Daily Technical Analysis by XtreamForex

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BITCOIN – $8,000 TICK, NEXT!

A choppy start to the day, but with Bitcoin avoiding an early sell-off, it’s a day of consolidation at worst.
Bitcoin jumped by 8.52% on Tuesday, following on from Monday’s 4.33% gain and last week’s 16.5% rally, to end the day at $8,376.2.
It was onwards and upwards throughout the day, with barely any red on the chart, as Bitcoin moved from a start of a day intraday low $7,690 through the day’s first major resistance level at $7,901.2 and second major resistance level at $8,083.6 to a late in the day intraday high and new swing hi $8,506.7, coming within reach of the third major resistance level at $8,529.6 before easing back to $8,300 levels.
The moves through the day left little doubt of Bitcoin’s bearish trend reversal, with the near-term bullish trend having been formed at 24th June’s swing lo $5,755
For the Bitcoin Bulls, the first part of the recovery mission is complete, with Bitcoin gaining strong momentum in the run through to $8,000 levels, side lined investors jumping in on hopes of a move back through to $10,000, while investors exposed to altcoins also moved back into Bitcoin that has outperformed the likes of Bitcoin Cash and left Litecoin and Ripple’s XRP in the dust, the Bitcoin dominance reflecting the shift in sentiment since May’s dip.
On the news wires, talk of the SEC bringing the Bitcoin ETF debate back to the table provided support through the start of the week, while last week’s talk of the cryptomarket posing no threat to global financial stability, as outlined by the FSB and regulators, eased market fears of a heavy handed set of new rules and regs that could cripple the market, which had kicked off the Bitcoin rebound that led to Bitcoin’s 16.5% gain last week.
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CRUDE OIL, GOLD PRICES MAY RETREAT AS DOVISH ECB BOOSTS US DOLLAR

CRUDE OIL & GOLD TALKING POINTS:
Crude oil prices rise as EIA reports dramatic inventory drawdown
Gold prices swing to range top courtesy of Trump/Junker meeting
Dovish ECB might boost US Dollar, weighing on commodity prices
Crude oil prices shot higher as EIA inventory data showed stockpiles shed 6.15 million barrels last week, an outflow nearly three times larger than the projected 2.23 barrel draw. The outcome likewise dwarfed the larger 3.16 million barrel decrease signaled in a private-sector estimate from API.
Gold prices swung higher as the US Dollar weakened, boosting the appeal of the standby anti-fiat alternative. The greenback drifted lower as traders reduced exposure ahead of the closely watched meeting between US and European Commission presidents Donald Trump and Jean-Claude Junker, respectively.
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GOLD PRICES MAY DROP AS US GDP BOOSTS FED OUTLOOK, DOLLAR

GOLD & CRUDE OIL TALKING POINTS:
Gold prices fall as dovish ECB translates into stronger US Dollar
Crude oil prices edge up on inventory data, Saudi shipment halt
US GDP data might keep gold under pressure, oil impact unclear
Gold prices turned lower as the US Dollar returned to the offensive, tarnishing the appeal of anti-fiat alternatives. An early retracement of the prior day’s downswing was compounded by a dovish ECB policy announcement, which sank EUR/USD and echoed as broader support for the greenback (as expected).
Meanwhile, crude oil prices continued to edge higher, finding continued support in an impressive set of EIA inventory figures. News that Saudi Arabia suspended shipments through the Bab el-Mandeb Strait after Houthi attacks on two of its tankers probably helped as well.
GOLD PRICES VULNERABLE AS US GDP DATA BOOSTS DOLLAR
The spotlight now turns to US GDP data. Economists expect to see that the annualized growth rate ticked up to 4.2 percent in the second quarter, the highest in almost four years. A strong result may boost bets on a fourth Fed rate hike in 2018. Its probability is now priced in at 57.8 percent.
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BITCOIN – A BIG FEW DAYS FOR THE BULLS TO GET THROUGH

Sub-$8,200 support has kept Bitcoin at bay, but another pullback to $8,100 levels could see the week’s gains at risk. It’s a key part of the week.
Bitcoin fell by 2.46% on Wednesday, partially reversing Tuesday’s 8.52% gain, to end the day at $8,183.1.
In a relatively choppy start to the day, Bitcoin moved through to a start of the day intraday high $8,488.1, coming up short of the first major resistance level at $8,691.93 and Tuesday’s $8,506.7 high, before a mid-morning reversal saw Bitcoin slide through to a mid-afternoon intraday low $8,073.
A late in the day recovery saved Bitcoin from heavier losses on the day, which would have seen Bitcoin slide back to sub-$8,000 levels to bring the first major support level at 7,857.23 and, more importantly, the 23.6% FIB Retracement Level of $7,857 into play.
For the Bitcoin bulls, Wednesday’s pullback was more of a consolidation than a shift in sentiment, with Bitcoin finding the necessary support through the day to avoid sub-$8,000 levels.

In spite of the day’s loss, the near-term bullish trend formed at 24th June’s swing lo $5,755 remained intact, with Bitcoin managing to steer clear of the 23.6% FIB Retracement Level of $7,857, though Bitcoin will need to break back through Tuesday’s swing hi $8,506.7 to avoid another reversal similar to the one seen back in early May, where a bullish trend had seen Bitcoin climb to $9,999 before an extended bearish trend formed and continued through to late June.
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GOLD PRICE PREDICTION – GOLD SLIPS FOLLOWING ECB DECISION

Gold prices edged lower after running into resistance near the 10-day moving average at 1,230, following the ECB meeting where the central bank left rates unchanged and said stimulus is still needed. The ECB was slightly more confident on growth and inflation and is poised to end its quantitative easing program in December and hold rates steady until the summer of 2019. Support on the yellow metal is seen near the July lows at 1,211 and then the July 2017 lows at 1,204. Momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. Softer than expected U.S. Durable goods data helped capped the greenback, which has placed a floor under gold prices.
ECB left policy rates on hold and confirmed the guidance on QE
ECB left policy rates on hold and confirmed the guidance on QE, with net asset purchases expected to be reduced from October and phased out at the end of December this year. Rates are still expected to remain unchanged at least through the summer of 2019, so at least in the initial statement no clarification on whether that means until the end of September next year.
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EURO FORECAST: EURO UNLIKELY TO FIND DIRECTION BETWEEN JULY CPI OR Q2’18 GDP

Fundamental Forecast for EUR/USD: Neutral
– The Euro slipped at the end of the week after ECB President Draghi made clear that no rate hikes are coming for a year or more.

– Neither the July Eurozone Consumer Price Index or the Q2’18 Eurozone GDP release will materially impact rate expectations, and therefore, the Euro.

The IG Client Sentiment Index has shifted to a ‘mixed’ outlook from ‘bullish’ earlier last week.

The Euro struggled in the second half of the week, finishing as the third-worst performing major currency. Knocked lower by the European Central Bank and President Mario Draghi’s press conference on Wednesday, EUR/CAD led the way lower by -1.22%, while EUR/USD dropped by -0.57%. But with EUR/CHFand EUR/GBP pushing higher, it’s too soon to say that a broad bearish bias for the Euro is appropriate.

Even though the ECB’s policy meeting this week resulted in a weaker Euro over the course of President Draghi’s press conference, there was no significant shift in current policy or future expectations, so we shouldn’t necessarily be anticipating Thursday’s meeting to be ground zero for a bearish trend to start anew.

As was anticipated ahead of the meeting, the ECB’s July policy statement – and Draghi’s press conference – were near carbon copies of June’s iteration, insofar as the ECB did not move on rates, change its expected timeline for ending its QE program (December 2018), or change its expected timeline for its first rate hike (summer 2019). Against this backdrop, the Euro may be entering a period where, due to monetary policy being on a preset course, it is not the dominant currency in any pairing (i.e. EUR/CAD, EUR/GBP, or EUR/USD, etc.) for the foreseeable future.
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BITCOIN FACES DIFFICULTIES WITH GROWTH OVER 8K

This week, many market players have been betting that the market has passed the bottom and is moving towards highs at $20K in anticipation of new projects, the launch of ETF’s and institutional money. But it may well be that the increase observed in July is all that the cryptomarket could demonstrate in the upcoming months.
The Bitcoin course (BTC) fell below $8.000 on the news that the US SEC had rejected the second Winklevoss twins’ attempt to launch Bitcoin ETF, which negatively affected the prospects of all similar projects. The expectation that the regulator would allow ETF launches have been the main growth driver in recent weeks, and now the market can face a serious rollback.

As of Sunday morning, the benchmark cryptocurrency lost 0.37%% trades slightly above $8100 after a drop below $8000 on Thursday and Friday. The total market capitalization of the cryptocurrency market fell from $302 bln. to $296 bln. The record number of bitcoin contracts on CME makes cryptocurrency vulnerable if traders start to wind down their positions.
This week, many market players have been betting that the market has passed the bottom and is moving towards highs at $20K in anticipation of new projects, the launch of ETF’s and institutional money. But it may well be that the increase observed in July is all that the cryptomarket could demonstrate in the upcoming months.
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USD/JPY FUNDAMENTAL WEEKLY FORECAST – WILL BOJ TWEAK YIELD CURVE CONTROL SETTINGS ON TUESDAY

The focus this week for investors will be on central bank monetary policy statements from the U.S. Federal Reserve and the Bank of Japan, and a slew of U.S. economic data. The BOJ begins its policy meeting on Monday with its statement on monetary policy due on Tuesday. Investors expect the BOJ to make no policy change. However, there is increasing speculation the BOJ may tweak its yield curve control settings in part because of lower bank profitability and muted inflation in Japan.
The Japanese Yen rose sharply early last week on reports that the Bank of Japan could adjust its monetary policy to make the program more sustainable. According to Reuters, the BoJ was holding preliminary talks on making changes to its interest-rate targeting and stock-buying techniques. Any such shift would come years after BoJ Governor Haruhiko Kuroda started a massive bond buying initiative in 2013 to help eradicate deflationary pressures and buoy prices.
However, the central bank did try to make it clear that this wasn’t a tightening policy although the reaction in the markets suggested it was moving away from its easy money policy.
For the week, the USD/JPY settled at 111.016, down 0.446 or -0.40%.
After that initial reaction on Monday, the Dollar/Yen settled into a trading range as investors began to doubt that the BoJ will change its stimulus program when it meets next week. Helping to stabilize and consolidate the Forex pair was a sharp rise in U.S. Treasury yields.The rest of the week, the USD/JPY treaded water in reaction to U.S. economic data and ahead of this week’s Bank of Japan Monetary Policy meeting.
In Japan, Flash Manufacturing PMI was lower than expected and the previous read at 51.6. Additionally, BOJ Core CPI came in at 0.4%, versus a 0.6% estimate and 0.5% previous read. Tokyo Core CPI was 0.8%, higher than the 0.7% forecast and previous read.
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BITCOIN BACK IN THE RED, WITH VOLATILITY TESTING THE BULLS

It’s another poor start to the day, with Bitcoin managing to steer clear of support levels early. Holding on to $8,100 levels will be key.
Bitcoin fell by 0.63% on Monday, following on from Sunday’s 0.17% loss, to end the day at $8,168.7.
A choppy start to the day saw Bitcoin recover from a fall through the first major support level at $8,125.57 to a morning low $8,065.1, bouncing back to an early intraday high $8,301.7, just short of the first major resistance level at $8315.87.
Negative sentiment across the market weighed through the late morning and early afternoon, with Bitcoin sliding back through the first major support level at $8,125.57 and second major support level at $8,029.13 to an intraday low $7,861.2 before a late afternoon recovery.
The break back through the major support levels by the day’s end was certainly a positive, with Bitcoin also managing to steer clear of the 23.6% FIB Retracement Level of $7,857 on the day, the moves affirming the near-term bullish trend that was formed back at 24th June’s swing lo $5,755.
While the 2nd half of the day recovery saved Bitcoin and the broader market from some quite heavy losses, Bitcoin’s recent string of weekly gains have come in spite of some choppy moves and the start of the week will raise some concerns over what lies ahead, with $8,200 continuing to be a key level, though the positive for the Bitcoin bulls was the level of support at sub-$8,000 levels.
On the news front, there was no particularly negative news to cause the slide to sub-$8,000 levels, with investors continuing to fret over whether the SEC will approve any Bitcoin ETFs to support the much needed inflow of institutional money.
On the regulatory front, a delay to the roll out of unified rules and regulations by the G20 will leave the markets on tender hooks until October, the deadline having been previously set to today. The delay could force the South Korean government to introduce interim regulations to safe guard investors, which could weigh on the broader market should anti-money laundering rules and requirements for crypto exchanges to step up security levels be too cumbersome.
At the time of writing, Bitcoin was down 0.85% to $8,110, with Bitcoin pullback from a start of a day $8,178 high to a morning low $8,095 before recovering to $8,100 levels, the early moves through the day leaving the major support and resistance levels untested.
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GOLD PRICES MAY FALL ON HAWKISH FED, US BOND SUPPLY BOOST

GOLD & CRUDE OIL TALKING POINTS:
Gold prices stalling before Fed rate decision, Treasury funding news
Crude oil prices rise on UK supply disruption, US auto rules proposal
EIA production report, API inventory flow statistics due for release
Gold prices continued to struggle for lasting direction Monday, with traders understandably unwilling to commit one way or another ahead of the upcoming Fed rate decision. A hike is not expected but officials might dial up hawkish rhetoric in the policy statement to assert their independence after US President Donald Trump talked down rate hikes recently.
The fading appeal non-interest-bearing assets is likely to hurt the yellow metal in this case. The fall may be amplified as the US Treasury reveals how it plans to fund a deficit made larger by a $1.5 trillion tax cut and $300 billion in new spending. Officials said today that third-quarter borrowing will be $329 billion, up from April’s $273 billion projection. Added issuance may amplify upward pressure on yields.

CRUDE OIL EYES EIA OUTPUT REPORT, API INVENTORY DATA
Crude oil prices moved higher as three UK oil fields shut down ahead of strikes. Meanwhile, a joint draft report from the National Highway Traffic Safety Administration and the Environmental Protection Agency said a Trump administration proposal to halt higher auto efficiency requirements after 2020 will boost US fuel consumption by 500k barrels per day.
From here, the spotlight turns to monthly EIA production statistics as well as the API estimate of weekly inventory flows. The former will help inform bets on the extent to which growing US output can offset demand pressures. The latter will be judged with reference to official figures due Wednesday that are projected to report a 2.26 million barrel outflow.
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