Digital currency market turns lower as traders book profits
The broader cryptocurrency market turned lower this week as traders started to book profits after the strong start to the month of January. Bitcoin headed back towards the $8,300 support level after briefly trading above the $9,000 resistance level last weekend. Altcoins also came under pressure, with both Litecoin and Ethereum failing to move above their 200-day moving averages. Market participants looked past positive news surrounding the recently launched Bitcoin options trading on the CME exchange, which showed a sharp increase in trading volumes over a one-week period.
- The BTCUSD pair is only bullish while trading above the $8,500 level, key resistance is found at the $9,000 and $9,300 levels.
- The BTCUSD pair is only bearish while trading below the $8,500 level, key support is located at the $8,000 and $7,700 levels.
The Canadian dollar came under pressure against the greenback this week after the Bank of Canada noted that an upcoming rate reduction could be on the cards. The USDCAD pair moved towards the 1.3200 level as the Bank of Canada kept the rate unchanged and added dovish commentary inside the January policy statement. The central bank said that interest rates could be reduced if the economic downturn in the global economy continues. The change in policy tone caught traders off-guard, as the Bank of Canada had been seen as one of the more bullish central banks.
- The USDCAD pair is only bearish while trading below the 1.3160 level, key support is found at the 1.3000 and 1.2910 levels.
- If the USDCAD pair trades above the 1.3160 level, buyers may test towards the 1.3200 and 1.3250 resistance levels.
The British pound moved above the 1.3100 level against the US dollar this week, following the releases of better-than-expected unemployment data. The GBPUSD pair recovered sharply higher as traders cheered the positive data, which showed the UK economy motoring along, despite Brexit uncertainty. Market sentiment was also more positive, as investors expected that the Bank of England will not cut interest rates at next week's policy meeting. The GBPUSD pair also appeared more bullish from a technical perspective after holding key support, around the 1.2960 level.
- The GBPUSD pair is only bearish while trading below the 1.3100 level, key support is found at the 1.3000 and 1.2960 levels.
- If the GBPUSD pair trades above the 1.3100 level, buyers may test towards the 1.3200 and 1.3370 resistance levels.
The Japanese yen currency gained strength against a basket of major currencies this week over concerns about the spread of the coronavirus in China. The USDJPY pair dropped as Asian equity markets sold-off over fears about the rapid spread of the coronavirus, which originated in the Chinese city of Wuhan. The Nikkei 225 and other Asian equity bourses moved sharply lower over fears that the virus could affect the global economy. The USDJPY pair reversed sharply from the 110.20 level as investors moved into the safety of the Japanese yen.
- The USDJPY pair is only bullish while trading above the 109.70 level, key resistance is found at the 110.50 and 111.00 levels.
- If the USDJPY pair trades below the 109.70 level, key support is located at the 109.30 and 109.00 levels.