Forex Signals US Session Brief, February 5 – Ready to Buy Litecoin As Cryptocurrencies Slide
Skerdian Meta • 3 min read
The UK services report’s dive this morning gave the British Pound a big reality check. This is despite the fact that forex markets tend to stay quiet on Monday mornings. Cryptocurrencies are heading south today and we are thinking of opening a forex signal in Litecoin.
Litecoin is resisting better than other major cryptocurrencies today
Brexiteers Lose Confidence
The GBP went through some great times last month as hopes for a soft Brexit picked up again after comments from UK and European officials. The GBP rallied throughout January causing GBP/USD to gain more than eight cents.
The GBP retraced by the end of the month and then resumed its uptrend. Although, last Friday, the UK construction report came just a tick above the 50 level, which is the breakeven level. That poured some cold water on GBP bulls and the GBP started reversing.
The market has been waiting for today’s services report since it is the most important sector of the British economy. The report was negative because it showed that the pace of expansion slowed.
Last month’s report came at 54.2 points and this month was expected to be the same. The actual number came at 53 PMI points causing Brexit fears to surface once again. The GBP started diving and it is now about 100 pips lower.
If the construction and services sectors lose steam so quickly, the UK economy will be in contraction in a few months and Brexit hasn’t even started yet. That’s bad news for GBP traders but good news for us. We have a long-term sell forex on this pair, which we opened at 1.36. We moved the stop loss to 1.4370 and it survived the surge. Now it looks safe.
Long on Litecoin
Last week was a bad week for cryptocurrencies. Bitcoin lost about $4,000 and finally broke and closed below the major support level at $10,000. Ethereum dived below the $1,000, which is the equivalent of the $1,000 in Bitcoin.
Litecoin lost nearly half its value last week, falling from around $200 to $106, according to my broker’s platform. Last week we went long on Litecoin at $160, but took a loss as the decline in cryptos accelerated.
Litecoin bounced on Friday and Saturday last week, climbing above $170. That climb led us to believe that the decline in cryptocurrencies was over. Nevertheless, yesterday, the decline resumed again and now Bitcoin and Ethereum have broken last week’s low.
Although, the losses in Litecoin over these last two days are not as big as in other cryptos. Litecoin is about $30 above Friday’s lows. This sort of price action looks a bit bullish in my opinion. If Litecoin can’t make new lows, then it is likely to jump higher when the other cryptocurrencies reverse. We know that the reverse in the crypto market is quite violent.
At the end of last week, Litecoin jumped nearly $70, so there’s some good profit to be made on the bounces. We are looking to buy at current levels with a stop below $90 and a target at $170 first. Afterwards, we might extend if the price action supports it.
Trades in Sight
- The price is not making new lows
- The bigger trend is still bullish
- The retrace lower seems to be complete
As we mentioned above, Litecoin has been declining in the last two days. But sellers are failing to make new lows while other cryptocurrencies have broken last Friday’s lows. This means that the move down might be over for the time being. So, we are thinking of going long on Litecoin again, after all, the big trend is still bullish.
The UK services report was negative making it the second negative report from Britain in just a few days, after the terrible construction report last Friday. This has placed the GBP on a bearish path, so we remain bearish on the GBP for now. The rest of the forex market remains pretty quiet today and I don’t expect much volatility until the day ends.