Forex Signals Brief for May 10: Risk Assets Resume the Plunge
Stock markets, commodities, commodity dollars and cryptocurrencies all tumbled lower yesterday, resuming last week's downtrend
Last Week’s Market Wrap
Yesterday the calendar was light. The minutes from the Bank of Japan meeting didn’t offer much but they added further fuel to USD/JPY which pushed above 131 again yesterday in early Asian session. The trade balance from China grew but missed expectations after the contraction in the Chinese economy last month.
The Sentix investor confidence indicator deteriorated further this month in the Eurozone, falling deeper into negative territory for the third month. The USD had a couple of shakes yesterday, but it remains bullish. Although the most important event yesterday was the selling pressure in risk assets which resumed the decline and tumbled down further, such as stock markets.
The Data Agenda Today
The calendar is light today again, so we will be focusing on the market sentiment and the impact it will have on risk assets, as well as the USD. The US Dollar has been on a bullish trend for months now but it has been showing some signs of weakness lately. It retreated more than 100 pips lower after the FED decided to hike interest rates by 50 basis points and chairman Jerome Powell announced several such hikes in the coming meetings.
Although the market isn’t too satisfied by that, and comments from FED’s Bostic who suggested that the FED can’t keep up the pace of bps hikes in every meeting yesterday are not helping the buck. So, the bullish momentum has stalled for the moment in the USD, but there’s nothing better to buy since all central banks are hiking rates fast.
Forex Signal Update
USD/JPY – Buy Signal
We have been buying USD/JPY since it has been on a strong bullish trend for a long time and the buying pressure has picked incredible pace in recent month after the conflict in Ukraine started, when the JPY should have turned bullish as a safe haven and this pair bearish. As a result, we have opened many buy signals during this time, most of which have closed in profit. We opened another buy signal yesterday as this pair retreated to the 50 SMA (yellow) where we decided to buy.
USD/JPY – 240 min chart
EUR/USD – Sell Signal
EUR/USD has also been on a bearish trend since last summer which has picked up pace recently as the USD has turned quite bullish. The Euro turns bearish on the other hand, since the ECB hasn’t set a date for the first rate hike yet. So, we have been selling this pair as it retraces higher and we decided to do so again yesterday after the upsidedown pin which is a selling signal.
EUR/USD – 240 min chart
Cryptocurrency Update
Holding to Our Terra LUNA Buy Signal
Last month we decided to buy the Terra LUNA token since this cryptocurrency has been the most bullish among major ones for many months, as it continued to make higher highs until late March. LUNA/USD retreated in January, falling to the low $40s, but the 200 SMA (purple) held as support twice and buyers resumed the uptrend again.
Terra LUNA almost reached $120 earlier this month but retreated lower again although this time it was the 100 SMA (green) which held as support where we decided to open a buy signal. LUNA/USD started to bounce again off the support zone but the 20 daily SMA (gray) stopped the bounce and now the price returned back down, breaking below the 200 SMA and trading below $50, but there is one last support around $45.
LUNA/USD – Daily chart
Should We Buy BTC As It Approaches the $30,000 Support?
BTC/USD made a new record high last November, as it reached $69,000, but since then sellers have been in control. The last attempt to turn bullish ended at the 200 daily SMA (purple) and the price returned below $40,000 again. Now the price is trending below $35,000 where the first support stands, while the next one comes at around $30,000 where we plan to buy again.
Will the support hold for Bitcoin?
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