Yesterday’s Market WrapYesterday we had two summits at the same time, with the BRICS heading toward the end while the Jackson Hole Symposium started.
Yesterday’s Market Wrap
Yesterday we had two summits at the same time, with the BRICS heading toward the end while the Jackson Hole Symposium started. We heard that Iran, Saudi Arabia and a couple of other countries got the green light to join the BRICS, although it is not clear yet what it would mean for risk currencies, which turned bearish yesterday after making some gains in the previous days, while the USD was retreating.
But the markets turned to the USD again after waiting for the US durable goods orders and unemployment claims numbers which were released in the afternoon. The numbers looked sort of mixed, with the headline durable goods orders coming at -5.2% for July, although that came after a -4.6% increase in June. Although core orders excluding transport showed a +0.5% increase beating expectations of 0.2%
Non-defense capital goods orders excluding air also came positive at +0.1% as expected, but June capital goods orders were revised down to -0.4% from 0.1% in the previous reading, so the report was mixed overall. Unemployment claims came a bit lower than expected on the other hand. The USD turned bullish after the release and resumed the uptrend of the previous days.
Today’s Market Expectations
Today we have some mild economic releases ahead of the major speeches by central bankers at the Jackson Hole. The German Final Q2 GDP is expected to remain flat at 0.0% as previously before the German Ifo Business Climate shows another slowdown as interest rates remain high.
Later in the US session, we have the revised UoM Consumer Sentiment and the UoM Inflation Expectations which are not expected to show much of a change from the previous reading. In the evening we have speeches from ECB’s Christine Lagarde and FED president Jerome Powell. Lagarde is expected to keep a dovish tone as Eurozone economy heads into contraction, while expectations from Powell tilt on the hawkish side, so the risk is on the downside for the USD, given that Powell disappoints and vice versa for the Euro, in case Lagarde sounds more hawkish than anticipated.
Yesterday we saw a couple of reversals in financial markets, with the USD being on a retreat since the previous days, befoe resuming the uptrend after the data, although markets were still uncertain as we headed into the Jackson Hole Summit. We opened many trading signals, but only reached the targets and we ended up with one losing and four winning forex signals in total.
For more detailed updates, please refer to the section below.
MAs Turning Into Support for GOLD
Gold has experienced a bearish trend for over a month, during which the moving averages have been acting as resistance levels. Specifically, the 20-day Simple Moving Average (SMA), represented in gray on the chart, has been capping the upward movement. During this time, the price of Gold slipped below the crucial support level of $1,900.00.
In recent days, there has been a reversal in this trend as buyers have managed to drive the price of gold above most of the moving averages. This upward push led the price above $1,920 yesterday and my colleague Arslan decided to open a buy Gold signal after the slight retreat below $1,920.
XAU/USD – 240 minute chart
Remainign Short on EUR/GBP As the 200 SMA Holds
Both the Eurozone and the UK have witnessed a contraction in their respective service sectors, indicating a decline in overall economic activity. These developments have caused traders to revise their expectations concerning a potential interest rate hike by the European Central Bank (ECB) in September, with the likelihood now estimated at around 50%. Furthermore, previously optimistic predictions regarding the peak level of interest rates set by the Bank of England (BOE) have been revised downward. This adjustment in forecasts has resulted in a delay in the expected timing of these rate changes.
Regarding the EUR/USD exchange rate, it initially remained close to the 1.0860 level but subsequently dropped to 1.08. On the other hand, the decline in the value of the British Pound (GBP) was more pronounced, leading to an increase in the EUR/GBP exchange rate. Despite the 200-day Simple Moving Average (SMA) serving as resistance and rejecting the price, a decision was made to initiate a sell signal for EUR/GBP. This choice aligns with the prevailing bearish trend in this currency pair.
Cryptocurrency Update
BITCOIN Failing at the 50 SMA
BTC/USD – H4 chart
We’re looking to open another buy Bitcoin signal on Monday, playing the range again, buying BTC/USD around $26,000
ETHEREUM Breaks the 200 Daily SMA
Ethereum also crashed lower last week, following the SpaceX rumours and the Evergrande bankruptcy. It failed to hold the gains after climbing above $2,000. Despite the prevailing bearish trend that has persisted since the beginning of 2023, characterized by a series of progressively lower lows, Ethereum has exhibited a greater degree of resilience compared to Bitcoin. Although ETH wasn’t spared during this crypto crash and ETH/USD fell below $1,600, but the 200 SMA (purple) held as support on the weekly chart. So, we are thinking about going long on Ethereum again.
ETH/USD – Daily chart
- ETH Buy Signal
- Entry Price: $1,671.79
- Stop Loss: $1,371
- Take Profit: $1,971
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