By Rubika Ventures® on The Capital
This week’s economic calendar is packed with data that will show even more how far the Coronavirus pandemic has weighed global growth. The United States will release its April data for retail sales and industrial production, while the UK and Germany will release first-quarter GDP data.
The data will fuel debate over whether the rebound in the U.S. stock market is warranted amid an unprecedented slowdown. US President Donald Trump’s trade threats against China remain a source of concern for investors at a time when large swaths of the economy are nearly paralyzed. Meanwhile, bitcoin is going to experience the third division this week in its 11-year history. This is what you need to know to start your week, as wrote investing.
Third Division Of Bitcoin
Investors are getting ahead of Tuesday’s bitcoin division, the third in the 11-year history of the digital currency. Bitcoin’s two previous divisions fueled big rallies in bitcoin’s market value, but this time we have a wild card in the form of a Coronavirus pandemic, some analysts have said.
“From an efficient market perspective, any fundamental reaction to the split should already have been taken into account; after all, it is difficult to imagine a more predictable event than a steady supply reduction that has been slated for more than a decade in a liquid, heavily traded asset,” said Matt Weller, global head of market research at GAIN Capital.
Bitcoin’s technology was designed in such a way that it halves the reward for miners every four years, a move aimed at putting a limit on inflation.
In the run-up to this week’s split, bitcoin was up nearly 40% since the start of the year and more than 80% off its lows.
Everything That Goes Up Has To Go Down
But unfortunately, for many, we had a rejection of the support area of $10k as the daily chart shows us. Actually, several false breaks and among them the 61% line of the Fibonacci retraction in the price of $9441.98, showed us that “everything that rises must also fall.” Apparently, the physical laws here also play their part.
Now Bitcoin struggles to hold on to the support created by EMA21 and MA300 with the price ranging from $ 8580.34 to $ 8650.45. This rejection sets the pattern for the beginning of a micro wave sequence of Elliot ABC and macro wave WXYXZ with the macrocyclic ABCD in sequence.
What will trigger the next market alerts will be the break of the high channel at the exact point of $8200.34, theoretically limited by 38% of the Fibonacci retail line at $7960.34 and several moving averages as a barrier.
If this alarm does go off, we have a price projection very close to 78% of the Fibonacci retraction line at $ 6662.45 with a slight crossover of the support created by the Ichimoku cloud at $ 6779.45, along with an M-shaped geometric projection.
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But to confuse us further, the Onchain studies of Bitcoin currently show us a neutral sentimental framework. We are not walking in the direction of the run, or we are being eaten by bears.
However, the failure to break one of the main downtrend lines at the $ 10k point sets the tone for the market to move into a possible correction. Actually, most of the big players now have the majority of their reserves in Tether, around 10% in relation to 2% of Bitcoin.
Not to mention that even fear dominates the market as a strong enemy.
The Real Bullish Point
Already to remove that confusion that currently exists in the cryptocurrency market, we will give you the real starting point of the new bullrun.
The cryptocurrency market will only begin this new phase on the day that it exceeds $ 300 trillion in total market capitalization. Below, unfortunately, we can see more money leaving than entering.
That teaches us something: “It is not only about prices. It is also how much capital is entering the market”; and 300 is a critical number that we must follow very carefully.
The worst thing is that we see many investors surfing Altcoins in a crazy and passionate way. But he has not seen the future. For the next few months, we will see Bitcoin’s dominance well above 67%.
Division in the US Stock Market
Investors are concerned about the latest economic data pointing to a historic decline in activity as they fear that unprecedented stimulus from the Federal Reserve and the United States Government has led markets to ignore the huge economic slowdown.
The Labor Department announced Friday that the U.S. economy destroyed a whopping 20.5 million jobs that month, the steepest drop since the Great Depression.
If this week’s economic data is worse than the already dire forecast, it could reinforce the argument that the rebound in stocks has gone too far. But it is too early to say whether it will derail the rise that led shares to their highest monthly advance for the past three decades in April, despite weak economic data from the previous month.
The latest advances could fade if states in the United States have to relax efforts to reopen their economies and unemployment does not decrease in the coming months.
But, in a few, the economy of the United States recovers. SPX500 SP & 500 SPX500USD second attempt to break 38% of the Fibonacci retraction line at the current price of $ 2921.14. Approximate valuation of 1.40% compared to the previous correction.
United Kingdom and Germany GDP
First-quarter GDP figures for the UK and Germany will give investors a first glimpse of the economic consequences of the confinements that started in late March.
The UK economy is expected to contract 2.5%, but the overall damage, seen in the second quarter, will be much worse.
The Bank of England said last week that it believes the UK economy will collapse by 14% this year, its worst annual collapse in more than 300 years and that the unemployment rate will reach 8% as the Coronavirus crisis has devastated the economy.
Meanwhile, the euro zone’s largest economy, Germany, is expected to contract 2.1% in the first quarter, and the government has said it expects an annual contraction of 6.3% this year, which would be the largest since World War II.
Trump’s Trade Threats
Trade tensions between the United States and China appear to be resuming after Trump told Fox News on Friday that he was “very divided” as to whether to end phase 1 of the trade deal with China.
The Trump administration is weighing punitive actions against Beijing for its early management of the Coronavirus outbreak, including possible tariffs and taking away its supply chains from China.
Trump has said he would end the trade deal if China fails to meet its purchase commitments. On Wednesday he said he would know in a week or two if that was possible.
The deal, which asks Beijing to increase its purchases of US products by $ 200 billion in two years, had just entered into force on February 15 when the Coronavirus pandemic was breaking out. The confinements aimed at slowing down the spread of the virus dealt a severe blow to the Chinese economy, which is now beginning to recover.
US Data Will Highlight The Sharp Decline At Economic Activity
April’s US retail sales and industrial production data released on Friday will further highlight the effect of disrupted sales and production at factories. Economists expect retail sales to have plummeted 11.6%, beating March’s record 8.4% drop. Everything indicates that industrial production, which fell 5.4% in March, will fall 11.5%.
Data on inflation and consumer confidence will also be published, while the weekly report of initial applications for unemployment benefits will cover the eighth week from the entry into force of the general confinement averages.
Thursday’s report showed that applications reached 3 million for the seventh week in a row, although the figure falls well short of the highs of 6.8 million recorded the week ending March 28.
Investors will also watch for Federal Reserve Chairman Jerome Powell’s Wednesday speech on current economic issues at a webinar organized by the Peterson Institute for International Economics.
Oil Is Still Dead But Alive
USOIL remains in the fight of the price of $ 25.50, but seeing a monthly perspective a good purchase price for the long term and considered a protection price is above 78% of the Fibonacci retraction line, which currently points to the price of the $ 31.40. This asset really has a lot of fabric to cut in order to overcome the barrier of the historical downtrend line.
See you in the next story! With love 💛 Rubika Ventures® Team!
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