Forex Signals Brief for August 4: BOE Bonanza As the 6th Rate Hike Planned Today

Yesterday’s Market Wrap

Yesterday was mostly about services. The Chinese Caixin services PMI posted a decent increase, while expectations were for a decline, although the Q2 employment report from New Zealand was negative, as the unemployment rate ticked up to 3.3%. The Eurozone services for July were revised higher, which takes them away from contraction, so the Eurozone economy might avoid recession.

The US ISM non-manufacturing PMI also beat expectations and increased to 56.7 points, which indicates a very decent level of activity. The OPEC meeting didn’t produce much as expected, besides a small increase of 100K barrels/day. US WTI crude rallied above $96 again, but it reversed in a similar fashion to what we saw yesterday, showing that there’s some strong selling pressure up there.

The Data Agenda Today

Today started with the German factory orders and the UK construction PMI reports which showed a small decline from the previous month. The Bank of England is expected to deliver the sixth rate hike in a row, this time by 0.50% although the impact on the GBP is expected to be limited. But, it will depend on the BO statement as well, since they might leave the door open for further strong rate hikes, which would turn the GBP bullish.

This week the volatility has been both ways, after the USD had been on a retreat during the last several days. Now it seems like the  USD is resuming the long-term bullish trend, so traders are repositioning themselves. Yesterday we opened four forex signals, in commodities and in forex, closing the day with three winning signal and a losing one, giving us a 75/25 win-loss ratio.

EUR/USD Sell Signal

EUR/USD has been bullish for a few weeks, but this week it seems like the uptrend has ended. Yesterday we saw a bearish reversal below 1.03, while today we decided to open a sell forex signal as buyers were failing to push the price above the 100 SMA (green) on the 15 minute chart. Then the decline came after the US ISM services posted a decent increase.

EUR/USD – 60 minute chart

GOLD – Buy Signals

Gold was bullish as well for a couple of weeks as the uncertainty prevailed, keeping the sentiment bullish for XAU. But in the last two days we have seen the beginning of a reversal, although we are still using moving averages to open Gold signals against them. Yesterday we opened two buy signals at the 100 SMA (green) on the H1 chart, one of which closed in profit as the price bounced, while the other closed in loss as the 100 SMA broke after the US ISM numbers.

XAU/USD – 60 minute chart

Cryptocurrency Update

The bullish signs in the crypto market are increasing. Earlier this week they were reversing lower after being bullish last week, but the retreat was quite weak and yesterday cryptocurrencies turned bullish again. Moving averages have turned into support now, so they keep making gains.

The 20 SMA Has Turned into Support for BITCOIN

Bitcoin has formed a bullish channel since it crashed below $20,000 in June. Moving averages have now turned into support, as BTC keeps making higher highs. In the last several days we were seeing the crypto market retreat lower, but the retreat has ended at the 20 SMA (gray) for Bitcoin, which is another bullish sign as buyers are jumping in before reaching the bottom of the channel. We are already long on Bitcoin, so we’re holding on to our signal here.

BTC/USD – Daily chart

ETHEREUM Trying to Push Above the 100 Daily SMA

Ethereum fell below $1,000 in June during the last crypto crash, but  turned bullish by the middle of July. Buyers pushed above the 50 SMA (yellow) which was the first bullish signal and after the first failure at the $1,700 support and resistance level, ETH/USD pushed above it, as the 20 SMA (gray) turned into support. But the 100 SMA (green) continues to act as resistance at the top, although chances are that ETH will push above it soon as the price remains stuck at this moving average.

ETH/USD – Daily chart