Bitcoin will likely continue pulling back as investors buy the dip. If this happens, it will likely retest the lower side of the flag pattern.

Bullish view

• Buy the BTC/USD pair and set a take-profit at 21,200.
• Add a stop-loss at 19,500.
• Timeline: 1-2 days.

Bearish view

• Set a sell-stop at 19,500 and a take-profit at 18,500.
• Add a stop-loss at 21,000.

The BTC/USD price dropped below the important support at 20,000 as the US dollar index surged to the highest level in over 20 years. It then pared back some of those losses and is trading at 20,200, which was slightly above this week’s low of 19,500.

US dollar index rallies

The BTC/USD price continued its downward trend and hit its lowest level since July 13 of this year. This price was about 22% below the highest level this month.

This decline happened as the US dollar index surged to the highest level in over 20 years following the extremely hawkish statement by Fed officials. In a statement last week, Jerome Powell said that the bank will continue hiking interest rates in the coming months.

The Fed has already hiked interest rates by 225 basis points this year and analysts expect that the bank will hike by either 0.75% or 0.50% in the coming meeting in September.

Bitcoin’s retreat coincided with that of American shares. The Dow Jones and the S&P 500 indices dropped slightly on Monday after they fell by more than 3% on Friday.

The next key catalyst for the BTC/USD pair will be the upcoming US consumer confidence that will come out on Tuesday. This is an important number because consumer spending is the biggest part of the American economy.

Economists expect the data to show that confidence rose slightly in August as consumer and producer inflation eased. Data published this month showed that the headline CPI dropped to 8.7% in July. With gasoline prices easing, there is a likelihood that inflation eased in August too.

The US will also publish the latest house price index (HPI) which is expected to show that prices remained at an elevated level.

BTC/USD forecast

The four-hour chart shows that the BTC/USD pair has been in a strong bearish trend after it peaked at over 25,000 this month. As it dropped, the pair formed a bearish flag pattern that is shown in red. It moved below the bearish flag pattern and crossed the important support at 20,722, which was the lowest level in July.

The pair moved below the 25-day and 50-day moving averages and the standard pivot point. Therefore, the pair will likely continue pulling back as investors buy the dip. If this happens, it will likely retest the lower side of the flag pattern.

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The pair will likely continue falling as sellers target the next key support at 1.1750.

Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.1750.
• Add a stop-loss at 1.1900.
• Timeline: 1-2 days.

Bullish view

• Set a buy-stop at 1.1900 and a take-profit at 1.2000.
• Add a stop-loss at 1.1800.

The GBP/USD price crashed to the lowest level since July as the US dollar rose across the board. It dropped to a low of 1.1830, which is much lower than this month’s high of 1.2288.

US dollar strength

The GBP/USD pair continued its downward trend as the US dollar staged a major rally. The greenback rose against most currencies, including the Swiss franc, euro, and Japanese yen. As a result, the dollar index, which tracks its performance against a basket of currencies, rose to the highest point in weeks.

The US dollar strength continued after Chinese data showed that the economy was weakening. Industrial production and retail sales growth was lower than estimated, pushing the PBoC to lower rates on key bonds.

The strength then accelerated after the Federal Reserve published minutes of its past monetary policy meeting. The minutes showed that the bank’s officials were increasingly concerned that inflation will become entrenched in the economy for a long time.

At the same time, the officials were worried about moving too fast and too soon on rate hikes. It has already hiked interest rates by 225 basis points this year and started implementing a quantitative tightening policy.

Federal Reserve speakers like Charles Evans, Lorretta Mester, and Neel Kashkari said that the bank will likely continue hiking in the coming meetings. Expectations are that the bank will hike by 0.50% in its September meeting.

There will be no economic data from the UK and the US on Monday. Therefore, the market will continue focusing on last week’s actions of the Federal Reserve.

The next key economic numbers will come on Tuesday when S&P publishes the flash manufacturing and services PMI numbers. Analysts expect that the PMIs made some modest improvements in August as the price of oil dropped slightly.

GBP/USD forecast

Turning to the four-hour chart, we see that the GBP/USD pair formed a double-top pattern at 1.2288 this month. It then managed to move below the neckline of this pattern at 1.2000 on August 5. The pair dropped below the 25-day and 50-day moving averages.

The Relative Strength Index (RSI) has moved to the oversold level while the Oscillator has moved below the neutral level. Therefore, the pair will likely continue falling as sellers target the next key support at 1.1750. This price is slightly below the year-to-date low of 1.1760.

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Looking at this chart, it is not till we break above the €14,250 level that I would consider going long.

The DAX rallied a bit on Wednesday as we bounced from the €13,250 level. That being said, the market is still very much in a negative mood, and it does make sense that we have not been able to hang on to all of the gains for the day. At this point, it looks as if we are going to try to recover some of the losses, but the vicious selloff that we had seen during the previous several sessions does suggest that there is still a lot of negativity out there.

The ECB had an emergency meeting during the trading session but did not announce anything important, and I believe there is probably a little bit of disappointment getting ready to be priced into the market. The DAX is the gateway to the rest of the European Union, meaning that money comes into Germany much quicker than it does in many of the other economies. The DAX is a major beneficiary of this, but at this point in time, it looks as if the market is trying to do everything it can to figure out where we are going to go next. Ultimately, the €13,250 level is an area that you need to pay close attention to. It has been important more than once, so if we were to break down below there, I think it opens up a selling opportunity down to the €13,000 level, and then perhaps even down to the €12,500 level, where we had bounced from previously.

On the upside, the €13,750 level is an area where we could see a little bit of noise, followed by the €14,000 level, which is rapidly being approached by the 50-day EMA. In other words, I believe this is only a short-term rally, and that sellers will reenter the market rather quickly. In fact, when you look at the 50-day EMA and the 200-day EMA indicators, it looks like we are in a very negative trend, and we should continue to see quite a bit of momentum. It would not surprise me at all to see a couple of days to the upside, followed by fresh selling yet again. Looking at this chart, it is not till we break above the €14,250 level that I would consider going long.

The GBP/USD pair has been in a strong bearish trend in the past few weeks

Bullish view

• Buy the GBP/USD pair and set a take-profit at 1.2300.
• Add a stop-loss at 1.2050.
• Timeline: 1-2 days.

Bearish view

• Set a sell-stop at 1.2120 and a take-profit at 1.2050.
• Add a stop-loss at 1.2250.

The strength of the US dollar pushed the GBP/USD price to the lowest level since May 2020. It crashed to 1.2127, which was about 4.2% below the highest level this month. Other currencies like the Japanese yen and the euro also crashed against the greenback.

UK jobs data ahead

The UK economy is under a lot of pressure across the board. Retail spending has dropped as inflation has surged to a multi-decade high. At the same time, manufacturing and industrial production has dropped as companies scale back their spending.

On Monday, data by the Office of National Statistics (ONS) showed that the economy contracted for the second straight month in April. This decline was worse than what most analysts were expecting. In its report, the ONS warned that the situation will likely worsen going forward.

The next key data to watch will be on the country’s employment. Analysts expect the data to show that the unemployment rate dropped from 3.7% in March to 3.6% in April. If this number is correct, ut will be the lowest level in more than a decade. It will be a sign that the labor market is tightening.

Analysts also believe that the country’s wages continued to strengthen in April. With bonuses, they expect that wages rose by 7.6%. Excluding bonuses, they expect that wages rose by 4.0%. This wage growth is still lower than the country’s inflation growth.

The GBP/USD is also falling as investors price in a more hawkish Federal Reserve. The bank will start its meeting on Tuesday and deliver its decision on Wednesday. The baseline expectation is that the bank will hike by 0.50%. Some analysts believe that the bank could surprise with a 0.75% hike.

The BOE will then start its meeting on Wednesday and conclude it on Thursday. It is also expected to hike by about 0.25%.

GBP/USD forecast

The GBP/USD pair has been in a strong bearish trend in the past few weeks. Along the way, it has formed what looks like an inverted cup and handle pattern, which is usually a bearish sign. It remains below the 25-day moving average while the Bollinger Bands have widened. The Stochastic Oscillator has moved below the oversold level.

Therefore, the pair will likely have a relief rally as it forms the handle section of the cup and handle pattern. This could see it rise back to 1.2300 and then resume the bearish trend.

There is a likelihood that Bitcoin will continue rising as bulls target the important resistance level at 33,000.

Bullish View

• Buy the BTC/USD pair and set a take-profit at 33,000.
• Add a stop-loss at 29,000.
• Timeline: 1-2 days.

Bearish View

• Set a sell-stop at 30,700 and a take-profit at 28,000.
• Add a stop-loss at 32,000.

The BTC/USD pair rose to an important resistance level as cryptocurrencies and stock prices turned green. The pair rose to a high of 32,000, which was the highest it has been since May 16th this year. This price was about 20% above the lowest level this month.

Bitcoin Recovers

Bitcoin price has been in a tight range in the past few weeks as investors assess the overall market conditions of digital coins.

It appears that Bitcoin is now attempting to regain its correlation with American stocks considering that the main indices have been in a strong comeback. The Nasdaq 100 index has risen by more than 10% from its lowest point in May. Futures point that the index will open in the green.

Analysts believe that the rally is happening since all the bad news have already been priced in. For example, all investors now believe that the Fed will continue hiking interest rates in the coming months.

In a statement on Monday, Fed’s Christopher Waller went a step further and said that the bank should hike rates above the neutral point in a bid to slow the economy. The neutral point is often judged to be about 2.4%.

The BTC/USD pair’s recovery is also tied to the potential recovery of the Chinese economy now that officials have signaled that they will end lockdowns.

Still, some analysts believe that these gains could be temporary. They note that the rebound could be part of buying the dip considering that the coin has crashed in the past eight straight weeks. In the past, coins and other assets tend to have some pullbacks during bear markets.

“Bitcoin just went through eight consecutive weeks in red territory and got technically oversold to levels we traditionally only see at the bottom of bear markets.”

BTC/USD Forecast

The four-hour chart shows that the BTC/USD pair has been in a slow recovery lately. It has retested and moved above the important resistance level at 30,800, where it has struggled moving above before. The pair has managed to move above the 25-day and 50-day moving averages. At the same time, the Relative Strength Index has moved above the overbought level. It has also formed a small bullish flag pattern.

Therefore, there is a likelihood that Bitcoin will continue rising as bulls target the important resistance level at 33,000.

The pair will likely keep rising as investors target the key resistance at 1.0650. 

Bullish View

• Buy the EUR/USD and a take-profit at 1.0650.
• Add a stop-loss at 1.0450.
• Timeline: 1-2 days.

Bearish View

• Set a sell-stop at 1.0480 and a take-profit at 1.0390.
• Add a stop-loss at 1.0550.

The EUR/USD pair rallied to the highest level since May 11th ahead of the upcoming Euro area consumer inflation data. It rose to a high of 1.0560 as investors price in a more hawkish European Central Bank (ECB). The pair has risen by almost 20% from its lowest level this year.

EU Inflation Data Ahead

The euro rose against the US dollar after more ECB officials pointed to more interest rate hikes. In a statement last week, the head of the German Central Bank made the case of a rate hike in July. Further, in a separate statement, Christine Lagarde said that she was leaning towards a rate hike in July.

The loudest voice came on Tuesday when the head of the Dutch central bank said that the bank should consider a 0.50% rate increase in July. If this happens, it will be the biggest single interest rate hike that the bank has implemented ever.

Therefore, the EUR/USD pair will react mildly to the latest inflation data that will come out today. Economists expect the data to show that the bloc’s CPI rose to 7.5% in April while core CPI rose to 3.5%.

While these numbers are important, they will likely be similar to the preliminary data that Eurostat published two weeks ago. As such, they will not have a major impact on the EUR/USD pair.

The pair also rose even after the relatively strong US retail sales numbers. The data revealed that the headline retail sales rose to 8.19% year-on-year and by 1.0% on a month-on-month basis. These numbers were better than what analysts were expecting. Core retail sales rose by 0.6%., signaling that consumer spending was rising.

Other data showed that the country’s manufacturing and industrial production numbers rose by 0.8% and 1.1% in April.

EUR/USD Forecast

The EUR/USD pair invalidated the bearish flag pattern that was forming on the four-hour chart. Now, it has managed to cross the 25-day and 50-day moving averages while the Relative Strength Index (RSI) is approaching the overbought level. The Stochastic Oscillator moved above the overbought level.

A closer look shows that the pair retested the tip of the triangle pattern shown in pink. Therefore, the pair will likely keep rising as investors target the key resistance at 1.0650. The alternative scenario is where the pair drops below 1.0440.

The only thing that you can count on is volatility as the VIX continues to get thrown all over the place.

After the Federal Reserve raised interest rates 50 basis points during the trading session on Wednesday, the S&P 500 continued its bullish move, as we went straight up in the air. In fact, now looks as if we are going to threaten the 4300 level as Jerome Powell has stated that although hawkish, the central bank will be paying attention to financial conditions, perhaps opening up the door for potential loose behavior later.

As Wall Street always goes out of its way to find a bullish narrative regardless, the reality is that they at least see the possibility of the Federal Reserve saving them. Whether or not they will is a completely different question of course, but at the end of the day, it does not really matter what the market thinks or what the reality is, because the only reality that matters is price. Price has rallied, and now it looks as if we are going to threaten the 4300 level just above. The 4300 level is an area that will cause a bit of resistance, so if we were to break above there it is likely that we will continue to see the market take off. At that point, it is very likely that we would see the 200 Day EMA eventually tested.

On the other hand, if we pull back then it is possible that we reach the 4150 level again to form some type of consolidation. Either way, the only thing that you can count on is volatility as the VIX continues to get thrown all over the place. I do not see that changing anytime soon, so therefore you need to be cautious about your position sizing, but it is obvious the buyers have come in to step up the pressure. Perhaps it is the fact that Powell was not ready to throw Wall Street under the bus, showing that the Federal Reserve still serves The Street over anything else, as he failed to suggest that they were going to get much more aggressive. Because of this, there was a huge sigh of relief and therefore we have had a nice relief bounce. Whether or not that sticks is a completely different question, so pay close attention to that 4300 level and whether or not we get a daily close above it.

The pair will likely have a relief rally as investors buy the dips.

Bullish View

• Buy the AUD/USD and set a take-profit at 0.7300.
• Add a stop-loss at 0.7100.
• Timeline: 1-2 days.

Bearish View

• Set a sell-stop at 0.7135 and a take-profit at 0.7050.
• Add a stop-loss at 0.7200.

The AUD/USD pair crashed to the lowest level since February this year as concerns about the Chinese economy pushed commodity prices sharply lower. The Aussie is trading at 0.7165, which is about 6.55% below the highest level this month.

Commodity Prices Retreat

The Australian dollar is often seen as a commodity currency because of the vast amount that it produces and exports. Some of the most important commodities in the country are iron ore, coal, and natural gas. Therefore, the Australian economy tends to do well when commodity prices are soaring.

This week, however, most commodity prices have dropped sharply as concerns about demand from China. The country’s government has embraced Covid-zero strategy that aims to end the virus completely. As a result, officials have ordered a lockdown in Shanghai, one of the biggest cities in the country.

The AUD/USD pair has also retreated as the risks associated with the upcoming election rise. Recent polls show that the race between Morrison and Albanese will be close even as the incumbent leads. An Ipsos poll showed that Albanese maintains low approval ratings.

The biggest catalyst for the pair on Tuesday will be the latest US consumer confidence data. This is usually an important figure considering that consumer spending is usually the most important part of the American economy.

Economists expect the data by Conference Board to show that confidence held steady in April even as most people continue to worry about inflation. They expect the number to reveal that consumer confidence rose to 108.0.

The other important data will be durable goods. Economists also expect these numbers will reveal that durable goods rose by 1.0% in March. Finally, the US will release the house price index and new home sales numbers.

AUD/USD Forecast

The four-hour chart shows that the Aussie has settled at a strong support level. It remains at its lowest level since March 15th. Oscillators show that he pair has gotten significantly overbought. At the same time, the Relative Strength Index (RSI) and the Stochastic Oscillator have started moving sideways, signaling that bottoming could be happening.

Therefore, the pair will likely have a relief rally as investors buy the dips. If this happens, the key reference level to watch will be at 0.7300. A drop below the support at 0.7100 will invalidate the bullish view.

While the overall trend is bearish, a relief rally is expected to happen in the near term.

Bullish View

• Buy the AUD/USD and set a take-profit at 0.7300.
• Add a stop-loss at 0.7150.
• Timeline: 1-2 days.

Bearish View

• Set a sell-stop at 0.7220 and a take-profit at 0.7150.
• Add a stop-loss at 0.7300.

The AUD/USD slipped to the lowest level since March 16th as the US dollar rally continued amid fears of a more hawkish Federal Reserve. The pair is trading at 0.7245, which is about 5.50% below the highest level this week.

Australian Dollar Pressured

The Aussie has been under intense pressure in the past few weeks for a number of reasons. First, after soaring during the start of the Russian invasion of Ukraine, commodity prices have cooled a bit recently. The Bloomberg Commodity Index has dropped by more than 5% from its highest level in April this year. This is notable since the Australian dollar is often seen as a leading commodity currency.

Second, the US dollar has been in a strong bullish trend in the past few days. The dollar index, which tracks the greenback against a basket of currencies, has jumped to the highest level since 2020. This rally accelerated last week after Jerome Powell hinted that the Fed will be more aggressive in the coming months. Now, analysts expect that the Fed will deliver a 0.50% rate hike in May and then start its quantitative tightening (QT) policy.

Third, the AUD/USD pair has retreated as investors eye the upcoming Australian election. It will pit Scott Morrison and Andrew Albanese of the labor party. While most analysts expect that Scott Morrison will win his second term, most of them believe that the election will be close. Still, it is unclear how these results will impact the Australian dollar.

This week, the Australian dollar will react to the latest inflation data scheduled for Wednesday. Analysts expect these numbers to show that inflation rose from 3.5% in Q4 to 4.6% in Q1 of this year as energy prices rise. On a QoQ basis, they expect that the CPI rose from 1.3% to 1.7%.

AUD/USD Forecast

The AUD/USD pair has been in a strong bearish trend in the past few days. On the four-hour chart, the pair’s Bollinger Bands have widened, signaling that there is intense volatility. At the same time, the Relative Strength Index (RSI) has moved to the oversold level and is still pointing downwards. The Stochastic oscillator has also moved to the oversold level.

Therefore, while the overall trend is bearish, a relief rally is expected to happen in the near term. If this happens, the next key resistance level to watch will be at 0.7300.