KVB Market Analysis | 7 Oct: Bitcoin Faces 6% Drop Amid Geopolitical Tensions

Product: XAU/USD

Prediction: Increase

Fundamental Analysis:

Gold price trades in negative territory for the fourth consecutive day near $2,650 on Monday during the early Asian session. The further upside in the US Dollar after the upbeat US Nonfarm Payrolls on Friday exerts some selling pressure on the yellow metal. Heading into the key data risk, some repositioning trade leads to a modest US Dollar (USD) pullback from a one-month top touched on Thursday and lends some support to the Gold price. Apart from this, persistent risks stemming from the ongoing conflicts in the Middle East turn out to be another factor benefiting the safe-haven precious metal. This, in turn, suggests that the path of least resistance for the XAU/USD is to the upside, which remains within the striking distance of the all-time peak touched last week.

Technical Analysis:

From a technical perspective, the range-bound price action might still be categorized as a bullish consolidation phase against the backdrop of the recent strong runup to the record peak. Moreover, oscillators on the daily chart are holding comfortably in positive territory and have also eased from the overbought zone. This, in turn, favors bullish traders and suggests that the path of least resistance for the Gold price remains to the upside. In the meantime, the $2,672-$2,673 area could offer immediate resistance ahead of the $2,685-2,686 zone, or the all-time high touched last week. This is closely followed by the $2,700 mark, which if conquered will set the stage for an extension of a well-established multi-month-old uptrend.

Product: USD/JPY

Prediction: Increase

Fundamental Analysis:

The Japanese Yen (JPY) retraces recent gains following comments from Japans ministers on Friday. Japan's Prime Minister (PM) Shigeru Ishiba stated that overcoming deflation is the top economic priority, with economic growth serving as the foundation for fiscal stability. Ishiba pledged to swiftly compile an economic package aimed at easing the impact of rising costs on households. He also emphasized the importance of strengthening ties with like-minded nations to complement Japan's alliance with the United States (US), while pursuing a regional security policy that balances diplomacy with military strength.

Technical Analysis:

USD/JPY trades around 146.50 on Friday. The daily chart analysis shows that the pair could attempt to break above the ascending channel pattern, indicating a strengthening bullish bias. Additionally, the 14-day Relative Strength Index (RSI) remains above the 50 mark, reinforcing the continuation of the bullish trend. Regarding the upside, the USD/JPY pair is facing resistance close to the upper boundary of the ascending channel, near the five-week high of 147.21, which was last reached on September 3. A breakout above this level could enable the pair to test its seven-week high at 149.40. In terms of downside, the USD/JPY pair may find support at the nine-day Exponential Moving Average (EMA) around 144.97, followed by the lower boundary of the ascending channel at 143.60. A drop below this level could push the pair toward 139.58, marking its lowest point since June 2023.

Product: BTC/USD

Prediction: Increase

Fundamental Analysis:

Bitcoin (BTC) price declined over 6% this week until Friday as the escalation of the conflict between Iran and Israel added fuel to this sell-off. The decline was also supported by falling institutional demand for ETFs, which recorded outflows of more than $280 million this week. Some analysts suggest that the rising geopolitical conflicts could further escalate, pushing Bitcoin prices even lower potentially to $55,000. However, from a technical point of view, bulls seem to be holding strong at a critical support level.

Technical Analysis:

Bitcoins weekly chart shows that, after three straight weeks of rally in September, the biggest crypto asset by market capitalization faces resistance after testing the descending trendline, declining over 6% so far until Friday. This descending trendline (formed by connecting multiple weekly closes since the end of March) roughly coincides with the weekly resistance level of around $65,800, making it a key resistance zone. If BTC continues its decline, it could fall further to retest its next weekly support around $55,400, which roughly coincides with its 50-weekly Exponential Moving Average at $55,336.