Gold & Silver Market Analysis for Wednesday 17th November

Another Bitcoin Crash – What Happened?

The volatility of Bitcoin remains high today, as the leading cryptocurrency lost over 5% in just a few hours, falling below the support level of $60.000. While BTC is still up 100%+ YTD, it is also down 14% from the peak it reached in the past week. This is not the best scenario for investors looking for a stable asset to incorporate into their portfolios. 

Perhaps a Bitcoin crash is no longer big news for investors. With Bitcoin and cryptocurrencies more generally, huge swings in their value seen through massive rallies to corrections and pullbacks are the norm.

It appears difficult to describe the recent decline of BTC that could be a pure consequential result of the strength found currently in the US Dollar. Certainly, the correction is linked to the rebound of the greenback, but other factors must be at play. Indeed, the US Dollar is up 7.5% YTD against the Euro, and in the same time frame, Bitcoin gained over 100%.

It seems that there is both a technical and a graphical component to its decline. On the 9th of November, Bitcoin reached a historical high above $68,000. After this rally, the price could no longer find fuel for new rebounds and started losing momentum temporarily. 

It is true that the RSI (Relative Strength Index) was in a clear overbought situation and the current decline could be seen as a large consolidation phase. At the same time, the graphical scenario suggests that some modest signal of deterioration and a dip below $58,000 could trigger new falls, with a potential target in the area $54,200 – $54.000.

Above all, it is clear that another reason behind this bearish movement was the growth in traders and investors willing to take profit after the recent gains, generating this pullback of the price.

Kinesis Money Gold Analysis

Will the gold price be able to surpass the resistance placed at $1,900, continuing its bullish movement? It is possible, but not just yet. 

For the time being, it seems that investors are betting on a healthy consolidation phase. After the recent rally, which pulled the price up to $1,875, bullion is resting in the trading region of $1,850/1,855. This is just 1% below gold’s recent high.

Following from the massive rebound of the greenback, the dollar index spike past 96 and the EUR/USD trading pair below 1.13, these three events have considerably slowed down gold recovery. Despite this, the graphical scenario remains unchanged.

From a technical point of view, the recent retracement has not yet changed the overall picture, with bullion still moving in an upwards trend. A new positive signal will arrive only with a clear break up of the resistance placed at $1,870/1,875. In this case, a return of bullion above $1,900 will be relatively likely. However, in the case of uncontrolled inflation, the historical all-time high of summer 2020 (2,074$/oz) might be, again, reachable.

Kinesis Money Silver Analysis

Silver is being traded at $25, with a fractional loss that can mostly be aligned by the strength of the US Dollar. Technically, a decline below $24.9 would represent a negative signal, but if silver remains above this threshold there is a good chance of a rebound for silver. In the case of silver, a strong positive signal will enable it to achieve a new high, surpassing the recent top placed at $25.4.

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Carlo Alberto De Casa is an external Market Analyst for Kinesis Money.

He also writes as a technical analyst for the Italian newspaper La Stampa.

Carlo Alberto provides regular commentary for UK outlets including the BBC, Telegraph, the Independent Bloomberg & Reuters. He is also a commentator for CNBC Italy. He worked for Bloomberg as their Equity Research Fundamental Analyst before joining brokerage ActivTrades in 2011 to specialize in currency markets and commodities. In 2014 he published a book on gold and the gold market, followed by a new updated edition in 2018.

This report is not an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance.