Bitcoin has been range bound for the month and has significantly outperformed the price drops of gold and silver. At $64,650, Bitcoin has not moved significantly for about four weeks. Conversely, the precious metals price of gold is down about 15 percent from its high earlier this year, while the silver price is down over 35 percent since mid-June. Stocks have corrected slightly for a more limited decline.
This divergence between assets is not the picture of an outright sell-off; instead, it appears precious metals are the weak horse here and Bitcoin and stocks continue to support price in their key areas. The end product is three markets doing different things under the same macroeconomic picture; relative strength is as important as price.
Bitcoin is changing hands in a narrow range
Bitcoin (BTC) remains at around $64,676 and has barely moved from the daily pivot point at $64,617. Bitcoin has managed to rebound and move back towards the high it reached early in July ($65,544) after its low in late June around $57,747, but it hasn’t managed to climb further. Bitcoin has been stuck trading within a narrow price range for almost a month now.
We also see this balance in the momentum oscillators. The MACD and the RSI both sit in the neutral zone, signaling that sellers do not currently hold an upper hand nor do they have buyers in the driving seat. The market appears to be waiting for an additional catalyst in which to decide upon a direction.
The support level still holds favorably. With 23.6 percent and 50 percent Fibonacci retracements at $63,704 and $61,645, respectively, which supported the price on pullbacks during recent sessions. However, a strong breakthrough will result in major resistance on the upper side. The first major resistance on the upper side is at 127.2 percent extension, $67,664; then $70,362 and $73,340 if bulls extend their rally.
So the longer the price is stuck in this tight range, the more people will be focused on which way the eventual price will go, either up or down. Low volatility has to eventually turn into high volatility prices, and we are heading for that either through a support level breakdown or a resistance level break. Short-term swings would mean nothing until that is out of the way.
The precious metals are facing the market pressure
Gold has failed to climb above the earlier highs of recently and is now trading at levels close to $4,011. A cluster of support below the metal ranging from $3,970 to $4,050 kept a further free fall in check, but every bounce up ended around resistance ranging from $4,080 to $4,150. The market bulls will need to overcome this range to make any headway.
But silver was sold even harder. After topping out around $88.50 in the first half of June, it has slid to about $56.88, down more than a third in a little over two weeks.
The metal has repeatedly tested support around $56.70, but each rebound has been weak. That suggests sellers remain active and buyers have not yet regained enough strength to reverse the trend. Compared with Bitcoin’s stable trading range, silver continues to show much stronger bearish momentum.
Stocks are resting on the stable side
Currently trading at about $7,457, the S&P 500 is trading about 2 percent lower from recent highs around $7,600. Despite a small pullback from highs, the index hasn’t experienced significant downside if we put it in comparison with the precious metals.
If anything, its resiliency implies investors haven’t abandoned the risk trade across the board. Higher earnings forecasts, solid economic numbers, and institutional flow into the market should be able to keep equity indices on or near record levels even in a world where everything else seems to be faltering.
