Gold remains in a descending broadening wedge formation since July 2020
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We asked BitGet's analyst about his views on the future of gold prices and the possible Bitcoin price range at the end of the week full of macoeconomic events.
What's next for gold prices, after rising 16% in 3 months and after pretty good data from the U.S. economy for Q4 2022?
Last 3 months brought gold very close to the all-time highs. General audience is obviously extremely bullish on this asset, but technical analysis shows a more objective picture of the current situation. Gold remains in a descending broadening wedge formation since July 2020. Right now it is struggling against one of the final resistances standing in the way to all-time highs. Technically, there are 3 more or less probable scenarios in this case.
Bearish one. The resistance zone so close to ATH (all-time high) price is too strong, so gold gets rejected. The trend reverses and the value of gold follows the formation. Based on the previous history, such retracement might take up to 9 months. At the start of Q4 2023 the lower band of wedge places itself around 1580 USD. According to TA (technical analysis) this is a scenario with a low percentage of happening. To occur it requires the global economy to deal with the first half of 2023 extremely well.
Bullish one. Price goes through the resistance and afterwards retests it. Filling these conditions within the incoming weeks leaves gold almost in the price discovery zone. It means the value of assets is determined purely by the demand and the supply. In this case the force driving the gold price up is the global GDP, which is totally crushed in the first half of 2023. This scenario goes along with the expectations of the new lows (higher lows or lower lows) for the global markets by the end of Q2 2023. Every downward movement of markets makes gold an attractive safe haven for their funds.
Still bullish, but in a higher time frame. Quite probable according to the TA. Gold bounces off resistance as global markets remain in bear market relief rallies. Then it retests former ATH from 2011-12 and 1W 200 EMA. Both of them while acting as support result in a great impulse to the upward movement. Therefore, those two confluences are a great catalyst for the gold upward movement. This way price prints one of the most popular Wyckoff schematic with price pivoting in the middle of broadening wedge to create Head And Shoulders formation. This eventually ends in breaking out and going for the price discovery area.
Bitcoin has been gaining for 4 weeks straight, but it's a tough week ahead. How high could be price of Bitcoin on Friday evening?
The price could go as high as 25k USD$ per Bitcoin, if the necessary conditions are met. Although it’s important to remember there is a high chance of price volatility in the markets and the returns are not guaranteed.
First of all, the recent Bitcoin movement is highly related to DXY weakness and upward momentum of the S&P 500. This double impulse brought BTC to the price level we see today. The uncertainty on the market results from the high time frame pivotal position of both DXY and the S&P 500. First of them barely holds around the crucial area of support, while the latter one is on the verge of breakout & trend reversal.
Therefore, the incoming FOMC decision regarding interest rates will set up the pace for in coming weeks. Most probable one of the forecasted scenarios is hiking rates by 25bps. This decision is already priced in current trends, but as people sell the news, we may encounter a dip in all markets.
Increasing rates by 50bps would crush DXY hopes for a bounce. This scenario is quite bullish for Bitcoin and other cryptocurrencies, as it means rallying continuation. Although the probability of this happening is very low.
On the other hand, a positive impulse for DXY means retracement for the crypto market. Therefore, any “positive” surprise by FOMC means Bitcoin diving down at least to the last strong range. This forecast is the least likely to happen.
