|BTC/USD => The cryptocurrency falls below 22k
Gold => The commodity rises to a weekly high
DAX => The index falls below 13200
Bitcoin extends its Tesla-inspired selloff
After a strong start last week, which saw Bitcoin jump over 10% to almost 23k, the cryptocurrency then sold off and ended the week over 3.5% lower.
The move came after Tesla’s earnings report disclosed that it had sold around 75% of its bitcoin holding during Q2 to raise cash. Elon Musk cited uncertainties over the COVID position in China as a reason for the firm needing more cash. Some big investors appear to use Tesla’s sale as justification to sell out of their crypto holdings. The Fed’s rate decision later this week will likely be the next major catalyst for the cryptocurrency.
Where next for BTC/USD?
After running into resistance at 24,200 BTC/USD is falling lower.
The move back below the 50 sma combined with the receding bullish bias on the MACD is keeping buyers hopeful of further losses. Sellers need to break below the 20 sma at 21450 in order to test key support at around 20k, the round number and the confluence of the multi-week rising trendline and the multi-month falling trendline, which could prove a tough nut to crack.
A break below here opens the door to 18900 the July 13 low ahead of 17600 the 2022 low. Should the 20 sma hold, buyers will look for a move over 24200 the July high to create a higher high and extend gains to test 25500 the May low ahead of 27800.
Gold rebounds ahead of the Fed
Gold recovered from multi-month lows on Friday after dismal US PMI data lifted the safe haven and as the USD tumbled across the week.
The precious metal climbed above 1730 for the first time in a week as data revealed that the service sector activity in the US contracted in July. Where gold goes from here depends largely on the Federal Reserve, which meets to announce its monetary policy decision on Friday.
Expectations for a 100 basis point rate hike have fallen to around 20%, with the central bank instead expected by 75 basis points. Should the Fed acknowledge an increasing risk of recession, this could lower expectations of aggressive Fed bets in September, which would be Gold positive.
|US composite PMI
|Actual: 47.6 (4.6)
DAX slips ahead of IFO economic sentiment data
The DAX surged 3% last week after Russian gas flow via Nor Stream 1 came back online after 10-days of maintenance, easing fears of Russia using gas as a political weapon.
However, gains in the index were capped by the ECB raising interest rates by 50 basis points and weaker than forecast PMI data, which saw German business activity unexpectedly contracted in July, as the composite PMI fell to its lowest level in 2 – years.
Today the index is falling, tracking Asian markets lower as growth concerns rise. Attention moves to the German IFO business sentiment index, which is expected to fall again in July.
|German composite PMI
Ger. IFO business sentiment
|Actual: 48 (3.3)
Expected: 90.5 (1.8)
Support can be found at 12955 (20 sma) and 12650 (June low).
Resistance for the index can be seen at 13450 (last week’s high) and 13850 (May 25 high).