Daily Analysis: Pound Roars Higher Again as Bitcoin Rebounds

Friday Market Recap

Asset Current Value Daily Change
S&P 500 2494 -0.01%
DAX 12518 -0.17%
WTI Crude Oil 49.77 -0.22%
GOLD 1326.00 -0.24%
Bitcoin 3494 3.36%
EUR/USD 1.1934 0.13%

We expected a boost from the surprising shift of the Bank of England, but the two-day rally that the Great British Pound staged is still quite impressive. The currency is up by 400 pips against the USD since the decision, and the 1.36 level is now in the range of the Brexit week. Of course, the Dollar itself has been losing substantial ground in recent months, and in Euro terms, the Pound is still some 20% off its pre-Brexit levels.

Apart from the Pound, North Korea provided more news material, when the country launched two more ballistic missiles, with one of them flying over Japan again. Although together with the recent hydrogen bomb test the improved missiles increased the threat of a nuclear strike by the country, financial markets only briefly reacted to the news and risk assets are mainly higher before the weekend.

GBP/USD, Daily Chart Analysis

Stocks also ignored the dismal Retail Sales report that was even worse under the hood than the headline growth numbers, as last month positive surprise was substantially revised lower. While the Dollar gave back some of its recent gains after the release, the short-term resilience of US equities is still apparent and, a rally to new all-time highs looks to be baked in the cake, despite the long-term worries.

The DOW is already edging higher in uncharted territory, while the NASDAQ and the S&P 500 is still stuck near 6000 and 2500 respectively. Oil continues to show short-term strength in the meantime, although the WTI contract is still struggling with the $50 per barrel level that capped the commodity’s price since May.

Oil, 4-Hour Chart Analysis

Cryptocurrencies

Volatility has been out of control in the segment today, with Bitcoin having an incredible 30% daily range amid the developing Chinese trade ban story. The major coins were all in free fall in early trading, plunging below important support levels, and triggering a massive liquidation event. After that, the almost 30% rally left bears shocked, erasing most of the losses of the past two days. While volatility is expected to remain elevated and a re-test of the lows is possible, the sector is now far from being overbought, and investors can already find buying opportunities among the majors.

BTC/USD, 4-Hour Chart Analysis

Technical Picture

The NASDAQ is hovering just below its all-time high as the 6000 level still holds the benchmark back, despite the several break-out attempts. That said, we expect a move above the key resistance zone, as equities proved their short-term strength once again this week. The target of the move could be around 6200, given the extent of the preceding consolidation.

NASDAQ 100 Futures, 4-Hour Chart Analysis

Key Economic Releases on Friday

Time, CET Country Release Actual Expected Previous
14:30 US Core Retail Sales 0.2% 0.5% 0.5%
14:30 US Retail Sales -0.2% 0.1% 0.6%
15:15 US Industrial Production -0.9% 0.1% 0.2%
16:00 US UOM Consumer Sentiment 95.3 95.1 96.8

Key Economic Releases on Monday

Time, CET Country Release Expected Previous
11:00 EUROZONE Final CPI 1.3%

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Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.

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