Following a broad decline in global equities, alternative investment asset classes, such as commodities and cryptocurrencies, also shed light on market trends. The correlation between asset classes can be an insightful tracker for investors to spot the market pulse. First, the US dollar seems to be losing steam after a five-week rally, which may provide a rebounding opportunity in gold. Secondly, China’s economic woes pressured oil markets, causing a technical correction in WTI futures. Thirdly, selloffs in the US government bonds sparked liquidity concerns, crashing cryptocurrencies. Fed Chair Powell’s speech in Jackson Hole will be a pivotal event for market sentiment this week. Let’s dig into the three instruments’ technical charts ahead of the volatility.
Spot Gold, daily - Downtrend is intact but oversold
Gold fell for the third straight week in a downtrend channel. The recent three trading days eased falling while the RSI entered oversold territory, suggesting a technical rebound may be needed. The USD’s movement directly impacts gold’s pricing action. Traders might be bidding for a more-dovish-than-expected Fed rhetoric and a pullback in the USD. If the rebound happens, the imminent resistance can be found around 1,902 at the 38.20% Fibonacci retracement. A breakout of this level may take gold back to the 50-day moving average of about 1,932. However, it is too early to say gold can reverse the downtrend. A breakout of the recent low of 1,883 may take gold to potential further support of 1,848 at the 50% Fibonacci retracement.
Crude Oil West Texas (Cash), daily – The range-bound movement may continue
WTI retreated from the channel resistance of 84.5, while the RSI pulled back from overbought territory and is still in its downtrend, suggesting oil prices could continue falling toward the potential support of 76.20. And a breakdown of this level may crash it to test the year low of about 67. On the flip side, a bullish breakout of the recent high of nearly 85 could end the range-bound movement and push WTI to its high of about 94 in November 2022.
Bitcoin (USD) – Oversold
Bitcoin eased losses after a two-day plunge as RSI entered oversold territory when the world-largest cryptocurrency rebounded at the previous two times when the indicator showed the same pattern in November 2022 and March 2023. The near-term potential support can be found at about 25,000 near the low in mid-June. A rebound from this level may take Bitcoin back to the near-term resistance of about 27,500, then 29,250 at the 50-day moving average. On the flip side, a breakdown below 25,000 may take the coin to further potential support of around 25,250.
