Rising energy prices continue to fuel inflation. In the EU, the consumer price index is already very close to 3.5%, while the main cryptocurrency Bitcoin “shot up” as much as 25%. What’s next? Don’t miss our weekly digest.
- Facebook -4.02%.Trading for a fall with $100 and a multiple of X20 could have earned $80.4.
- BTC/USD +15.13%. Trading up with $100 and a X10 multiplier could have earned you $151.30.
- Alibaba +8.21%. You could have earned $164.20 by trading long with $100 and a multiple of X20.
Over the past week, we observed the strongest movements in the European currency. Currency pairs EUR/GBP, EUR/CAD, EUR/AUD, dropped by more than 1%, cross rates EUR/CHF and EUR/NZD decreased by 0.7% and 0.5%, respectively. Eurozone retail sales data was released Wednesday. Growth in August amounted to + 0.3%, while the forecasted value was + 0.8%.
In addition, one should not forget about the energy crisis, which affects the state of the EU economy. In late September, the head of the ECB, Christine Lagarde, tried to calm the markets, saying that the rise in energy prices would not lead to permanent inflation. Meanwhile, we already see a CPI acceleration in the Eurozone. The published indicator for August showed an increase of 3%, and preliminary data for September already amounted to +3.4%.
The acceleration of inflation against the backdrop of a slowdown in consumption growth are signs of stagflation in the economy, and the ECB is under increasing pressure. On the one hand, all measures have been taken to accelerate the economy in the form of PEPP and low-interest rates, and on the other hand, it is suppressing the growing CPI.
From the point of view of technical analysis, it is pretty interesting to look at the behavior of the EUR/AUD currency pair. The cross-rate has formed a classic head-and-shoulders technical analysis pattern with a neckline at 1.59000.
Considering that the price has broken the “neckline” and continued to decline, the target for the ongoing bearish trend is at the level of 1.53500.
One of the central news of the past week was a large-scale failure in the services of WhatsApp, Instagram, and Facebook, which occurred on 10/04/2021. The failure occurred due to an error in the configuration of the DNS servers and lasted for about 6 hours. According to preliminary estimates, Facebook could have lost about $582 million during the outage. Against this background, the company’s shares fell from $345 to $323, i.e., more than 6%. Later the bulls managed to recover somewhat from the blow, and the company’s capitalization began to grow.
In general, if you do not take into account the failed social networks, the American stock market tried to grow last week. On 07.10, the Dow Jones even formed a gap upward, breaking through the 34,500 point mark. The favorites among traders were shares of Netflix (+ 6.68%), 3M Company (+ 3.8%), Amazon (+ 4.4%) and Microsoft (+ 3.2%).
Microsoft shares are currently in a short-term bullish trend. If the bulls manage to break through the $295.78 mark, then the target for the price will be the 161.8% Fibonacci extension level or $302.
Per the discounted cash flow (DCF) model we built, the company’s fair value was $3.2 trillion. At the same time, the current capitalization of Microsoft is about 2.1 trillion. Thus, the company’s shares are considered attractive for investment.
Quotes on hydrocarbons continue their bullish trend. Brent crude oil has renewed a 3-year high at $83.2 per barrel. And the WTI quote has already crossed the 7-year high.
Oil has been growing continuously through seven weeks, adding over 25% and over 50% since the beginning of the year. Technical analysis points to the area between $70 and $100 per barrel and has no significant obstacles to price advancement. The quotes touched the uptrend line again, demonstrating the confidence of buyers.
Oil is growing despite the strengthening of the US dollar. The data did not stop the bullish trend from the (EIA) US Department of Energy, which reported an unexpected increase in oil reserves in the country. The statements did not stop the growth from OPEC +. The cartel has abandoned the idea of increasing production above the levels they previously named (400,000 barrels).
It is not only oil that continues to multiply. Natural gas prices hit a new local high of $6.528 per million British thermal units. After that, it fell again by almost 10%, finding support at $5.450.
Due to the difficulties in the agreements on the supply of gas from Russia to Europe, prices for gas in the Netherlands jumped 40% during morning trading last Wednesday, transferring momentum to the Henry Hub quotes.
Europe has cut its gas production sharply, failing to compensate for it with energy from alternative sources fully. This was superimposed on a rainy summer and a calm September. The combination of these factors, in particular, spurred the quotes to grow.
The US EIA released data on gas reserves last week. With a forecast of 105 and an average of 81 billion cubic feet, reserves increased by 118 billion cubic feet. Soon, this value will be calculated in 3-digit numbers.
The build-up of reserves in the United States and the resolution of the gas crisis in Europe will determine the future fate of the asset in the short term.
Bitcoin has skyrocketed over the past week, hitting a local high of around $56,000 per coin. The asset has impulsively broken through the previous local maximum and the $52,000 level.
BTC has broken through the downtrend line and exited the triangle pattern, in which it has been trading since April. This is a solid bullish signal for the asset. In the short term, we can expect a retest of $52,000, but the overall market situation has changed dramatically. From the technical analysis point of view, we can expect continued growth up to $60,000 and a further renewal of the historical maximum.
Bitcoin has shown tremendous growth of 25% over the past seven days and again surpassed $1 trillion in capitalizations. The total capitalization of the entire crypto market is already more than $2.3 trillion.
Overall, altcoins have posted fewer gains over the past week than BTC. The only exception was the meme cryptocurrency SHIBA INU, which has risen in price by almost 400% and took 13th place in the overall crypto rating.
Of course, in the background of increase, the indicator of fear and greed moved to Extreme Greed at the level of 76 points. Last week, it showed the uncertainty of traders at around 20 points.
In a speech before Congress, Gary Gensler, the new head of the SEC, said that the Commission has no plans to ban cryptocurrencies. However, he sees a potential threat to financial stability from stablecoins.
In August, Gary Gensler announced that the SEC would consider new Bitcoin ETF filings, but they must comply with a set of rules:
- based on Chicago Mercantile Exchange futures and the
- Investment Company Act of 1940.
Several companies have applied in the new form, but this week the consideration of applications from Global X, Kryptoin, Valkyrie, and WisdomTree have been postponed for 45 to 60 days.
On the stock market, the week’s main event was the fall in Facebook quotes after the incident on Monday. However, this had little impact on the major indices.
The energy market continues its active growth phase. Some analysts expect to see natural gas at $7 and oil at $100 a barrel by the end of the year. This growth may result in acceleration of inflation, especially for the EUR.
The cryptocurrency market has entered a phase of active growth. There were no fundamental reasons for this, from a technical point of view. According to many market participants, Bitcoin may well rise in price to $100,000 in the medium term.