KVB Market Analysis | Sep 2: Bitcoin Nears $1.3 Billion Liquidation Risk Amid Market Volatility

Product: XAU/USD

Prediction: Increase

Fundamental Analysis: 

Although gold still has a lot of potential to rise, some caution is entering the market. Investors are waiting to see how the health of the U.S. labour market will affect the Federal Reserve's decisions next month. Analysts say that because of recent price movements, investors are taking a wait-and-see approach. This week’s job data is expected to cause some market fluctuations during the shortened trading week. The North American market will be closed on Monday, September 2, for the Labor Day long weekend. As the gold market deals with the strength of the U.S. dollar, an interesting dynamic is forming. Even though gold prices have solidly surpassed $2,500, there’s no bubble or extreme overbuying. However, analysts note that the weakening U.S. dollar may have gone too far, which could pose risks to precious metals.

Technical Analysis: 

The short-term technical for gold suggests that the bullish trend is still in place. The Relative Strength Index (RSI) on the daily chart remains around 60, and gold prices continue to trade in the upper half of the upward channel since mid-February. In the short term, gold has support in the $2,500-$2,490 (a psychological level). The next support level is at $2,475, which is also where the 20-day Simple Moving Average (SMA) is located. If gold’s daily closing price falls below $2,475, it could lead to a further decline towards $2,420 (the 50-day moving average). On the upside, a static resistance seems to have formed at $2,530. If gold rises above this level and confirms it as support, it might target the upper limit of the channel at $2,600.

Product: USD/JPY

Prediction: Increase

Fundamental Analysis: 

Japanese Economy Minister Yoshitaka Shindo said the economy is expected to recover gradually as wages and incomes improve. He mentioned that the government will work closely with the Bank of Japan to implement flexible economic policies. The USD/JPY pair was supported by a stronger US Dollar due to higher Treasury yields. However, further gains in the Dollar might be limited as expectations grow for a 25 basis point rate cut by the US Federal Reserve in September. Moderate US Consumer Price Index (CPI) data has led to debate, with traders favouring a 25 basis point cut and a 36% chance of a 50 basis point cut.

Technical Analysis: 

The USD/JPY pair shows a downward trend, even though it's above $146.00. The Relative Strength Index (RSI) suggests mixed momentum—it's in bearish territory but pointing upward. Short-term buyers are in control, but they need to push the price to $146.93 and $148.46 before reaching the recent high of $149.39 from August 15. On the downside, if USD/JPY falls below the Tenkan-Sen line, it could drop to the recent low of $143.44 from August 26. If losses continue, sellers may target the August 5 low at $141.69.

Product: EUR/USD

Prediction: Decrease

Fundamental Analysis: 

The European Central Bank (ECB) recently noted that there was no strong reason to cut interest rates last month. However, they warned that this could be reconsidered in September due to the ongoing impact of high rates on economic growth. Lower-than-expected inflation data in Germany for August might challenge the ECB’s cautious stance. With advanced inflation data for the Eurozone coming on Friday, a similar surprise could lead the ECB to consider a rate cut on September 12. If the US Federal Reserve also cuts rates, the policy gap between the Fed and ECB might narrow, potentially boosting the EUR/USD.

Technical Analysis: 

The EUR/USD is expected to test its 2024 high of $1.1201 (reached on August 26), followed by the 2023 peak of $1.1275 (from July 18), and then the $1.1300 round level. On the downside, the next target is the weekly low of $1.0881 (from August 8), followed by the important 200-day Simple Moving Average (SMA) at $1.0852. The upward trend should continue as long as the pair stays above the 200-day SMA. The four-hour chart shows a slight increase in downward momentum. Initial resistance is at $1.1201, with immediate support at $1.1055, followed by the 100-SMA at $1.1046 and the 200-SMA at $1.0960. The Relative Strength Index (RSI) has dropped to around 35.

Product: BTC/USD

Prediction: Increase

Fundamental Analysis: 

According to CoinGlass, if Bitcoin falls below $56,000, major centralised exchanges like Binance, OKX, and Bybit could see long positions worth $465 million liquidated. If Bitcoin rises above $60,000, short positions worth $860 million could be liquidated on these exchanges, making the upcoming price movements important to watch. CoinGlass explains that their liquidation map shows a visual forecast of potential liquidations in the futures crypto market based on past price movements. While small clusters of liquidations have minimal market impact, large clusters close in price could cause significant market shifts if liquidated simultaneously. Bitcoin’s price might also be affected by U.S. government sales of over 203,000 Bitcoins, worth $12.1 billion. Additional selling pressure from Mt. Gox and the U.S. government could extend Bitcoin's volatility into September.

Technical Analysis: 

The immediate support level for Bitcoin is $57,000. If the price rises from its current level, buyers will try again to break above the 20-day moving average. If successful, Bitcoin could climb to $65,000. The 50-day Simple Moving Average (SMA) at $62,020 might act as resistance, but it's expected to be broken. On the other hand, if the price continues to drop and falls below $57,000, it would indicate that sellers are still in control. This increases the risk of falling below $55,724. If this support level breaks, Bitcoin could drop to $49,000.

Market Analysis Disclaimer: 

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