Yesterday, the European Central Bank (ECB) held its usual meeting and it ended up with the Euro being dumped at first. But it soon turned into a broad USD buying and that has been the case in the last couple of sessions. Cryptocurrencies, on the other hand, have entered a bearish trend and today the downside has stretched further.

Cryptocurrencies are down for the fourth consecutive day

The Euro Turns Bearish While the Buck Turns Bullish

The statement from the ECB yesterday looked a bit hawkish at first. The section about extensive QE (quantitative easing) was dropped and the market took it as a hawkish signal. The Euro rallied about 70 pips higher and the USD was being dumped. If you have noticed, whatever happens in the forex market nowadays, the market turns to the USD, for better or for worse, but it has been for worse in more than a year.

So, the ECB statement looked a bit hawkish and the USD started declining. Then came Mario Draghi who said that the ECB expect higher growth in the Eurozone, but inflation is expected to decline somewhat. Those words reversed the markets and EUR/USD started tumbling pretty fast.

Again, as time passed, the decline in EUR/USD turned into broad USD buying. That is one of the rare occasions we have seen the market go in favour of the USD in more than a year, because we have seen the Buck get sold off aggressively after major events since January 2017.

As a result, the USD has gained considerable ground against mast forex majors. GBP/USD is about 100 pips lower from the highs yesterday, while USD/JPY is around 100 pips higher from the lows. Commodity Dollars are also lower. We opened a long term sell forex signal in EUR/USD yesterday, which we’ll explain below.

Cryptocurrencies Continue Their Tumble on Regulation Comments from SEC

In the last two days I have been posting about cryptocurrencies. They started to reverse down earlier in the week but in the past two days, they looked like they were going to reverse back higher. On Wednesday, it was the $10,000 level which was resisting in Bitcoin, while yesterday it was the previous support area at $9,300-400 which was holding the sellers.

But, this morning I wake up to find that cryptocurrencies have formed another bearish daily candlestick. The second support at $9,300 has gone and the picture is looking increasingly bearish. But, in the last few hours, cryptos are pulling back up.

Litecoin and Ethereum have both formed a pin on the daily chart now and Bitcoin is moving higher, so it looks like it will form a pin also. But, as we said yesterday, there’s plenty of time until the day ends. Although, if Bitcoin climbs above the 100 SMA (red) on the daily chart, then that will be a bullish signal.

There have been many reasons for this decline in cryptos, both technical and fundamental, but the latest news to send them tumbling was the comment from SEC (Security Exchange Commission) in the US that it was going to clamp down on cryptos that claim to be registered with a regulatory agency.

The platforms for altcoins are usually called exchanges and they give the impression to the public that they are an actual trading floor registered with a regulatory agency. While most crypto are genuine, there might be some smaller ones which could be dodgy. So, this is a good move actually. But, this privacy is at risk, so down went the cryptos. But as I said, the daily candlesticks in most major altcoins are forming pins and dojis which are reversing signals.

If Bitocin climbs above the 100 SM (red) then it will be a bullish sign

Trades in Sight

Bearish EUR/USD

1. Wednesday’S doji candlestick is a bearish signal
2. Yesterday’s candlestick is a big bearish one
3. Stochastic was overbought and has now reversed down

After yesterday’s big red candlestick, the picture is looking increasingly bearish

We highlighted this pair yesterday since the daily chart was setting up for a bearish reversal. But, we had to wait for the ECB. Well, the market didn’t like what the ECB had to say and this pair started diving hard. We opened a sell forex signal before it was too late, so we are short on EUR/USD now and more than 100 pips in profit, so it looks like a good trade.

In Conclusion

The US Dollar is on a roll today, but the prices have frozen at the moment. The US non-farm payrolls and average earnings reports will be released soon, so the market is sidelined now. Hopefully, we will see some positive numbers and the USD gets another boost, because we are long on the USD with a few signals.