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• Oil prices remain subdued due to recession fears and demand concerns.
• US stockpiles unexpectedly increased, adding to the bearish sentiment, EIA data out later today.
• Geopolitical tensions in the Middle East and China’s economic outlook are also contributing factors.

Oil prices continued to struggle yesterday as increasing recession fears kept bullish investors at bay. The prospect of a recession is exacerbating global demand concerns, putting additional downward pressure on oil prices.

Overnight, oil prices made a brief attempt to push higher as market sentiment temporarily improved. Market participants are closely monitoring geopolitical tensions, as any significant conflict in the Middle East could drastically impact supply and support oil prices.

China’s economic outlook remains another factor weighing on oil prices. Recent data revealed that Chinese oil imports fell to their lowest levels since September 2022.

Adding to the bearish sentiment, US stockpiles posted an unexpected increase. According to PI data, crude stocks rose by 176,000 barrels for the week ending August 2, while analysts polled by Reuters had anticipated a decrease of 700,000 barrels.

Later today, further insights into US stockpiles will be available when the Energy Information Administration (EIA) releases its weekly inventory data at 14:30 GMT.

As it stands, the upcoming EIA data is unlikely to alter the overall outlook on its own. Geopolitical risks continue to be the main concern, keeping market participants on edge. Additional worries about a recession or global economic slowdown could further depress oil prices.

Technical Analysis Oil

From a technical perspective, Brent has been making its way lower since July 5 highs around 88.55 handle. This has brought the price to within a whisker of the lower band of the channel that has been in play since March 2023.

The low of this pattern rests around the 75.00 psychological level and this could prove a tough nut to crack for oil bears.

Brent Oil Chart Weekly, August 7, 2024

Source: TradingView (click to enlarge)

Dropping down to a H4 chart and price does appear to be attempting a recovery. Whether or not oil will be able to gain bullish traction remains to be seen but the H4 technical picture gives a sense of hope.

Having broken the descending trendline there is a possibility that a recovery may materialize, this is to say barring any new developments around a peace deal in the Middle East and an improving sentiment. A H4 candle close above 78.500 will result in a change in structure and may attract more buying pressure.

Brent Oil Chart H4, August 7, 2024

Source: TradingView (click to enlarge)

Support

• 76.50
• 76.00
• 75.00 (psychological level)

Resistance

• 78.50
• 79.315
• 80.00

Market picture

Crypto market capitalisation is back above $2 trillion, up 1.3% over 24 hours. On Wednesday, the Crypto Fear and Greed Index retreated from extreme fear territory at 17 (the lowest in over two years) to 29.

The sharp declines in Bitcoin and Ethereum, sustained by the rumblings of falling stock indices since late July, accelerated the formation of a powerful bearish signal—the death cross—as the downward sloping 50-day MA accelerated its decline in recent days, promising to cross the 200-day MA in the next few days. Often, this signal triggers a new wave of declines, but now both coins look locally oversold as the financial markets lick their wounds after the recent sell-off.

However, even in case of a technical rebound, a return above the 200-day MA would be needed to prove that the bull market has returned. For Bitcoin, that level now stands at $61.5K, and for Ethereum, it is at $3200.

Meanwhile, bitcoin’s share of all cryptocurrencies continues to rise, standing at 55.8%, up from 53.7% a month ago and 48.7% a year ago. This is normal, as altcoins are obviously in weaker hands at this stage of the market.

News background

Abra warned of the risks of increased volatility in the cryptocurrency market, noting that the VIX fear index has risen to its highest level since the 2020 market collapse. Implied volatility (IV) will remain high until the macroeconomic situation calms down.

An analyst at Rekt Capital said that based on Bitcoin’s historical fluctuations, the bearish trend could continue for another two months. In his opinion, BTC’s bullish trend will resume as early as October, but don’t expect a renewal of the historic high anytime soon.

Factor founder Peter Brandt drew parallels between BTC’s recent collapse and the 2016 crash, which was followed by a bullish rally. If BTC follows the trajectory of past post-halving bull cycles, it will reach $130K-$150K by the end of August 2025.

UK hedge fund Capula Investment Management reported owning $464 million worth of bitcoin ETF shares. Capula is the fourth largest hedge fund in Europe, with $30 billion in assets under management.

Japanese Metaplanet will spend $59 million to buy Bitcoin. The decision was made amid volatility in the local stock market and a significant strengthening of the local currency.

EURCHF edged higher in early trading on Wednesday on s=initial signals that risk appetite is gaining traction.

The pair from new multi-year low after being hit by surge in risk aversion in past few days, sparked by worsening economic and geopolitical conditions, which provided strong tailwinds to safe-haven Swiss franc.

Strong bounce from new low at 0.9210 came on likely intervention by Swiss National Bank, aiming to curb strong gains of national currency.

However, recovery still needs to gain pace to generate initial reversal signal, with minimum requirement for close above broken Fibo barrier at 0.9342 (23.6% of 0.9731/0.9210).

The picture on daily chart is negative (double death-cross of 10/200 and 20/200DMA’s / 14-d momentum deeply in negative territory, suggesting that correction may be limited.

Falling 10 DMA (0.9456) and June low (0.9477) mark significant barriers, followed by 0.9490 (50% retracement), with extended upticks to stay below upper pivot at 0.9600 (200DMA) to keep in play prospects for fresh push lower.

Res: 0.9425; 0.9456; 0.9477; 0.9490.
Sup: 0.9342; 0.9301; 0.9285; 0.9210.

Key Highlights

• USD/CHF declined heavily below the 0.8700 support and tested 0.8430.
• A major bearish trend line is forming with resistance at 0.8600 on the 4-hour chart.
• Bitcoin started a recovery wave from the $48,500 zone.
• Gold corrected gains and might revisit the $2,350 support.

USD/CHF Technical Analysis

The US Dollar started a major decline from well above 0.8850 against the Swiss Franc. USD/CHF traded below 0.8700 and 0.8650 to enter a bearish zone.

Looking at the 4-hour chart, the pair settled below the 0.8600 level, the 200 simple moving average (green, 4-hour), and the 100 simple moving average (red, 4-hour). It even crashed below the 0.8500 level.

A low was formed near 0.8432 before the pair started a recovery wave. There was a move above the 0.8500 level. The pair tested the 23.6% Fib retracement of the downward move from the 0.8875 swing high to the 0.8432 low.

Immediate resistance sits near the 0.8585 level. The next resistance sits at 0.8600. There is also a major bearish trend line forming with resistance at 0.8600 on the same chart.

A clear move above 0.8600 could open the door to more gains. In the stated case, the pair could rise and test 0.8650, and the 50% Fib retracement of the downward move from the 0.8875 swing high to the 0.8432 low.

Immediate support is near the 0.8480 level. The next major support is near the 0.8440 level. A downside break and close below the 0.8440 support zone could open the doors for more losses. In the stated case, USD/CHF might decline toward the 0.8400 level.

Looking at Bitcoin, the price started a recovery wave above the $53,500 level but faces many hurdles near $56,500 and $58,000.

Economic Releases

• EIA Crude Oil Stocks Change – Forecast 0.85M, versus -3.436M previous.

• USDJPY gears up after 7-month low
• Recent sharp sell-off looks overdone
• Bulls hope for a close above 146.58 to continue higher

USDJPY showed signs of life on Wednesday, forcefully bouncing above the 144.57 bar that had limited Tuesday’s gains following the flash spike to 146.35.

There is still a chance for sellers to reverse today’s bull run since the RSI and stochastic oscillator have not moved out of the bearish area. However, with the indicators hovering within the oversold region, downward pressures might soon subside.

More importantly, if the pair manages to complete a bullish doji candlestick pattern by recouping Monday’s freefall above 146.58, the pair might receive fresh buying interest likely towards the 149.00 constraining zone. Even higher, the spotlight will fall on the 200-day simple moving average (SMA) at 151.50, a break of which could navigate the price straight to the 20-day SMA at 153.20.

On the downside, the key support trendline drawn from July 2023 will be closely watched along with the 50% Fibonacci retracement of the 2023-2024 uptrend at 144.57. If that base collapses, the price is expected to fall rapidly into the 139.35-140.48 zone formed by the descending constraining line from November 2023 and the 61.8% Fibonacci level. Another step lower could target the 2021 ascending trendline at 137.23.

Overall, it appears that the recent aggressive sell-off in USDJPY has reached a bottom. The bulls face a challenging task for a full recovery, but closing above 146.58 could give their recovery attempt a boost.

GBP/USD started a fresh decline from the 1.2860 resistance zone. EUR/GBP is rising and might climb above the 0.8620 resistance.

Important Takeaways for GBP/USD and EUR/GBP Analysis Today

• The British Pound is showing bearish signs below the 1.2800 support.
• There is a key bearish trend line forming with resistance near 1.2750 on the hourly chart of GBP/USD at FXOpen.
• EUR/GBP is gaining pace and trading above the 0.8500 zone.
• There is a short-term contracting triangle forming with support near 0.8570 on the hourly chart at FXOpen.

GBP/USD Technical Analysis

On the hourly chart of GBP/USD at FXOpen, the pair failed to stay above the 1.2860 pivot level. As a result, the British Pound started a fresh decline below 1.2820 against the US Dollar.

There was a clear move below 1.2800 and the 50-hour simple moving average. The bears pushed the pair below 1.2750. Finally, there was a spike below the 1.2680 support zone. A low was formed near 1.2673 and the pair is now consolidating losses.

There was a minor move above toward the 23.6% Fib retracement level of the downward move from the 1.2802 swing high to the 1.2673 low.

On the upside, the GBP/USD chart indicates that the pair is facing resistance near the 50-hour simple moving average at 1.2735 and the 50% Fib retracement level of the downward move from the 1.2802 swing high to the 1.2673 low.

The next major resistance is near a bearish trend line at 1.2750 on the same chart. A close above the 1.2750 resistance zone could open the doors for a move toward 1.2800. Any more gains might send GBP/USD toward 1.2840.

On the downside, there is a key support forming near 1.2680. If there is a downside break below the 1.2680 support, the pair could accelerate lower. The next major support is near the 1.2620 zone, below which the pair could test 1.2585. Any more losses could lead the pair toward the 1.2540 support.

EUR/GBP Technical Analysis

On the hourly chart of EUR/GBP at FXOpen, the pair started a decent increase from the 0.8415 zone. The Euro traded above the 0.8465 resistance level to enter a positive zone against the British Pound.

The pair settled above the 50-hour simple moving average and 0.8515. The pair traded as high as 0.8618 before there was a downside correction. There was a move below the 23.6% Fib retracement level of the upward move from the 0.8416 swing low to the 0.8618 high.

However, the pair is stable above 0.8550. There is also a short-term contracting triangle forming with support near 0.8570.

The next major support is near the 50% Fib retracement level of the upward move from the 0.8416 swing low to the 0.8618 high at 0.8515. A downside break below the 0.8515 support might call for more downsides. In the stated case, the pair could drop toward the 0.8465 support level. Any more losses might call for an extended drop toward the 0.8415 pivot zone.

The EUR/GBP chart suggests that the pair is facing resistance near the 0.8620 zone. A close above the 0.8620 level might accelerate gains. In the stated case, the bulls may perhaps aim for a test of 0.8650. Any more gains might send the pair toward the 0.8685 level.

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Daily Pivots: (S1) 1.0903; (P) 1.0933; (R1) 1.0962; More.....

Intraday bias in EUR/USD remains neutral as consolidation continues below 1.1007. While deeper retreat cannot be ruled out, downside should be contained well above 1.0776 support. On the upside, break of 1.1007 will resume recent rally from 1.0665 to 100% projection of 1.0665 to 1.0947 from 1.0776 at 1.1056 next.

In the bigger picture, price actions from 1.1274 are viewed as a corrective pattern that's still be in progress. Break of 1.1138 resistance will be the first signal that rise from 0.9534 (2022 low) is ready to resume through 1.1274 (2023 high). However, break of 1.0776 support will extend the correction with another falling leg back towards 1.0447 support.

Daily Pivots: (S1) 143.21; (P) 144.79; (R1) 145.95; More...

While USD/JPY's recovery extends higher today, upside is still limited below 150.88 resistance. Intraday bias remains neutral and further decline remains in favor. On the downside, below 144.04 minor support will bring retest of 141.67 first. Break there will resume the fall from 161.94 to 140.25 support next.

In the bigger picture, the strong break of 55 W EMA (now at 149.98) argue that fall from 161.94 medium term is correcting whole up trend from 102.58 (2021 low). Deeper decline could be seen to 38.2% retracement of 102.58 to 161.94 at 139.26, which is close to 140.25 support. In any case, risk will stay on the downside as long as 55 W EMA (now at 149.83) holds. Nevertheless, firm break of 55 W EMA will suggest that the range for medium term corrective pattern is already set.

Daily Pivots: (S1) 1.2642; (P) 1.2723; (R1) 1.2772; More...

Intraday bias in GBP/USD remains on the upside at this point. Fall from 1.3043 is in progress for 1.2612 support. Decisive break there should confirm that rise from 1.2298 has completed, and target this support next. For now, risk will remain on the downside as long as 1.2839 resistance holds, in case of recovery.

In the bigger picture, current development suggests that corrective pattern from 1.3141 is extending with fall from 1.3043 as another leg. Break of 1.2612 support would strengthen this case. But still, downside should be contained by 1.2036/2298 support zone even in case of deep decline. Rise from 1.0351 (2022 low) remains in favor to resume at a later stage.

Daily Pivots: (S1) 0.8485; (P) 0.8529; (R1) 0.8556; More…

Intraday bias in USD/CHF remains neutral as consolidation continues above 0.8431 low. While further recovery cannot be ruled out, upside should be limited by 0.8711 resistance to bring another fall. On the downside, below 0.8431 will resume the decline from 0.9223 to retest 0.8332 low.

In the bigger picture, price actions from 0.8332 (2023 low) are currently seen as a medium term corrective pattern, with fall from 0.9223 as the second leg. Strong support could be seen from 0.8332 to bring rebound. Yet, overall outlook will continue to stay bearish as long as 0.9243 resistance holds. Firm break of 0.8332, however, will resume larger down trend from 1.0146 (2022 high).