Market Analysis

Bitcoin Surge: Testing $70,000 as Geopolitical Factors Influence Market Sentiment

Dupoin · 17 Oct 2024355.4K Views

XAUUSD

Prediction: Uptrend Expected

Fundamental Analysis:

On Thursday, October 17, during the Asian trading session, spot gold maintained its strength following a significant rally the previous day, with prices hovering near $2,675 per ounce. Despite the strengthening of the US dollar, gold continued to benefit from safe-haven demand. On Wednesday, prices briefly approached record highs before retreating slightly, now settling around $2,675 per ounce. In geopolitical developments, 16 EU nations contributing personnel to the United Nations Interim Force in Lebanon (UNIFIL) agreed to exert maximum pressure on Israel to avoid further incidents involving UNIFIL. This comes after UNIFIL reported that an Israeli tank had fired on a UNIFIL observation post in the southern Lebanese village of Kfar Kila, damaging equipment and the post itself.

Technical Analysis:

From a technical standpoint, gold's upward momentum suggests the potential to test the $2,700 per ounce level. On the daily chart, the price has risen for two consecutive days, with the 20-day Simple Moving Average (SMA) offering solid support near $2,644.10 per ounce. The longer-term moving averages also indicate a sustained bullish trend, reinforcing a positive long-term outlook. Momentum indicators are stable near the 100 level, while the Relative Strength Index (RSI) is climbing, currently around 64, signaling that buyers are in control. On the 4-hour chart, short-term risk remains skewed to the upside. The 20-period SMA is above the 100-period SMA, and the 200-period SMA is trending higher below both, pointing to increasing upward momentum. Technical indicators have recovered and are gaining strength, supporting further bullish movement after a brief retracement.

USDJPY

Prediction: Likely to Increase

Fundamental Analysis:

On Thursday, October 17, USD/JPY dipped to 149.50 after Japan reported its first decline in exports in 10 months, highlighting weaker global demand and slowing economic recovery. The Ministry of Finance revealed a 1.7% year-on-year drop in exports, largely driven by reduced shipments of cars, mineral fuels, and construction machinery. This marked the first contraction since last November and exceeded economists’ expectations of a 0.9% growth, pointing to a broader global slowdown. Major central banks, including the European Central Bank, are expected to implement rate cuts to stave off further economic deceleration, with an ECB announcement anticipated on Thursday.

Technical Analysis:

USD/JPY is currently trading around 149.50, struggling to breach the 150.00 level for several sessions. Should US retail sales outperform or jobless claims come in lower than expected, USD/JPY could climb above 150.00. Conversely, weaker data may fuel speculation of a Federal Reserve rate cut, potentially pulling USD/JPY below 149.00. If USD/JPY clears the 150.00 resistance, it could move towards the 100-day moving average at 150.98, with the 200-day moving average at 151.27 serving as the next key level. On the downside, initial support is at 147.95, followed by 146.48 and 145.36, aligning with the 50-day moving average.

EURUSD

Prediction: Decline

Fundamental Analysis:

The recent strength in the US dollar has been supported by the release of the Federal Open Market Committee (FOMC) minutes from the September 18 meeting. While many policymakers were in favor of a 50-basis-point rate cut to loosen monetary policy, no clear timeline for future cuts was set. Hawkish comments from Federal Reserve officials have also contributed to the dollar’s rise. Although a 25-basis-point rate cut is widely anticipated for next month, some, including FOMC Governor Michelle Bowman and Atlanta Fed President Raphael Bostic, have indicated that the Fed may opt to hold off on any cuts in November.

Technical Analysis:

EUR/USD is facing the potential for further declines, with the October low of $1.0862 (October 16) being the first downside target, followed by $1.0800 and the August low of $1.0777 (August 1). On the upside, resistance is found near the 100-day and 55-day simple moving averages (SMAs) at $1.0935 and $1.1040, respectively. Beyond that, the key resistance levels are the 2024 high of $1.1214 (September 25) and the 2023 high of $1.1275 (July 18). A decisive move below the 200-day SMA at $1.0872 could reinforce a bearish outlook. Initial support sits at $1.0862, with resistance at $1.0943 and $1.0996. The RSI near 30 indicates ongoing downward momentum.

BTCUSD

Prediction: Potential for Pullback Following Recent Surge

Fundamental Analysis:

Bitcoin has seen a notable 16% rise over the past six days, pushing its technical outlook toward another potential breakout. This momentum suggests that Bitcoin may soon surpass the significant psychological threshold of $70,000. The recent price surge can largely be attributed to increased institutional interest, as evidenced by the growing trading volume on major exchanges. Meanwhile, geopolitical tensions in the Middle East are escalating, with Israeli Prime Minister Benjamin Netanyahu expressing opposition to a ceasefire with Hezbollah. The militant group has warned of severe consequences if Israel does not comply, raising concerns about further instability. Reports from AP News indicate that Israeli airstrikes in southern Lebanon have resulted in 27 casualties, including a local mayor, further adding to the geopolitical uncertainty that could influence market sentiment.

Technical Analysis:

Bitcoin is currently trading just above the key support level at $66,743 (the pivot point), with immediate resistance at $69,999.24. A break above this resistance could trigger a rally toward the next target around $71,905, with the $70,000 mark serving as a crucial breakout zone. If Bitcoin successfully clears this level, it could aim for the $75,000 range, which is viewed as the next major resistance. However, failure to break above $70,000 may lead to a short-term retracement, with immediate support at $67,000 and stronger support at $64,000, where previous consolidation occurred. While short-term volatility is possible, Bitcoin's long-term outlook remains positive, particularly if broader macroeconomic conditions continue to support risk-on assets.

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