Charts Of The Day: Crypto sell-off shows no sign of abating

Market Analysis / 4 Min Read
Milan Cutkovic / 19 May 2021

Highlights:

  • The broad crypto sell-off showed no sign of abating, with Chinese central bank comments adding to negative sentiment
  • Ethereum has not been spared in the first major crypto sell-off in weeks, but has stabilized somewhat
  • US Dollar weakness is intensifying, giving the Euro a major boost
  • With improved risk appetite, EUR/JPY is a currency pair worth watching

Bitcoin

The broad crypto sell-off showed no sign of abating on Tuesday. The Chinese central bank reiterated that cryptocurrencies cannot be used as a form of payment, which added to the negative sentiment. Meanwhile, Elon Musk´s back-and-forth comments about Bitcoin have done some serious damage to investor confidence, and an increasing number of market participants prefer to stand on the sidelines until there is more clarity. While Bitcoin traders are used to high volatility and the occasional slump, the recent events triggered panic selling and bears have at least temporarily gained the upper hand.

Looking at BTC/USD, $42,078 remains the key support line that bulls need to defend. A clear break below this level is likely to trigger further momentum selling and could pave the way for a deeper correction towards the support zone between $28,773 and $30,000 – which is also close to the 200 DMA. The Daily RSI is not signaling oversold conditions yet, hinting there could be further room to the downside.

Ethereum

Ethereum has not been spared in the first major crypto sell-off in weeks, but has stabilized somewhat in the past 24 hours. Traders will be keeping a close eye on the $3112 support and the $3590 resistance level for further clues on where ETH/USD is heading. A clear breakout to the downside would signal a correction to at least $2800. On the other hand, should the cryptocurrency overcome the hurdle at $3590, we may see Ethereum quickly return to $4000.

EUR/USD

The US Dollar weakness is intensifying, giving the Euro a major boost. The currency has already been benefiting from an advancing EU vaccination campaign and the prospect of more EU member states reopening their economies.

EUR/USD cleared another significant obstacle at 1.2210 – the 78.6 % Fibonacci level of the January-March decline. Euro bulls clearly have the upper hand, and a daily close would signal an extension of the rally towards 1.2350.

EUR/JPY

With the improvement in risk appetite, EUR/JPY is another currency pair worth watching. EUR/JPY's seven-day winning run is showing no signs of exhaustion, despite the hourly charts signaling overbought conditions. A pullback is likely to follow soon, but losses might be limited to 132.35/50 amid strong bullish sentiment. Support can be expected in the form of the rising trendline from the late April low too. To the topside, the next notable resistance level lies at 137.52 (Jan ´18 high).

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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