Bitcoin's Double Top Suggests BTC Could Fall to $50K

Cryptocurrency

Summary:

The bearish pattern hints at a further correction.

Bitcoin (BTC) has carved out a double-top price pattern, signaling a potential bearish trend change ahead of key data release that could influence the Fed's interest rate path.

Bitcoin's price journey has been a rollercoaster this month. After surging to nearly $70,000, approaching the all-time high of March, it has now retreated to $63,000, decoupling from Nasdaq's continued move higher, largely due to faster selling by miners, profit-taking by investors near lifetime highs, and outflows from the U.S.-listed spot exchange-traded funds.

The price action has formed a double top, a bearish technical analysis pattern comprising two peaks with a valley in the middle, usually appearing after a notable uptrend. The second peak represents uptrend exhaustion, with the eventual breach of the low hit between the two peaks confirming a bearish trend change.

"Technically, bitcoin appears to follow a double top formation, whereas the support level is being tested. This chart formation should be our base case unless it becomes invalidated. This formation could easily see a drop to $50,000—if not $45,000," Markus Thielen, founder of 10x Research, said.

"Yes, the U.S. election and CPI should be bullish later this year, but we can still have a steeper correction," Thielen added.

Bitcoin's Double Top Suggests BTC Could Fall to $50K_1

However, the Fed's preferred inflation yardstick, the personal consumption expenditures (PCE) price index for May, is expected to show the slowest monthly advance in the core figure in over three years. That would cement the case for renewed Fed rate cuts from September, potentially putting a floor under risk assets, including bitcoin.

"[Recent] Strong economic data has forced [bond] yields higher and precious metals lower on Friday. This continues to stand in the way of digital hard assets like crypto," Greg Magadini, director of derivatives at Amberdata, said in the weekly newsletter shared with CoinDesk.

"This week we have multiple Fed Governors speaking, GDP and most importantly PCE on Friday (the Fed’s favorite inflation indicator)," Magadini added.

Economists surveyed by Bloomberg expect no change in the PCE price index and a meager 0.1% uptick in the core PCE, amounting to 2.6% annual advances in both the headline and core figures. The projected core increase, excluding food and energy, would be the smallest since March 2021.

Source:CoinDesk

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Warren Takunda

Economic

Bank of Japan board members noted that high costs of living are hurting consumer spending but they appeared divided over how to proceed with another rate hike as part of its policy normalization, with one member calling for an early action while others urging caution, according to the summary of the bank’s June 13-14 meeting released Monday.

One of the nine members said that “upside risks to prices have become more noticeable” and that those risks “have affected consumer sentiment.” Ahead of the next meeting, the member urged the board to monitor data closely and “raise the policy interest rate not too late” as the likelihood of achieving the 2% price stability target increases.

But there was more cautious voices. “Any change in the policy interest rate should be considered only after economic indicators confirm that, for example, the CPI inflation rate has clearly started to rebound and medium- to long-term inflation expectations have risen,” another member said.

A third member pointed to downside risks to growth, saying that private consumption lacks momentum and there have been successive unexpected suspensions of shipment at some automakers over safety concerns. “As the bank needs to assess the effects of these factors, it is appropriate that it continue with the current monetary easing for the time being.”

On the impact of the weak yen, one member said it could increase the upside risk to the bank’s inflation outlook, and in this context, “the risk-neutral level of the policy interest rate should rise.”

Another member reminded that monetary policy is conducted based on an assessment of the trend in prices and underlying wage developments. “It is not determined by short-term developments in foreign exchange rates,” the member said.

On how the bank should trim its large financial asset holdings, which have killed normal functions of the bond market, one member called for a “gradual” approach, warning that a reduction in the pace of the bank’s purchases of Japanese government bonds “could push down the economy, depending on the timing of the start and the scale of the reduction.”

From the viewpoint of setting an optimal pace of reduction, “the bank should take some time to discuss the plan carefully, including by communicating with market participants,” another member said.

A third member noted that reducing the bank’s balance sheet “is to reduce its increased involvement in the market without exerting disturbing effects on it, and this should be conducted separately from monetary policy.”

Governor Kazuo Ueda told a post-meeting news conference on June 14 that the bank “will not use” the reduction as an “active” monetary policy adjustment tool. “Monetary policy adjustment will be done mainly through short-term interest rates,” he said.

At its June meeting, the nine-member board decided in a unanimous vote to hold the overnight interest rate target steady in a range of 0% to 0.1% for the second straight meeting after conducting its first rate hike in 17 years and ending the seven-year-old yield curve control framework in March.

The board also decided in an 8 to 1 vote to set the stage for gradually reducing the bank’s large holdings of various financial assets for the next year or two years “to ensure long-term interest rates would be formed more freely in financial markets.” It will work out a specific plan at its July 30-31 meeting after bank officials have compared notes with market participants.

Source: MaceNews

To stay updated on all economic events of today, please check out our Economic calendar

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Samantha Luan

Economic

Stocks

Indian shares fell onMonday, weighed downby financials, while some small- and mid-cap stocks slipped aftera report said the markets regulator was investigating allegations of "front-running" at Quant Mutual Fund.

The NSE Nifty 50 .NSEI was down 0.14%at 23,467.75 as of 10:48 a.m. IST, while the S&P BSE Sensex .BSESN shed 0.2% to 77,069.26.

"It's a reality that there is valuation comfort only in select pockets, so the benchmarks could continue to trade near current levels," said Saurabh Jain, assistant vice president of research of retail equities at SMC Global.

The earnings season and the national budget announcement next month will influence the trajectoryof the markets, Jain added.

Financials .NIFTYFIN and private banks .NIFPVTBNK, which outperformed other sectors last week, shed 0.25%and 0.60%, respectively, weighing on the benchmarks.

The broader, more domestically focussed small- .NIFSMCP100 and mid-caps .NIFMDCP100 each traded 0.1% lower.

Local news website Money Control reported that the markets regulator was probing Quant Mutual Fund over allegations of front running - or dealing on price-sensitive information before its general release.

Quant, one of the fastest-growing fund houses in the country and an active investor in small- and mid-cap stocks, said it is responding to the regulator's queries.

"The Securities and Exchange Board of India's investigation on Quant Mutual Fund is a slight sentiment-negativefor the markets," said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

Aurobindo Pharma ARBN.NS, Steel Authority of India SAIL.NS and Aegis Logistics AEGS.NS, which are among Quant's topholdings in broader markets in terms of value, shed 1%-4.5%.

RBL Bank RATB.NS, among Quant's topsmall-cap holdings in terms of value, fell 3.7% and was the top percentage loser in the private bank index.

Century Enka CNTE.NS, HFCL HFCL.NS and Arvind ARVN.NS lost 2%-4%. The stocks are Quant's topholdings in terms of ownership of outstanding shares.

Meanwhile,drugmaker Cipla CIPL.NS dropped 2.3% after receiving observationsfrom the U.S. drug regulator for one of its facilities.

Source:Reuters

To stay updated on all economic events of today, please check out our Economic calendar

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Swissquote

Economic

Stocks

Forex

The week kicks off on a weak note following a moody trading session across Europe and the US on Friday. One of the most significant moves of last two trading days of the US was a 10% selloff in Nvidia sales for … no reason other than the fact that it was the end of the month, the end of the quarter and the end of H1, and investors preferred taking profits while they repositioned for the new half than buying more Nvidia shares at peak levels, and at a very high valuation with little certainty regarding how to value a stock that's price-to-projected sales hit the highest of the S&P500. But still, Nvidia is expected to deliver around $28bn in the Q2, more than double the same time last year, while Microsoft is expected to announce 15% sales and Apple just 3%. It's just that, no one really knows at this point, if Nvidia deserves a higher price tag.

And the problem with that is, because the US Big Tech stocks led by Nvidia were responsible for most of this year's rally in major US indices – because the S&P500's equal weight index remained far behind the normal weighted index since at least a month, any weakness in the US tech rally could mean the end of the party for the major US indices.

This week, the US will reveal its latest GDP update on Thursday. US growth is expected to be revised slightly higher from 1.3% to 1.4% down, but that's down from 3.4% printed a quarter earlier. And on Friday, investors will focus on core PCE data – the Federal Reserve's (Fed) favourite gauge of inflation. The latter better be soft enough to prevent a broader selloff in US indices. On the individual front, FedEx and Micron Technology are due to release earnings.

Elsewhere, appetite is limited. The Stoxx 600 in Europe was toppish last week as the French political uncertainties occupied the headlines. The EURUSD sold off to 1.0670 on Friday and is trading a touch below 1.07 at the start of the week. Le Pen's National Rally increased its lead in the polls for the upcoming legislative elections to 36%, while Emmanuel Macron's centrists stand near 20% support. French risks will likely remain a shadow over the single currency at least until the election.

In Japan, the USDJPY is dangerously flirting with the 160 level – a level which had brought the Japanese policymakers to intervene to stop the bleeding back in April. The Japanese Vice Finance Minister Kanda told reporters that they are ready to intervene 24 hours a day if necessary. The net speculative short positions against the yen remain relatively high despite the rising risk of a currency intervention. The latter means that the USDJPY could post a rapid fall in case a BoJ-triggered price action clears a part of these short positions, but currency intervention alone will hardly send the USDJPY into a sustainable bearish trend; the Bank of Japan (BoJ) must change its rate policy that leads to such a strong yen selloff in the first place.

In energy, US crude is lower this Monday morning after having tested and failed to clear the $82pb resistance last Friday. Trend and momentum indicators remain in favour of a further rise while the RSI index is not yet pointing at extensively bought market conditions. Clearing the $82pb level, the major 61.8% Fibonacci retracement on April to May selloff, should act as a strong signal about the viability of the latest rebound and could throw the foundation of a further rise toward $85pb. But clearing the $82pb could be difficult with sputtering China.

Chinese equities begin the week on continued downside pressure. The CSI 300 fell to an almost 4-month low on the back of insufficient rebound in economic activity, copper futures remain also under the pressure of a slow Chinese rebound.

To stay updated on all economic events of today, please check out our Economic calendar

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ING

Forex

USD: PCE vs French elections

There are five big dates in markets over the next three weeks. On Sunday 30 June, there is the first round of the French parliamentary election – although certainty on how far Marine Le Pen's party has advanced will only be clear after the 7 July round of constituency run-offs. In the US, May PCE figures are released this Friday, and will be followed by June jobs report on 5 July and June's CPI on 11 June.

As discussed in our latest FX Talking monthly update, both politics and monetary policy will need to be pondered in the first part of the summer. The dollar has emerged as the favourite hedge for political uncertainty, especially as gains in the EU's natural safe-haven – the Swiss franc – are being actively thwarted by the Swiss National Bank.

If the US May core PCE on Friday does come in at the consensus 0.1% month-on-month, the short-term downside for the dollar against European currencies may be less pronounced as markets could still favour defensive positions ahead of the French vote on Sunday. When taking EU political noise out of the equation, though, PCE data should in our view feed into an increasingly dovish Federal Reserve narrative this summer, culminating with a September rate cut. This is why we remain generally bearish on the dollar for the end of next quarter.

Already this week, the likes of AUD/USD, NZD/USD and USD/JPY could be a preferred channel of some PCE-induced USD weakness. The yen seems to be desperately needing another supportive input from US data, as investors are looking right through the threat from Japanese authorities to intervene 24 hours a day and USD/JPY is back at 160. The Bank of Japan also released policy minutes this morning and seemed to open the door to a July hike, an option that will gather more traction (6bp priced in now) if FX interventions continue to prove ineffective in taking the yen back higher.

Another event to watch this week is the Iranian presidential election on Friday, although reports suggest a run-off (5 July) is likely, with three candidates seen as major contenders: one reformist and two conservatives.

Today, the only US data release is the Dallas Fed manufacturing index, while three Fed speakers will deliver remarks: Christopher Waller, Austan Goolsbee and Mary Daly. We think DXY can trade above 106.0 and potentially test the 106.50 May high into the events at the back-end of this week.

EUR: More space for risk premium build-up

Latest polls show Marine Le Pen's far-right RN party remains in the lead (35%) ahead of Sunday's first round parliamentary vote, followed by left-wing NPF party (29%) and President Emmanuel Macron's centrist coalition (19%). Barring a change in these poll figures before the weekend, political uncertainty may well keep a lid on the euro in the coming days.

We continue to keep a close eye on the EUR/USD risk premium (i.e., undervaluation in our short-term fair value model). As of Friday's close, that amounted to 0.9% in our estimates, well below the 2.4% 14 June peak and also below the 1.8% we had identified as historical benchmark in this note. We saw the 10-year OAT-Bund spread widen to a new peak (82bp) on Friday, and the there are lingering risks of further pressure on French bonds into the vote. We see risks skewed to the downside for EUR/USD before the Friday-Sunday events in the US and the EU.

Today, the German IFO survey will add information on how much political uncertainty has spread to German business confidence following soft PMIs last week. On Friday, CPI figures for France, Spain and Italy will start directing expectations ahead of the eurozone-wide estimate for June released on 2 July, but the proximity to the French vote means any upside surprises may still struggle to feed into a stronger EUR.

EUR/USD may find more sellers below 1.0700 in the coming days on the back of political risk. Should US PCE offer no support to the pair, the 1.0600 April lows will be at reach. Another pair to watch this week is EUR/SEK, which has paused its big downward trend ahead of the Riksbank announcement on Thursday. We expect a hold with unchanged guidance, and limited implications for SEK. Catch our full preview here.

GBP: EUR/GBP bulls need patience

We believe the Bank of England took a step in the direction of an August rate cut last week, even though core policy communication did not change meaningfully. Markets remain undecided on an August move (14bp priced in) and in our view, are also still too conservative on the total easing this year with 47bp versus our call for 75bp.

Our dovish BoE view means a bearish call on the pound this summer. We could also see some negative spillover on GBP from the UK election (4 July), where a Labour landslide win is largely expected – but perhaps a good result from the populist hard-Brexiteer Reform UK party may create some market jitters.

However, political uncertainty currently weighs more on the euro than on the pound, and that's why we think a re-appreciation in EUR/GBP beyond 0.8500 has likely been delayed. Still, we see wide upside room for the pair once the EU political noise has settled due to monetary policy convergence. The pound looks more likely to display weakness against the dollar in the near term, and we expect a move to below 1.25 in Cable in July. This week's calendar is very quiet in the UK data-wise, and there are no BoE speakers scheduled for now.

CEE: The Czech Republic and Turkey to discuss rate decision this week

A busy week in the CEE region starts today with consumer confidence in the Czech Republic and retail sales in Poland. Markets will be looking for confirmation of a recovery in consumption in the region. Tuesday and Wednesday will see the release of labour market data in Poland and current account data in Hungary. However, the second half of the week will be more interesting. Thursday will see central bank decisions in the Czech Republic and Turkey. We expect the Czech National Bank to cut rates by 25bp to 5.00%, in line with surveys, but communication from the board indicates that 50bp will also be discussed. The Central Bank of Turkey will leave rates unchanged at 50% and maintain its tightening bias. Poland will release inflation for June on Friday – as always, the first number in the region. We expect an unchanged number at 2.5% year-on-year, slightly below market expectations. In the Czech Republic, the final first quarter GDP numbers will be released, which could tell us more about the record drop in investment.

A stronger US dollar last week blocked the CEE region's potential, but we remain bullish here. Both a higher DXY and a small correction in European equity markets are creating a slightly negative environment. On the other hand, rate differentials across the board should still push the CEE to some gains this week. We therefore remain positive on PLN and HUF, but less so than last week, with the preference shifting from PLN to HUF. We see EUR/PLN closer to 4.310 and EUR/HUF closer to 394.

EUR/CZK is mainly driven by the rate cut discussion of 25 or 50bp this week. The pair, under pricing pressure moving towards a larger rate cut, approached 25.00 on Friday and we are likely to stay at these levels into the meeting. While the market has priced in a near 50bp rate cut, we think the CNB decision will have a symmetrical impact on the CZK. However, in both scenarios, we think we will see the weakest levels of the CZK on the day of the meeting and the next weeks should bring appreciation given that already the central bank will turn hawkish in any case and macro fundamentals are strenghtening.

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Cohen

Economic

Commodity

Chicago wheat futures steadied on Monday after falling to their lowest since April as the dollar strengthened and the supply outlook improved, with harvests ramping up in the United States and elsewhere, bringing new grain into the market.

Corn and soybean futures rose slightly.

The most-active wheat contract on the Chicago Board of Trade (CBOT) was flat at $5.76 a bushel by 0450 GMT after falling to $5.73, the lowest since April 22.

Downgrades to Russia's harvest outlook pushed wheat to a 10-month high of $7.20 last month.

But weather conditions in Russia have improved, with consultants IKAR last week raising its forecast and the country's agriculture minister saying frosts did not have a significant impact on harvest volumes as most affected farmland has been reseeded.

Soil moisture in other major producers such as Australia and Canada has also improved, while the U.S. harvest is advancing quickly and farmers in Ukraine have started bringing in crops.

The U.S. dollar rose to its highest since the start of May, making U.S. farm goods more expensive for buyers with other currencies.

"The extent of the price decline seems exaggerated," analysts at Commerzbank said in a note, adding that wheat stocks in exporting countries were likely to fall during the 2024/25 season despite improved crop prospects and rising inventories in the United States.

"We expect a stabilisation and subsequent recovery," they said.

The condition of France's main wheat crop was unchanged for the second week in a row last week, although the harvest is still set to plunge this summer after a damp growing season.

U.S. wheat export sales in the week ended June 13 were higher than trade estimates but corn sales were well below expectations, according to the U.S. Department of Agriculture.

In other crops, CBOT corn was trading 0.2% higher at $4.35-3/4 a bushel and soybeans were up 0.4% at $11.24-3/4 a bushel.

Record high temperatures have swept across northwest and east China, threatening to curb corn production in the world's second-largest producer and consumer of the grain.

Commodity funds were net sellers of CBOT corn and wheat futures on Friday but net buyers of soybeans, traders said.

Source:Reuters

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Warren Takunda

Economic

Pound Sterling has entered a short-term downtrend against the Dollar, but we look for a small rebound in the coming days if support at a key moving average holds firm.

The below chart shows the GBP/USD has fallen to meet the 100-day moving average at 1.2639, which looks to have arrested last week's selloff and could offer further support in the coming days:

Pound to Dollar Week Ahead Forecast: Recovery to 1.27_1

The 50-day MA is also located in this vicinity, suggesting the confluence of some notable technical levels that can create the basis for a light recovery towards 1.27.

"Look for resistance on minor rebounds to the upper 1.26s from here," says Shaun Osborne, Chief FX Strategist at Scotiabank.

For the rebound story to evolve, we must see a couple of positive daily closes on Monday and Tuesday that confirm the nearby support levels have holding power.

For now, strength will be shallow and limited with the daily RSI at 43 and pointed lower in recognition of the downside momentum that has built up recently. A break below the aforementioned 100 DMA would represent a technical deterioration and confirm a deeper downtrend is growing.

"Sterling’s technical tone has weakened in the past few sessions," says Osborne. "Loss of support in the upper 1.26s leaves the pound struggling for a foothold amid some clear deterioration in the intraday and daily trend strength oscillators."

Osborne sees support at 1.2580 (50% retracement of the April/June rebound).

"Traders seem happy to sit on the offer on the GBP/USD, keeping the short-term path of least resistance to the downside," says Fawad Razaqzada, an analyst at City Index.

"The GBP/USD has fallen to its lowest point since mid-May, testing potential support at 1.2635. A more significant support area to watch is at around 1.2550 where the 200-day average meets a prior support and resistance zone," he explains.

Pound to Dollar Week Ahead Forecast: Recovery to 1.27_2

Image courtesy of City Index.

"In terms of resistance levels to watch, they include 1.2655, 1.2700 and 1.2735 – all prior support/resistance levels," says Razaqzada.

Turning to the calendar, it is a quiet week in the UK, but there should be some interest from the U.S.

All eyes are on Friday's core PCE release, which is seen as important for the Federal Reserve when considering the outlook for interest rates.

Core PCE is expected to read at 0.1% month-on-month and 2.6% year-on-year. Should it beat expectations, expect the Dollar to end the week on a high, with Pound-Dollar potentially ending the week at lows not seen since mid-May.

But should the data undershoot, we could see a decent relief rally in the Pound-Dollar that stabilises the near-term outlook. That said, strength will likely be limited in nature as the Dollar looks to be benefiting from the ongoing U.S. stock market outperformance.

"We think that the relative outperformance of US stocks could prove a strong enough support that could prop up the USD in the coming weeks," says Valentin Marinov, head of FX strategy at Crédit Agricole.

Crédit Agricole thinks outperforming U.S. stocks could continue to attract unhedged inflows of international capital into U.S. equity markets, "in a boost to the USD".