July 29, 2018
First, a review of last week’s forecast:
- EUR/USD. The past seven days, like the previous one and a half months, did not bring any significant events, and the market is in a lazy-holiday mood because of that. The pair's volatility is 130 points, and the maximum deviation from the Pivot Point of the medium-range lateral channel (1.1660) is even less - only 90 points, after which the pair returns to the central zone. So it happened this time as well - at the end of the trading session, it froze at 1.1658;
- the GBP/USD pair also behaved weakly, gradually consolidating near the horizon of 1.3100. The range of British currency fluctuations was not much higher than that of the euro and amounted to only about 145 points. The pair finished the week at the level of 1.3102;
- USD/JPY. This pair was painstakingly drawing the head-and-shoulders figure for the whole month of July, although to some, it might be more like a cowboy hat. Last week was devoted to the right field of this hat, which means a sideways trend within the boundaries of 110.58-111.53. As for the end of the week, the pair met it in the middle of the channel at around 111.00;
- Cryptocurrencies. One of the development variants last week provided for a bitcoin attempt to break through the level of $8,000. And despite being overbought, it did it. The main growth driver was the expectation that the Securities and Exchange Commission (SEC) would still allow the Winklevoss brothers to launch Bitcoin ETF. The main trading volumes were traded at Japanese and South Korean crypto-exchanges.
But as soon as the BTC/USD approached the mark of $ 8,500, it became known that the SEC rejected the application of the brothers once again. As a result, bitcoin collapsed below the $8,000 horizon once again, losing about $630. However, the fall did not last long, and the pair once again broke through the eight-thousand level on Friday evening and reached the height of $8,275.
As for the main altcoins: etherium, ripple, litecoin, etc., they showed an average growth of 6-7%, following the bitcoin.
As for the forecast for the coming week, summarizing the opinions of a number of analysts, as well as forecasts made on the basis of a variety of methods of technical and graphical analysis, we can say the following:
- EUR/USD. The next week will be filled with events, which at another time could initiate quite strong movements in the market. However, at the present moment, surprises should not be expected either from the data on the GDP of the Eurozone, or from the values of the consumer price index, which will be announced on Tuesday July 31.
If we look at other developments concerning the euro/dollar pair, one can note the decision of the US Federal Reserve on the interest rate and the Fed's subsequent comment on Wednesday, August 1, as well as the publication of data on the US labor market on Friday, August 3. But here, most likely, there will be only a small short-term increase in volatility.
As for the oscillators, their indications on D 1 were divided into almost equal parts - one third are for the growth of the pair, one third are for its fall and one third are for the sideways trend. But as for the experts, the overwhelming majority of them (70%) still tends to see the pair reduce to the lower boundary of the medium-term side channel 1.1505-1.1850. However, it is possible that the pair will stay within the two-week zone 1.1575-1.1750 for some time, and only then it will go down. It is this scenario that is drawn by the graphical analysis on D1.
This time only 30% of analysts voted for the growth of the pair to the upper border of the channel 1.1850;
- The future of the British pound is not encouraging, even despite the possible increase by the Bank of England interest rate from 0.50% to 0.75%, which will be known on Thursday August 2. 65% of experts believe that the GBP/USD pair will continue its decline - first to the level of 1.3000-1.3070, and then to support 1.2955. The ultimate goal is the 2017 summer lows in the zone 1.2800.
An alternative point of view is represented by 35% of analysts who believe that the pair has reached the local bottom and will now return to the marks around 1.3200-1.3300. In their opinion, its rise during August to a height of 1.3450 is possible. 15% of oscillators side with the bulls as well, giving signals the pair is oversold;
- USD/JPY. Here, the experts who support the strengthening of the dollar and the growth of the pair, at least, to the zone of 111.75-112.20. are preponderant (60%) The graphical analysis on H4 fully agrees with this.
The remaining 40% place their hopes to Tuesday, July 31. On this day, the Bank of Japan is likely to leave Interest rate unchanged at -0.1%, but the comments of the leadership of this regulator have a chance to support the yen. But this will happen only if there are at least hints of a change in monetary policy and an increase in the interest rate to positive values. In this case, the support is at levels 110.60, 110.30 and 109.75;
- Cryptocurrencies. Traders, investors and miners have been looking forward to the bitcoin graph for the past few weeks. Since June 28, the rate of this currency has grown by 42%, and the total capitalization of the cryptomarket has exceeded 300 billion dollars. After the bitcoin reached the height of $8,500, there were quite a lot of chances that a $10,000 mark would be conquered. Moreover, many factors contribute to this. We list only a few of them:
- the first is the growth of political risks and, as a consequence, a decrease in the demand for "classical" assets and a decline in trading volumes in traditional markets. It is also possible to add instability in a number of countries, thanks to which crypto-currencies become a tool for saving the capital;
- the second factor is the emergence of new technological solutions for attracting large institutional investors at a number of crypto-exchanges;
- the third is more active recognition of cryptocurrencies at the state level, for example, in South Korea or in Venezuela. According to the statement of the president of this country, the Venezuelan currency bolivar will soon be tied to the national cryptocurrency Petro;
- the fourth one is the launch of a platform for the creation of crypto-exchanges;
- the fifth is statements of high state officials and other VIP-persons, like former Assistant to US President Steve Bannon, about their investments in bitcoin and other cryptocurrencies.
Experts believe that in case of growth of the pair BTC/USD above $10,000, there will be even more of those wishing to invest in bitcoin. As a result, there are more and more forecasts saying that the year-old rally may repeat, and bitcoin can rise well above $ 20,000 by the end of the year.
Roman Butko, NordFX