. The central bank is expected to keep rates and the size of its LSAP program unchanged. At the last meeting, the RBNZ struck a fairly dovish tone and highlighted that the outlook remains highly uncertain. This week, the central bank is likely to take a slightly hawkish position given the rising inflationary pressure and encouraging economic data which is signaling a healthy economic recovery.

NZD/USD has been consolidating in a fairly tight range in the past few weeks. NZD bulls are hoping that the RBNZ meeting will give the currency a much-needed boost and push NZD/USD through the upper trendline of the triangle and the 0.7305 resistance level. A daily close above this level could pave the way for an extension of the recovery rally towards 0.7466. To the downside, imminent support is seen at 0.7115, followed by 0.6945. 

NZD/JPY

NZD/JPY is another currency pair worth watching. It recently broke below the rising trendline support from the March low. However, with the uptrend clearly intact and risk appetite rising again, dip buyers are likely to emerge soon. Support is seen at 77.70, followed by 77.20. To the topside, the resistance area between 79.20 and 79.40 proved to be a difficult obstacle, and the New Zealand Dollar will need a major boost to overcome it.

The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.

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