BTC, ETH dominance warn of cycle change
Bitcoin has added 7.4% to $24.6K in the last 24 hours. It's not the magnitude of the move that draws attention but rather the ability to rewrite previous local highs. Ethereum has gained 13% to $1900 in the same time frame. Top altcoins add between 4.7% (BNB) and 13.4% (Solana).
The total capitalisation of the crypto market, according to CoinMarketCap, rose 7.4% to $1.16 trillion overnight.
Bitcoin jumped on Wednesday, and stock indices on US inflation data showed a more robust cooling, fuelling speculation that the Fed will soon soften its tone.
Bitcoin has added 7.4% to $24.6K in the last 24 hours. It's not the magnitude of the move that draws attention but rather the ability to rewrite previous local highs. Ethereum has gained 13% to $1900 in the same time frame. Top altcoins add between 4.7% (BNB) and 13.4% (Solana).
The total capitalisation of the crypto market, according to CoinMarketCap, rose 7.4% to $1.16 trillion overnight.
Bitcoin jumped on Wednesday, and stock indices on US inflation data showed a more robust cooling, fuelling speculation that the Fed will soon soften its tone.
On Thursday morning, BTCUSD, after three weeks of unsuccessful attempts, managed to gain ground above $24K and quickly moved into the $24.5K area. These are the highest levels since mid-June when bitcoin literally crashed. Now up to $30K, there are no significant technical obstacles.
On the other hand, the benchmark crypto pair is still moving within a moderate upward trend, with the upper boundary now at $25.5K. Moving within this range, BTCUSD will be at 30K only by October.
Ethereum is showing much more resurgence right now. Expectations of an imminent switch to proof-of-stake are a significant market driver. As a result, ETHUSD has already recouped all losses since June, recovering to previous consolidation levels.
On the other hand, the benchmark crypto pair is still moving within a moderate upward trend, with the upper boundary now at $25.5K. Moving within this range, BTCUSD will be at 30K only by October.
Ethereum is showing much more resurgence right now. Expectations of an imminent switch to proof-of-stake are a significant market driver. As a result, ETHUSD has already recouped all losses since June, recovering to previous consolidation levels.
Ether's dominance has recovered to 19.9%. The second most popular cryptocurrency has not had a sustainable share since 2017, but last year we saw a steady climb towards these levels due to the increased use of Ether in other projects. The next significant milestone for ETHUSD looks to be the $2300 area, where the 200-day moving average and the lows of the dips earlier in the year are concentrated.
We also note the drop in the bitcoin dominance index to 40%. For the past five years, a dip under this mark has often been followed by aggressive profit-taking in altcoins, whether we are in bull or bear markets. In our case, it may not mean the impending collapse of altcoins but rather an acceleration of BTC's growth.
We also note the drop in the bitcoin dominance index to 40%. For the past five years, a dip under this mark has often been followed by aggressive profit-taking in altcoins, whether we are in bull or bear markets. In our case, it may not mean the impending collapse of altcoins but rather an acceleration of BTC's growth.
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Dollar confirmed bearish reversal
The US inflation data published on Wednesday triggered a strong and unequivocal reaction from financial markets, allowing more certainty about the start of a new market cycle.
Yesterday's report showed close to zero price growth for July, while annual CPI growth slowed from 9.1% to 8.5%. An impressive contribution came from the fuel side. The slowdown was faster than forecast, causing markets to revise near-term expectations fundamentally. The main scenario was a 50-point Fed rate hike on 21 September, up from 75.
Yesterday's report pushed the dollar index under 105, where the lows of the pullback to early August were. Thus, a sequence of increasingly lower lows and lower highs is forming in the DXY. The index has fallen below May and June peaks, indicating that the market is ready to move further downwards.
The US inflation data published on Wednesday triggered a strong and unequivocal reaction from financial markets, allowing more certainty about the start of a new market cycle.
Yesterday's report showed close to zero price growth for July, while annual CPI growth slowed from 9.1% to 8.5%. An impressive contribution came from the fuel side. The slowdown was faster than forecast, causing markets to revise near-term expectations fundamentally. The main scenario was a 50-point Fed rate hike on 21 September, up from 75.
Yesterday's report pushed the dollar index under 105, where the lows of the pullback to early August were. Thus, a sequence of increasingly lower lows and lower highs is forming in the DXY. The index has fallen below May and June peaks, indicating that the market is ready to move further downwards.
We also note that the Dollar Index closed on Wednesday below the 50-day moving average, which has served as a support line for the uptrend since June last year.
The strength of the most popular currency pairs with the Dollar is also in favour of breaking the trend. AUDUSD gained almost 2% on Wednesday. A powerful wave of growth in the Aussie took it immediately above 0.7000, a multi-year pivot point, and allowed it to rewrite the two-month highs.
New Zealand's kiwi also proved a break of the medium-term trend by sharply moving up from its 50-day average.
We also saw sharp moves from key levels in the stock market, where the S&P500 and Nasdaq interrupted a sluggish correction and consolidated above previous local highs, thus stopping talk that the current bounce will end where it did in June.
The strength of the most popular currency pairs with the Dollar is also in favour of breaking the trend. AUDUSD gained almost 2% on Wednesday. A powerful wave of growth in the Aussie took it immediately above 0.7000, a multi-year pivot point, and allowed it to rewrite the two-month highs.
New Zealand's kiwi also proved a break of the medium-term trend by sharply moving up from its 50-day average.
We also saw sharp moves from key levels in the stock market, where the S&P500 and Nasdaq interrupted a sluggish correction and consolidated above previous local highs, thus stopping talk that the current bounce will end where it did in June.
It is also noteworthy that the reversal of the Dollar's bullish rally is well within the historical pattern whereby the Dollar's growth momentum starts about six months before the Fed's policy tightening cycle begins and ends six months after the tightening. The starting point in the policy reversal was a change in the QE, not a rate hike as before when such a tool became common.
However, to speak of an unambiguous and prolonged failure of the Dollar is prevented by the Fed and the stronger initial stance of the US economy.
The Fed has much more room to tighten policy than energy-hit Europe or commodity-exporting countries at risk of falling incomes in light of months of declining prices for their export.
Fed officials, including some of the most dovish, continue to reassure the market that policy easing is not to be expected in a year and that the cycle of hikes is far from over.
However, to speak of an unambiguous and prolonged failure of the Dollar is prevented by the Fed and the stronger initial stance of the US economy.
The Fed has much more room to tighten policy than energy-hit Europe or commodity-exporting countries at risk of falling incomes in light of months of declining prices for their export.
Fed officials, including some of the most dovish, continue to reassure the market that policy easing is not to be expected in a year and that the cycle of hikes is far from over.
If we are right and the Dollar continues to retreat from recent highs, the next significant area to look out for is 103.7 - the March 2020 peak and the end of the correction in June. If dollar bulls do not return to buying there as well, the road to 100-101 will open up next.
US PPI fall boosts speculation of peak inflation
US producer prices fell by 0.5% in July, the first decline after 26 months of growth. The year-over-year PPI rate returned to the single-digit territory at 9.8% against a peak of 11.7% in March and 11.3% a month ago.
Producer price trends are a couple of steps ahead of consumer inflation, so the first fall of the index in more than two years further strengthens the market sentiment that the Fed will tighten policy further in smaller steps.
US producer prices fell by 0.5% in July, the first decline after 26 months of growth. The year-over-year PPI rate returned to the single-digit territory at 9.8% against a peak of 11.7% in March and 11.3% a month ago.
Producer price trends are a couple of steps ahead of consumer inflation, so the first fall of the index in more than two years further strengthens the market sentiment that the Fed will tighten policy further in smaller steps.
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This is both good news for financial markets and bad for the USD. For the stock market, falling prices mean lower costs, which have recently held back the economy. Furthermore, weak inflation is a benefit for growth companies as it will allow the Fed to raise rates less and turn more quickly to easing.
The latter thesis is still somewhat controversial, as FOMC officials deny any intention of stopping soon and reversing quickly from a rate hike to a rate cut. Markets have their own opinion, with little confidence in the Fed after its mistake with "transitory" inflation.
As a result, we see a further decline in expectation of the Fed's next moves and a renewed momentum of pressure on the dollar. Next in the spotlight for traders and investors are import prices and the first estimates of consumer sentiment released on Friday, which could contain or reinforce buyers' optimism.
The latter thesis is still somewhat controversial, as FOMC officials deny any intention of stopping soon and reversing quickly from a rate hike to a rate cut. Markets have their own opinion, with little confidence in the Fed after its mistake with "transitory" inflation.
As a result, we see a further decline in expectation of the Fed's next moves and a renewed momentum of pressure on the dollar. Next in the spotlight for traders and investors are import prices and the first estimates of consumer sentiment released on Friday, which could contain or reinforce buyers' optimism.
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#WaveAnalysis #SPX
• S&P 500 rising inside impulse waves (iii) and 3
• Likely to rise to resistance level 4300.00
S&P 500 index recently broke the resistance level 4170.00 (which stopped the earlier waves (4) and 2 in May and June).
The breakout of the resistance level 4170.00 continues the active short-term impulse waves (iii) and 3 – which belong to the sharp intermediate impulse wave (C) from last month.
S&P 500 index can be expected to rise further toward the next resistance level 4300.00 (forecast price for the completion of the active impulse 3).
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• S&P 500 rising inside impulse waves (iii) and 3
• Likely to rise to resistance level 4300.00
S&P 500 index recently broke the resistance level 4170.00 (which stopped the earlier waves (4) and 2 in May and June).
The breakout of the resistance level 4170.00 continues the active short-term impulse waves (iii) and 3 – which belong to the sharp intermediate impulse wave (C) from last month.
S&P 500 index can be expected to rise further toward the next resistance level 4300.00 (forecast price for the completion of the active impulse 3).
📣Trade responsibly with fxpro.com
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#WaveAnalysis
#AUDUSD broke resistance level 0.7050
• Likely to rise to resistance level 0.7150
AUDUSD currency pair recently broke the key resistance level 0.7050 (top of the earlier wave A from the start of August).
The breakout of the resistance level 0.7050 coincided with the breakout of the Fibonacci cluster made out of the 50% Fibonacci correction of the downward impulse from April and the 38.2% Fibonacci correction of the downward wave from June.
AUDUSD can be expected to rise further toward the next resistance level 0.7150 (target price for the completion of the active impulse wave (i)).
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#AUDUSD broke resistance level 0.7050
• Likely to rise to resistance level 0.7150
AUDUSD currency pair recently broke the key resistance level 0.7050 (top of the earlier wave A from the start of August).
The breakout of the resistance level 0.7050 coincided with the breakout of the Fibonacci cluster made out of the 50% Fibonacci correction of the downward impulse from April and the 38.2% Fibonacci correction of the downward wave from June.
AUDUSD can be expected to rise further toward the next resistance level 0.7150 (target price for the completion of the active impulse wave (i)).
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#WaveAnalysis
#Platinum broke resistance level 955.00
• Likely to rise to resistance level 1000.
Platinum recently broke the resistance level 955.00 (top of wave A from June) intersecting with the 61.8% Fibonacci correction of the C-wave from June.
The breakout of the resistance level 955.00 accelerated the active impulse waves (iii) and C – which belong to wave (B) from June.
Platinum can be expected to rise further toward the next round resistance level 1000.00 (target price for the completion of the active impulse (iii)).
📣Trade responsibly with fxpro.com
#Platinum broke resistance level 955.00
• Likely to rise to resistance level 1000.
Platinum recently broke the resistance level 955.00 (top of wave A from June) intersecting with the 61.8% Fibonacci correction of the C-wave from June.
The breakout of the resistance level 955.00 accelerated the active impulse waves (iii) and C – which belong to wave (B) from June.
Platinum can be expected to rise further toward the next round resistance level 1000.00 (target price for the completion of the active impulse (iii)).
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FOMO into cryptocurrencies is not coming back anytime soon
Market picture
Bitcoin rose close to $25K on Thursday but failed to hold on to those heights, pulling back precisely to $24K on Friday morning and losing 2.4% overnight. Ethereum continues to outperform the market, losing 0.2% to $1900. Other top altcoins are losing between 1.5% (XRP, Dogecoin) and 3% (Polkadot).
Total crypto market capitalisation, according to CoinMarketCap, fell 1.4% to $1.15 trillion overnight.
Bitcoin failed to accelerate its rise on Thursday, rewriting two-month highs but failing to hold on to them. This bullish indecision was probably linked to a similar pullback in US stock markets, where buyers are also very timid and unsure.
Investors and traders should prepare themselves that the market will stick to such a pattern in the coming months, and the recovery trend will bear little resemblance to the FOMO-filled rallies rattling the crypto market.
Market picture
Bitcoin rose close to $25K on Thursday but failed to hold on to those heights, pulling back precisely to $24K on Friday morning and losing 2.4% overnight. Ethereum continues to outperform the market, losing 0.2% to $1900. Other top altcoins are losing between 1.5% (XRP, Dogecoin) and 3% (Polkadot).
Total crypto market capitalisation, according to CoinMarketCap, fell 1.4% to $1.15 trillion overnight.
Bitcoin failed to accelerate its rise on Thursday, rewriting two-month highs but failing to hold on to them. This bullish indecision was probably linked to a similar pullback in US stock markets, where buyers are also very timid and unsure.
Investors and traders should prepare themselves that the market will stick to such a pattern in the coming months, and the recovery trend will bear little resemblance to the FOMO-filled rallies rattling the crypto market.
Instead, it will be a period of foundation work, during which the market, stripped of its easy money, will leave the most talented and passionate enthusiasts. They see cryptocurrencies as more than just easy money and hype.
News background
In this regard, many eyes are on Ethereum, where developers have announced the successful migration of the third and largest Goerli test network to the PoS algorithm. The next step will be the merger of the core network, scheduled for September.
The world's largest investment firm, BlackRock, has launched its first bitcoin-based product targeting institutional clients. It sounds encouraging, but so far, it is difficult to isolate any net positive effect in quotes.
News background
In this regard, many eyes are on Ethereum, where developers have announced the successful migration of the third and largest Goerli test network to the PoS algorithm. The next step will be the merger of the core network, scheduled for September.
The world's largest investment firm, BlackRock, has launched its first bitcoin-based product targeting institutional clients. It sounds encouraging, but so far, it is difficult to isolate any net positive effect in quotes.
At the same time, regulatory pressure on the industry is intensifying. Coinbase has reported that the US Securities and Exchange Commission (SEC) sought through the courts' information on listing the company's crypto-assets and proprietary products.
The UN Conference on Trade and Development (UNCTAD) called on world governments to impose additional taxes on cryptocurrency transactions and restrict their advertising.
The CFTC and SEC have proposed requiring significant cryptocurrency hedge funds with more than $500 million in assets under management to report risks associated with digital assets.
The UN Conference on Trade and Development (UNCTAD) called on world governments to impose additional taxes on cryptocurrency transactions and restrict their advertising.
The CFTC and SEC have proposed requiring significant cryptocurrency hedge funds with more than $500 million in assets under management to report risks associated with digital assets.
UK economy slows slightly less than expected
The UK monthly statistics package showed that the economy lost 0.1% in the second quarter (0.2% expected), and the annual growth rate collapsed from 8.7% to 2.9% (2.8% expected). For the month, the decline was 0.6%, half the forecasts.
A similar "better than might have been" is evident in the other indicators released today. Industrial production fell 0.9% against an expected 1.3% and left something from the last month's gain. Construction dipped 1.4%, against a forecasted 2.0%. The service sector lost 0.4% of its volume, the first contraction since last March.
While this data is better than forecast, it is unlikely to inspire buyers of the pound or investors in the stock market. We see more market sensitivity to price data than the economy.
The UK monthly statistics package showed that the economy lost 0.1% in the second quarter (0.2% expected), and the annual growth rate collapsed from 8.7% to 2.9% (2.8% expected). For the month, the decline was 0.6%, half the forecasts.
A similar "better than might have been" is evident in the other indicators released today. Industrial production fell 0.9% against an expected 1.3% and left something from the last month's gain. Construction dipped 1.4%, against a forecasted 2.0%. The service sector lost 0.4% of its volume, the first contraction since last March.
While this data is better than forecast, it is unlikely to inspire buyers of the pound or investors in the stock market. We see more market sensitivity to price data than the economy.
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The GBPUSD is now struggling with downtrend resistance in the form of the 50-day moving average, trying to consolidate higher. On Wednesday, it formally succeeded, but the pound failed to develop the offensive, which might be the first worrying signal that the bears retain control of the markets.
Whether GBPUSD closes the day above 1.22 or below that mark may determine next week's performance. An ability to stay near or rewrite the local highs would be a bullish signal, sending the sterling further into the 1.25-1.2650 range. A close on a weak note or a move under 1.2140 would indicate that the recent rebound was only a temporary correction as part of a long-term downtrend. And in this case, GBPUSD could head down with an intermediate target below 1.2000 and a potential next target around 1.1800.
Whether GBPUSD closes the day above 1.22 or below that mark may determine next week's performance. An ability to stay near or rewrite the local highs would be a bullish signal, sending the sterling further into the 1.25-1.2650 range. A close on a weak note or a move under 1.2140 would indicate that the recent rebound was only a temporary correction as part of a long-term downtrend. And in this case, GBPUSD could head down with an intermediate target below 1.2000 and a potential next target around 1.1800.
A $66 slump could follow oil's ironic rebound
#WTI crude has gained more than 6.5% this week, and this strengthening has a pinch of irony.
Stock indices managed to surpass the highs of the previous pullback, and the weak inflation report's main driver of increased risk appetite.
A sharp slowdown in price growth and a reduction in the fuel component fuelled speculation that the Fed would slow policy tightening. But oil is a risky asset, so the rest of the market enjoyed a rise. The implication is that oil rose this week because the economy showed the effects of its decline in the previous two months.
It is also interesting that the reversal of stock indices from decline to rising was only a few days after oil reached its peak.
WTI crude oil took the initial setback at the beginning of August and is now testing its 200-day MA, a significant long-term trend line, from the downside. We considered the dip below it on the first day of August as an additional confirmation of the trend reversal to bearish.
#WTI crude has gained more than 6.5% this week, and this strengthening has a pinch of irony.
Stock indices managed to surpass the highs of the previous pullback, and the weak inflation report's main driver of increased risk appetite.
A sharp slowdown in price growth and a reduction in the fuel component fuelled speculation that the Fed would slow policy tightening. But oil is a risky asset, so the rest of the market enjoyed a rise. The implication is that oil rose this week because the economy showed the effects of its decline in the previous two months.
It is also interesting that the reversal of stock indices from decline to rising was only a few days after oil reached its peak.
WTI crude oil took the initial setback at the beginning of August and is now testing its 200-day MA, a significant long-term trend line, from the downside. We considered the dip below it on the first day of August as an additional confirmation of the trend reversal to bearish.
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However, we would venture to guess that under macroeconomic pressure, the current rebound in oil is a short-term correction after oversold conditions and that the primary trend of the last two months will remain predominant.
The latest weekly estimates have marked a rise in US oil production to 12.2 million BPD - a new high since April 2020 and a return to a rising trend. Besides, recently, the IEA and OPEC revised their forecasts to a less profound fall in Russian crude production, with cartel output rising. A small production surplus over consumption is forecast, adding pressure on prices.
The latest weekly estimates have marked a rise in US oil production to 12.2 million BPD - a new high since April 2020 and a return to a rising trend. Besides, recently, the IEA and OPEC revised their forecasts to a less profound fall in Russian crude production, with cartel output rising. A small production surplus over consumption is forecast, adding pressure on prices.
Meanwhile, the US continues to sell off strategic stocks, despite stabilisation and a moderate increase in commercial inventories. US policymakers are now focused on bringing the price of oil down as much as possible and are not prepared to stop. The intention to return to restocking only in 2023 works to encourage US companies to invest in production, as the government will have an increased demand for their raw materials in the future.
In addition, we note that the monetary policy tightening that has taken place over the past few months around the world is only beginning to work to slow demand.
The world could find itself in a stagnant or falling demand situation with continued production growth in addition to the surplus production already in the market and the sell-off from reserves.
In addition, we note that the monetary policy tightening that has taken place over the past few months around the world is only beginning to work to slow demand.
The world could find itself in a stagnant or falling demand situation with continued production growth in addition to the surplus production already in the market and the sell-off from reserves.