Yesterday’s Market WrapYesterday we came from a tensioned week, which was marked by restlessness, as traders directed their focus towards two signific
Yesterday’s Market Wrap
Yesterday we came from a tensioned week, which was marked by restlessness, as traders directed their focus towards two significant events: the Jackson Hole Symposium, an annual gathering of central bankers, and the BRICS Summit. During this time, apprehension loomed over potential signals of policy changes from both Jerome Powell of the Federal Reserve (FED) and Christine Lagarde of the European Central Bank (ECB). The mounting evidence of an impending economic downturn in the Eurozone added to investor concerns throughout the week.
In response to these circumstances, it is probable that central banks will uphold their stance of keeping interest rates elevated for an extended duration. Jerome Powell said that the FED is prepared ot hike interest rates further if they find it appropriate, which was a hawkish sign. This announcement initially caused the US dollar to dip, followed by a subsequent rebound that led to a positive close for the week.
Yesterday the price action was very slow and the economic data was light, so everything traded in tight range. Although risk assets continued to dispaly signs of weakness. The July retail sales from Australia posted a 0.5% for July, beating expectations of 0.3% which is a positive sign after the 0.8% decline in June. Although that didn’t improve thesentiment for the AUD anyway.
Today’s Market Expectations
Today starts with a speech from the RBA Gov-Designate Bullock although I don’t think the comments will change anything for the AUD, since they’re likely to resemble what we have heard recently. The German GfK Consumer Climate indicator is not expected to change much at -24.5 points, which means that the German consumer is not feeling too well.
Powell indicated that forthcoming decisions will be guided by available data, and the FED will exercise careful consideration when deliberating whether to implement rate hikes or maintain the current status quo and today we have some important releases. First comes the JOLTS job openings which give an insight of the US labourr market and they’re expected to show an increase this time, although it comes after several declines. The CB Consumer Confidence is xpected to show a slight slodown to 116.2 from 117 last month, but that’s stilll pretty good, showing that the US consumer is holding up.
Yesterday the price action was very slow and the economic calendar too light, so we didn’t open many forex signals. We have been mostly long on the USD in recent weeks as buyers have been in charge, while risk assets have been in retreat and kept that strategy for most trades. Although, we decided to open a buy Gold signal since it seems like the short-term trend has shifted to bullish.
For more detailed updates, please refer to the section below.
MAs Turning From Resistance Into Support for GOLD
Gold has been consistently forming lower highs since early May, which is a significant indication of a bearish trend. Sellers exerted enough pressure to push the price below all relevant moving averages. Earlier this month, the XAU/USD pair slipped beneath the $1,900 level, effectively paving the way for potential additional losses.
However, the preceding week witnessed a temporary upward correction in response to increased uncertainty preceding two key summits. Buyers pushed the price above the moving averages on the H1 chart which now seem to have turned into support, so we decided to open a buy Gold signal yesterday.
XAU/USD – Daily minute chart
- Gold Buy Signal
- Entry Price: $1,915.01
- Stop Loss: $1,901.01
- Take Profit: $1,923.01
Reversing to Bearish in GBP/USD
GBP/USD experienced a notably bullish trend for almost a year. However, a shift occurred in mid-July, leading to a bearish trajectory characterized by a series of declining high points. This trend shift can be attributed to the simultaneous strengthening of the USD and the weakening of the GBP. Key drivers of this shift include a noticeably slowing UK economy and the potential for an impending recession, as evidenced by elevated consumer inflation compared to the US and stagnant growth in public sector wages.
As a result of these factors, the currency pair has been consistently marking lower peaks since the middle of the past month. Currently, it encounters the 50 Simple Moving Average (SMA) indicated by the yellow line on the H4 chart. This moving average is functioning as a resistance indicator, halting the retraces hgihier.
Cryptocurrency Update
BITCOIN Trying to Push Above MAs
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 Stays Below MAs
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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