Bitcoin Spikes Overnight Amid Short Covering & Amazon Speculation

Okay, very good morning, Monday 26th of July. Hope you had a good weekend. I'm gonna jump straight in to Bitcoin because Bitcoin's had a pretty explosive move overnight, and in fact got pretty close to testing $40,000 once again. And if you actually look from the futures market, from the low we had last week to the high that we printed overnight, we're talking about gains of in excess of around 35%. So question then is, why has this happened? And we'll have a look technically from the futures chart, some interesting levels as well to be aware of. But Bitcoin jumping overnight, some traders attributing this to traders exiting their short bets. You remember towards the back end of last week, we started to see a bit of a recovery in the price of Bitcoin. There was a lot of positive commentary coming out of some of the heavyweights— Tesla boss Elon Elon Musk was talking about potentially reinstating Bitcoin as a form of payment after that suspension they put in place back in May. This comes after he said that they wanted to conduct due diligence on its energy use. We've also had Twitter boss Jack Dorsey also comment in regards to digital currency holding, quote, a big part of the company's future. And then Cathie Woods of Ark Investments was also talking about it as well. So that in combination with a lot of people just bailing on those shorts has created quite a catapult higher. And that's been exacerbated by also speculation that Amazon could enter the cryptocurrency space as well and potentially start accepting the digital coin for transactions. And the reason for that talk is because last week they advertised, they put out a job vacancy advertisement for a digital currency product lead, and that's where that's emanating from. So yeah, this is the spike in terms of the overnight And if I have a look on the daily chart, you can see the kind of setup in context of some of the recent price activity we've had in recent months for Bitcoin. And as you can see here, I've just put on a trend line from the 21st of May high, the 15th of June high, and to where we are trading at the moment. You can see it's being respected as a near-term, near-term target of resistance on that initial spike that we've had. Above here then, I'd be keeping an eye psychologically on the $40,000 level, and then respectively from where those points are taken on that trend line. So in the futures market, $41,335, and then $42,370 on the upside. So definitely quite an interesting start to the week for Bitcoin, and, and so subsequently as well, keep an eye on, on the kind of ripple effect across the crypto space, the likes of Ether Ether and, and so on. But otherwise, in terms of the general sentiment for this morning, we're off to a pretty hairy start. If you're looking at China, for example, this is a snapshot taken just a few moments ago and the Hang Seng down around 3.5%, the CSI 300 down a similar margin, but some of the Hang Seng tech stocks getting hammered once again. And this comes after the latest clampdown from Beijing, this time on the education sector. Following some of the tech impacts that we've seen of late. And a lot of these education providers in China are technology-based. And so again, it's continuing to be a quite a weighted factor, quite aggressive movement seen from the government looking to intervene and control particularly data security. And that's really impacting their local market. So as far as the, the sentiment from this morning is concerned, that doesn't have too much of a direct read across into the European Open, but the NASDAQ 100 did print a fresh all-time high at the recommencement of trade, but generally has drifted a little south then as the overnight Asia-Pac session has taken hold. A little bit mixed there in the APEC region. Um, in Japan, the Nikkei came back playing catch-up after a 4-day weekend, and the Nikkei was up about 1.1%, but I kind of forget that as it is just purely a catch-up play. So as far as the, the kind of perspective for US index futures, it's really quite a big week. We've got tons of earnings coming out this week. Here's just a snapshot of some of the highlights. You've got Tesla aftermarket tonight. You then get Apple, Microsoft, Alphabet tomorrow night, Facebook aftermarket on Wednesday, Amazon aftermarket on Thursday. So tons of big mega-cap stocks, and this is probably the singlest biggest week for stocks. There's 180 S&P companies reporting, there's 10 of the 30 Dow components, and all the big heavyweights are going to be coming out, um, this week. So for sure that's going to be a key thing. And then on the overall week perspective, there's a lot of economic data, but the highlights being you've got the first look at Q2 advance US GDP on Thursday, and you've also got the FOMC meeting on Wednesday as well. So that's a kind of a brief overview of the key things we're looking for. But as far as some of the charts are concerned this morning, away from the equity picture, in the FX market, the dollar is pretty quiet, but the pound has been technically responding quite nicely to that ongoing trend line that we've been observing since last week's briefings. It's played out once again this morning. And so just looking at that on the upside, area of resistance. And then on the downside, quite a few times now in the futures market, 137.43 holding as a line of support, but we're trading towards the lower bound of that at the moment. Um, you might have read over the weekend that, um, in the UK on the COVID side, case numbers in the UK are now 15.4% down week on week, and that's the first time they've dropped as well for 5 consecutive days since February of this year. So on the surface, quite positive, but ministers are saying the end of the school term in England just over a week ago may have helped those numbers. Also, they've been pretty clear to put out a cautious tone, saying they remain braced for upward pressures on case numbers later in the week, because of course then we're going to start to see the impact of the latest leg of loosening after Freedom Day, including the reopening of nightclubs, and that will start to feed into the data. So really, I'm not too looking at that as a positive, the fact that case rates have been declining at a fairly rapid pace, because really it's what do they look like in a week or two's time that's going to be quite telling. UK politicians and scientists have also said they're concerned that people are deleting the official COVID-19 mobile phone app or are turning off its tracing function to avoid having to self-isolate as well. On the flip side, as far as sterling is concerned, there's a few other things to be aware of with the kind of fundamentals on this product, and that is that Prime Minister Boris Johnson faces a so-called cabinet revolt for plans to raise National Insurance payments and maintain the triple lock on pensions, which is seen as unfair on younger workers. Given that pensioners would be exempt from making National Insurance, insurance contributions. And then thirdly, good old Brexit still in the mix. The Northern Ireland Protocol issue also lingered as PM Johnson was reportedly prepared to invoke Article 16, the so-called kind of nuclear option, during the past week, but was talked out of it by the Brexit Minister Lord Frost. So whether or not that latter point is just a tactical kind of drip feed into the press to make Europe aware of Johnson's intentions, or whether it was something more credible, is debatable. But the idea being here that there's quite a few things just ongoing for the moment for sterling. So that trend line still one to watch as the new week gets underway. Crude oil has backed off a little bit here this morning, but it does come after a really aggressive rally that we saw after we hit that trough at the middle of last week. So I don't find that too surprising technically. As you can see here, just finding a quite clear area of resistance as well with the daily R1 on the pivots. And so price just fading a little bit back towards those previous highs that we were trading on the recovery back on the 22nd. So here just trading on the S2 and at that, and that area at the moment, down 86 cents, 71.21. So perhaps even if we were to move lower I'd still look for some, um, support down around the $70 region, which was around the area of consolidation we had in the mid part of last week. But nothing new on really to speak of on the OPEC front. I'd say just more of a bit of a profit taking on those moves seen from the, um, the gains from last week. Otherwise, let's get into some of the other news stories to be aware of, and then really want to focus on the week ahead because Over, over the weekend, the actual news flow was pretty quiet. The only things I really want to mention is that a booster vaccine shot may be needed, especially for the most vulnerable. That was according to Anthony Fauci, who spoke at the weekend, the kind of lead medical advisor in the, in the US. He also added that the change in the masking recommendations was under active consideration in light of rising cases across the US. As you can see here, and then the other thing is the infrastructure talks happening in the US, and they just continue to kind of remain stuck in the mud somewhat. Nancy Pelosi, the Speaker, isn't backing off her plan to hold up a bipartisan infrastructure package until the Senate delivers a larger Democratic-only plan expected later this year, prompting a rebuke from Senator Republicans. Democrats are said to be still working on details of a follow-on $3.5 trillion package of social spending and taxes over a decade on top of the $579 billion infrastructure deal. And many want to ensure that both packages become law before anything is heard in Congress at the moment. So, yeah, not really too many developments here. I don't think it's massively surprising that this is happening as these politicians continue to kind of joust for positioning at this point in time. But let's get straight stuck into the main kind of subject matter, which is the week ahead. It's a really big week actually on, on many different fronts. From an economic calendar perspective, there's plenty going on. And so later on today you get the new home sales coming out the US, but before that, this morning, you've got the latest German IFO readings, which is always quite closely watched by European traders given that that's a survey of corporates on the ground in Germany about how do they feel about current economic conditions and the kind of 6-month outlook. So to judge optimism at the moment, and of course this is Germany and other mainland European countries deal with the, the latest COVID outbreaks and their situation over potential reimplementation of restrictions. So keeping an eye out for that today. Tuesday you get US durable goods Analysts have noted that Boeing experienced a huge jump in aircraft orders in June, uh, that was around 219 versus 73 that was seen in May, and this will lift durable goods orders more broadly while the ex-aircraft numbers will still be good if we use the likes of the ISM report as a bit of a litmus test for what that looked like. And then we move on to Wednesday. We've obviously got the FOMC meeting happening this week and You know, there's a lot of people talking about the FOMC. The FT put out an article about the kind of division between the hawks in red and the doves in blue and the decision that Powell needs to make. I have tweeted that FT article, it's my handle here if you want to have a read. Uh, the debate is out, it's kind of over the timing of tapering, but I would say the Fed is more likely set to maintain its steady course amid market durations and some tempering of economic expectations that we've seen since the June meeting with some of the latest economic data points. Analysts at ING make the point that Powell made it clear in his recent testimony to Congress that he continues to believe inflation pressures will be largely transitory and that there isn't any pressing need to signal an imminent shift in policy given the fact that employment levels remain 6 million lower than before the pandemic started. And so as such Timings-wise, remember that timeline that you might have seen me talk about a few times? It's really towards the back end of August when we have the Jackson Hole Symposium, and then going into September meeting where people are looking for a little bit more definitive detail on the timings around the hot topic of tapering. And perhaps now just a little bit too soon. So that event though, happening on Wednesday night, will be a key one of course for the week. And then Going further forward into then Thursday, aside from your regular initial jobless claims, going to be really important to keep an eye on the Q2 advance GDP reading coming out of the States. If we look at the Atlanta Fed GDPNow model, which is that one that's closely linked into how the government makes its own GDP data set, but it updates on a more regular period, so it's seen as a good precursor for what that number could look like. The latest estimate from that is that this figure will come out at 7.6%. So quite a clear moderation that we've had from this number. I was looking at it a few weeks ago and it was tracking up at like 10.5%. So really goes to show then, and as the markets have kind of reflected in the last fortnight or so, a bit of a recalculation about the shape of what the, the kind of the second half of this year looks like. And so 7.6% is actually, although very high, a moderation of what we've had. But first time we get to see this in the advance reading will be an important event for markets this week at 1:30 on, on Thursday. Figures on US personal income spending also going to be due out on Friday from, from the States. The other things to look out for, just jumping back to Wednesday, is Canada. You get inflation data from Canada on Wednesday, likely to show consumer price growth at a decade high. So very reflective of these inflation conditions that we're witnessing globally at the moment. And a preliminary estimate for second quarter GDP is also due on Friday from Canada as well, for any loonie traders. Now moving on to then down towards Friday and the end of the week, there's even more things coming out of the US. So aside from personal income spending, you get the July Chicago PMI, You've got the Michigan report, but that's the final reading. But looking at the eurozone, you can see we get eurozone flash CPI, and that's of course going to be quite important. It's expected to show that inflation hit the European Central Bank's 2% target in July, a reading that the ECB will likely dismiss as temporary. Analysts though have noted that German VAT affects higher goods inflation and perhaps some reopening effects in services are likely all to have been contributing factors for that next bump up that we're seeing in European inflation. And then at the end of the week, into the weekend, we've also got China's manufacturing PMI for July, and that's going to be due on Saturday. And we'll be closely watched, of course, for any signs of further slowdown in the country as the effects of the coronavirus show signs, um, of, of having an impact on the economic recovery. Economists polled by Bloomberg expect a reading just on the cusp of being expansionary at 50.8 compared with 50.9 in June. And if that were to materialize, it'd be the lowest reading since February of this year. And then, as I said, the other big thing of course is earnings. So again, to recap, 180 S&P 500 companies reporting, and one-third of the Dow Jones Industrial Average index and tons of important and big names to look out for pretty much on a daily basis. So this crib sheet is going to be quite key. And definitely for any of these, you just need to have some thorough prep. So I'll be going through that in full on Amplify Live on our community, but also keep an eye on my Twitter account as well. So I'm going to leave the briefing there. There is more details on my morning note. Which you can find in the community. So feel free to reach out to me if you have any questions, but just wanted to cover all the main things from a top level. So I hope that helps, and we'll look through more technical setups in AmplifyLive.com. All right, take care guys and have a great week ahead. Thank you very much.