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• The Australian dollar’s slide continues
• Evergrande bankruptcy raises contagion fears

It has been all red for the Australian dollar, as AUD/USD has closed lower for eight straight days and declined 230 basis points during that time. The downswing has continued on Friday, as AUD/USD is trading at 0.6390 in the European session, down 0.20%. There are no Australian or US releases today, so I expect a calm day for AUD/USD.

Evergrande collapse raises contagion fears

Chinese economic releases have looked weak in recent weeks, with exports and imports in decline, a slump in domestic demand, and soft services and manufacturing data. The news from Evergrande, one of the country’s largest property developers, is one more headache that the Chinese economy could do without.

Evergrande filed for bankruptcy in New York on Thursday. The company defaulted on its massive debt in 2021, which triggered a massive property crisis in China and damaged the country’s financial system. The bankruptcy has raised fears that China’s property sector problems could spread to the rest of the economy, which is experiencing deflation and is suffering from weak growth.

There are growing concerns about the stability of the Chinese economy and the Evergrande bankruptcy has raised contagion fears, similar to when the company defaulted on its debt. Australia is particularly sensitive to economic developments in China, which is Australia’s largest trading partner. A slowdown in China has meant less demand for Australian exports, and that has contributed to the Australian dollar’s sharp slide, with the currency plunging a massive 4.93% in August.

In the US, there was unexpected good news from the manufacturing sector on Thursday. Manufacturing has been in the doldrums worldwide, as high inflation and weak demand have taken a heavy toll. The US is no exception, but Philly Fed Manufacturing sparkled in August with a reading of +12, up sharply from -13.5 in July and blowing past the consensus estimate of -10 points.

AUD/USD Technical

• AUD/USD is testing support at 0.6402. This is followed by support at 0.6319
• 0.6449 and 0.6532 are the next resistance lines

This morning the BTC/USD price is near 26,500, the lowest price since mid-June.

What is the reason for this? Among the drivers of the decline may be information that Elon Musk's SpaceX company intends to sell (or has already sold) USD 373 million worth of bitcoins. However, the collapse could have been influenced more by technical than by fundamental factors.

On August 8, we wrote that the ADX indicator fell to a minimum since the beginning of the year — that is, the market was in a protracted flat. It was a vulnerable position for the birth of a new impulse.

Note that the USD 30K psychological level acted as resistance in August — the price was not able to stay higher for long. It was logical to assume that the bears would try to take the initiative. And it happened this week — notice the widening bearish candles on August 15-16 as we approach the 28,800 support.

The decline triggered a cascade of stop-losses (more than USD 1 billion worth of positions on cryptocurrency exchanges were liquidated), which intensified the selling wave.

The chart shows that the price of BTC/USD today is near the median line of the descending channel, where the demand for cheaper bitcoins has balanced the supply. If the price continues to develop within this channel, we can see a new attempt to break through the psychological level of USD 25,000, which in mid-June led to a sharp increase in the price of bitcoins.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Market picture

The crypto market lost 6.4% in the last 24 hours to $1.063 trillion. The sell-off in illiquid trading after the close of the regular US session has intensified sharply after falling below the $1.1 trillion mark. At the peak of the sell-off, total capitalisation was down to $1.038 trillion, a two-month low.

Bitcoin has lost 7.4% in 24 hours to $26.4K. The reduced traction of risk assets in traditional markets has coincided with increasing bearish signals we observed in the crypto over the past few days. BTCUSD’s downward slide quickly became a high-speed collapse upon the breach of local support at $28.8K.

There was little control over the subsequent decline, as it occurred during low liquidity hours when most participants were out of the market. This added to the negative momentum, and Bitcoin sold off to $25.924.

Intraday, BTCUSD traded below its 200-week and 200-day averages, centred around $27.3K. A daily and weekly close below this level would be an essential signal of a break in the uptrend of recent months, with faint hopes of stabilisation around $25.5K.

News background

CryptoQuant recorded several large BTC transfers to crypto exchanges Binance, Gate.io and Coinbase the day before. Whales typically send cryptocurrency to exchanges before selling it.

US institutional crypto platform Bakkt is seeing a substantial influx of new clients focused on trading and storing digital assets, its head Gavin Michael said.

Tether, the issuer of the largest stablecoin by capitalisation, announced that it would no longer support USDT on the Bitcoin blockchain, as well as Bitcoin Cash and Kusama.

The US Office of Government Ethics (CREW) reported that former US President Donald Trump invested over $2.8 million in the cryptocurrency – more than previously disclosed.

USDCHF is worth watching in the coming sessions as its recent upswing caught up to the  50-day simple moving average (SMA) and the 0.8800 level.

Technical signals are mixed. The RSI and the MACD have moderately strengthened above their neutral levels for the first time in two months, increasing speculation that the bull run could develop higher. On the other hand, the stochastic oscillator has confirmed a lower high below its 80 overbought level, mirroring some caution among traders.

If buying interest resumes above the 50-day SMA and May’s trough of 0.8819, the bulls may face a tougher obstacle around the resistance trendline from March at 0.8865. The 38.2% Fibonacci mark of the 0.9437-0.8550 downleg is also within a breathing distance at 0.8890. A decisive close above that barricade could trigger a new bull run towards the 50% Fibonacci of 0.8990, where the price faced a challenging battle during April-July. Still, only a sustainable extension above June’s ceiling and the 200-day SMA at 0.9100 would signal a bullish trend reversal in the big picture.

Alternatively, the price may ease to seek support somewhere between the 23.6% Fibonacci of 0.8760 and the 20-day SMA at 0.8733. If the 0.8670 constraining area cracks too, the downfall could worsen towards the 0.8600-0.8545 base.

Summing up, USDCHF retains its upleg from July lows, but the upcoming sessions could be somewhat burdensome as a major resistance area lays overhead. 

The pair is holding in red for the second consecutive day, as larger bulls were hurt by fresh risk aversion, with overbought daily studies prompting traders to start collecting profits.

Bulls probed through Fibo resistance at 146.10 (76.4% of 151.94/127.22), but so far without clear break higher that keeps in play risk of pullback.

Weekly close below 146.10 pivot would generate initial signal top and keep the downside vulnerable, with return below 145 level (reinforced by rising 10DMA), to increase likelihood of deeper pullback, as this likely ease pressure on Bank of Japan to intervene and support the national currency.

On the other hand, weekly close above 146.10 Fibo level would signal that larger bulls hold grip and are likely to resume after narrow consolidation.

Bearish scenario – loss of 145 handle would open way for attack at next pivotal support at 143.00 (Fibo 38.2% of 137.23/146.56) with risk of deeper fall on break of this point.

Bullish scenario – sustained break above 146.10 would expose targets at 148.82 (Nov 22 peak) and 150.00 (psychological).

Res: 146.10; 146.56; 147.00; 148.82.
Sup: 145.00; 144.80; 144.36; 143.00.

• UK retail sales post a sharp decline
• Rainy weather and high prices weighed on consumer spending

The British pound has given up ground on Friday after several days of modest gains. In the European session, GBP/USD is trading at 1.2736, down 0.07%.

UK retail sales decline more than expected

The weather in the UK continues to have a major impact on consumer spending. The June retail sales report was stronger than expected, with record-hot weather contributing to an increase in spending. July brought cold and rainy weather, which led to a decline in spending as shoppers preferred to stay home. Retail sales declined -1.2% m/m in July, down from +0.6% in June and below the consensus estimate of -0.5%.

The UK consumer’s spending appetite isn’t only dependent on the weather, of course. Consumer spending has been surprisingly resilient in a tough economic environment, but high inflation and rising interest rates are taking their toll. The cost-of-living crisis has created a situation in which sales volumes are falling but the value of goods purchased has been rising – in other words, consumer purchasing power has been falling as consumers are spending more to buy less.

What is bad for consumers may be welcome news for the Bank of  England, whose battle with inflation hasn’t gone all that well. The BoE has raised interest rates to 5.25% in order to curb inflation, but a tight labour market and strong consumer spending have contributed to high inflation, which is currently running at a 6.8% clip. If the cracks we saw this week in the labour market and consumer spending continue, it could mean that the BoE has finally turned the corner in its tenacious battle to bring inflation closer to the 2% target.

GBP/USD Technical

• GBP/USD is testing support at 1.2787. Below, there is support at 1.2634
•  1.2879 and 1.2940 are the next resistance lines

Eurozone CPI was finalized at 5.3% yoy in July, down from June's 5.5% yoy. Core CPI (ex energy, food, alcohol & tobacco) was finalized at 5.5%, unchanged from June's reading. The highest contribution came from services (+2.47%), followed by food, alcohol & tobacco (+2.20%),), non-energy industrial goods (+1.26%),) and energy (-0.62%),).

EU CPI was finalized at 6.1% yoy, down from prior month's 6.4% yoy. The lowest annual rates were registered in Belgium (1.7%), Luxembourg (2.0%) and Spain (2.1%). The highest annual rates were recorded in Hungary (17.5%), Slovakia and Poland (both 10.3%). Compared with June, annual inflation fell in nineteen Member States, remained stable in one and rose in seven.

Full Eurozone CPI final release here.

Gold price is moving lower from the $1,930 resistance. Crude oil price is also declining and showing bearish signs below $80.00.

Important Takeaways for Gold and Oil Prices Analysis Today

• Gold price failed to clear the 1,930 resistance and moved lower against the US Dollar.
• A major bearish trend line is forming with resistance near $1,895 on the hourly chart of gold at FXOpen.
• Crude oil prices are also moving lower below the $80.00 resistance zone.
• There is a key bearish trend line forming with resistance near $80.00 on the hourly chart of XTI/USD at FXOpen.

Gold Price Technical Analysis

On the hourly chart of Gold at FXOpen, the price struggled to settle above the $1,930 resistance. The price started a fresh decline below the $1,920 pivot level.

The price traded below the $1,900 support and the 50-hour simple moving average. It tested the $1,885 zone. A low is formed near $1,885 and the price is now consolidating losses. It is now testing the 50% Fib retracement level of the downward move from the $1,903 swing high to the $1,885 low.

There is also a major bearish trend line forming with resistance near $1,895 and the 50-hour simple moving average. The next major resistance is near the 76.4% Fib retracement level of the downward move from the $1,903 swing high to the $1,885 low at $1,900.

An upside break above the $1,900 resistance could send Gold price toward $1,910. Any more gains may perhaps set the pace for an increase toward the $1,930 level.

Initial support on the downside is near the $1,885 level. The first major support is near the $1,875 level. If there is a downside break below the $1,875 support, the price might decline further. In the stated case, the price might drop toward the $1,850 support.

Oil Price Technical Analysis

On the hourly chart of WTI Crude Oil at FXOpen, the price struggled to continue higher above $84.00 against the US Dollar. The price formed a short-term top and started a fresh decline below $83.00.

There was a steady decline below the $81.45 pivot level. The bears even pushed the price below $80.00 and the 50-hour simple moving average. Finally, it tested the $78.60 zone. A low is formed near $78.58 and the price is now attempting a recovery wave.

There was a move above the 50-hour simple moving average. However, the price is struggling near the 23.6% Fib retracement level of the downward move from the $84.30 swing high to the $78.58 low.

There is also a key bearish trend line forming with resistance near $80.00. If the price climbs further higher, it could face resistance near the 50% Fib retracement level of the downward move from the $84.30 swing high to the $78.58 low at $81.45.

Any more gains might send the price toward the $82.50 level. Conversely, the price might start another decline and retest the 50-hour simple moving average. The next major support on the WTI crude oil chart is near $78.60.

If there is a downside break, the price might decline toward $77.50. Any more losses may perhaps open the doors for a move toward the $76.20 support zone.

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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

GBPJPY turned red after its one-week-old 3.2% rally reached an 8-year high of 186.45 near a trendline area. The longer-term ascending line from May 2021 and the shorter-term upward-sloping trendline from October 2022 cemented that ceiling, sending the price slightly lower on Thursday.

The pair continued to weaken during Friday’s early European trading hours, heading towards the former resistance of 184.00. The 20- and 50-day simple moving averages (SMAs) could also come to the rescue slightly lower. If the SMAs allow more declines below 182.00, sellers could drive towards the channel’s lower boundary seen near 180.00. The 178.00 constraining zone could next come into consideration, as a step lower from there would switch the short-term outlook to bearish.

Technically, the pullback in the momentum indicators is endorsing the current negative mode in the market. That said, the RSI is still clearly above its 50 neutral mark, while the stochastic oscillator has not exited the overbought zone yet, suggesting that an upside reversal cannot be excluded. Note that the MACD is also standing above its red signal line.

If the market finds enough buyers to crawl above the trendline area of 186.70, the price could advance towards the 190.00 psychological level or slightly higher to test the channel’s upper boundary around 191.50. A decisive close above the bullish formation could lift the price straight up to the 2015 top of 195.55-195.87.

In brief, GBPJPY came under pressure before reaching the upper band of a bullish channel, increasing the risk for more downside corrections in the coming sessions.

USDCAD had been trending higher in the short term after finding its feet at the 10-month low of 1.3091 in mid-July. Moreover, the pair has sliced through important technical zones such as both the 50- and 200-day simple moving averages (SMAs), while posting a fresh 2-month high in today's session.

The momentum indicators currently suggest that the recent rally could be overstretched. Specifically, the MACD is strengthening above zero and its red signal line at its highest level since March, while the RSI is hovering within its 70-overbought territory.

Should the bulls conquer the crucial 1.3550 zone, immediate resistance could be found at the April peak of 1.3666. Jumping above the latter, the pair may ascend towards the 1.3700 psychological mark, which held strong in December 2022. Further advances could then cease at the 2023 high of 1.3860.

Alternatively, if the recent advance fizzles out, the price may retrace lower to test the 1.3385 resistance, which could serve as support in the future. A violation of that territory could open the door for the April bottom of 1.3300. Failing to halt there, the pair could attempt to halt its retreat at the February low of 1.3262.

In brief, USDCAD has been staging a strong comeback, which accelerated after the pair pierced through the ascending trendline that connects its higher lows from November 2022 until early May. However, a pullback should not be ruled out as the price has approached overbought conditions.