The Trade: Tesla and Alphabet miss earnings, Nasdaq’s ugly week
IG's Tony Sycamore's explores NASDAQ's critical support level, Bitcoin's rally and consolidation, crude oil's six-week low, gold's potential decline, and the Australian dollar's downward pressure amid weak Chinese economic data.
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This video was created on 25 July for IG audiences by ausbiz.
IG’s Tony Sycamore provided an in-depth analysis of key market trends affecting major indices and commodities. He emphasised the precarious position of the NASDAQ, which, after a rough patch, is showing signs of further potential decline if it breaches the $19,500 support level. This critical support level could lead to a significant drop if broken, reflecting the market's sensitivity to recent earnings reports from major tech names like Tesla and Alphabet.
NASDAQ's critical support level at risk
In the crypto space, Bitcoin has experienced a notable 28% rally over the past two weeks. However, Sycamore points out that the market is currently in a consolidation phase. For the bullish momentum to continue, Bitcoin needs to break above its trend channel resistance and the $74,000 high from March. Until then, it remains within a trading range, indicating potential for either further gains or consolidation.
Bitcoin's rally and consolidation phase
Crude oil prices have dipped to a six-week low, influenced by various geopolitical tensions and disappointing Chinese economic data. The decline in crude oil is compounded by the end of the US driving season, which traditionally sees lower demand. Sycamore highlighted the importance of the 200-day moving average as a critical support level, suggesting that a further decline towards $74 could be on the horizon if current trends continue.
Crude oil dips amid geopolitical tensions
Gold, after a brief spike to new highs, has reverted back within its previous trading range. Sycamore suggests that the strengthening US dollar could push gold prices lower, potentially towards the $2,275 mark. This reflects ongoing market uncertainties and the impact of global economic factors on precious metals.
Gold reverts to previous trading range
The Australian dollar is facing downward pressure due to weak Chinese economic data and declining commodity prices, such as copper and iron ore. The Aussie dollar has broken below its uptrend support from April, indicating potential for further declines. Sycamore also notes the uncertainty surrounding the Reserve Bank of Australia's future rate hikes, which adds to the currency's challenges.
Australian dollar faces downward pressure
Finally, the ASX 200 index is struggling due to its exposure to the Chinese market. Despite reaching new highs recently, it is now testing critical support levels. Sycamore emphasised the importance of the 7900 support level, noting that a break below could signal a deeper decline for the ASX 200.
Overall, Sycamore’s analysis underscores the volatility and interconnectedness of global financial markets, highlighting the need for investors to stay informed and responsive to economic indicators and geopolitical events.
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