This week I am going to be taking a look into the U.S. CPI report, which is scheduled to be released this coming Wednesday and is likely to be the main price catalyst (unless we get Spot ETF news) next week.
Of course, another reason why I am focusing on the CPI release this week is because the price action and on-chain action have been so lame.
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Core CPI will be a huge focus for traders this week as this inflation component is still very sticky and causing concern for the Fed.
As you can see by the attached charts inflation month on month inflation has been crashing. However, Core CPI still remains well above the Fed's 2 percent target.
To summarize, US inflation has fallen from a peak of 9.1% in June last year, slowing to 3% last month, while core CPI slowed to 4.8%, a much softer number than expected.
With the Federal Reserve having hiked rates by another 25bps in July, there is a sense that further rate hikes are unlikely, (as referenced by the Fed Ratewatch tool odds) and especially with PPI inflation on the cusp of going negative.
With that said, anyone expecting a one-way drop when it comes to slowing inflation could find that further weakness towards 2 percent might not be such a straightforward process.
Global oil prices have risen sharply over the past few weeks, with A1 jet and EN590 diesel showing big increases.
Although this is a very premature statement, this could be the start of a trend that could accelerate into the autumn and winter month.
Expectations for July are for headline CPI to tick higher to 3.2%, while core prices could slow further to 4.7%. In such an outcome Bitcoin would probably not react that much.
Any indication that we might be at a short-term base when it comes to headline inflation could prompt some concern that the Fed might think about another rate hike at its September meeting.
Notably, the next key focus is likely to be on the annual Jackson Hole Symposium at the end of the month, as the world's central bank heads meet.
Chair Powell's speech will be the main event at the JHS and he occasionally makes major policy statements at this event.
Looking at the technical this weekend I am going to cover Bitcoin, Ethereum, and Litecoin.
Starting with Bitcoin and a central theme on the charts I am seeing that BTC/USD really does not want to trade too far beyond $28,500. If it does the risks become greatly magnified, placing $27,500 and $26,800 as the next targets.
On the upside, stabilization for Bitcoin starts at $30,000, and then $30,400. If we do see that happen and we see a multi-day close above $31,000 I would then expect no less than $34,500.
For Ethereum, the higher time frame charts really highlight the lower lows in place. Meaning that despite the lackluster price action and false breakouts, bulls are still in control.
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Much below $1,790 and things become dicey, however, I am still expecting at least $2,400 for ETH if BTC does perform a multi-day close above $31,000.
Litecoin has been a massive disappointment lately. The loss of $90.00 has been a big shock, however, all is not lost.
For me, I still see a pathway to $135.00. This is a long shot given the massive decline from above $110.00.
But given the close correlation LTC has with BTC if we did see Bitcoin taking off towards $34,500 I'd be surprised if Litecoin didn't hit a new yearly high in that instance.
Overall, Bitcoin and other cryptos still have a solid chance to rally to new yearly highs, however, if we see new extended weekly lows I would become skeptical about those new yearly highs happening.
