Forex Signals US Session Brief April 5 – The UK Economy Takes A Turn South
Skerdian Meta • 3 min read
It?s been a relatively quiet session today with some minor moves, particularly in AUD/USD and GBP/USD. GBP/USD has been affected to some degree by the UK services report which was pretty bad. Yesterday, cryptocurrencies have lost some ground, so the bullish reverse of the previous few days is out of the window, although today they are consolidating in a tight range.
You better get out of the way when giants fight
Disappointing UK Services but the GBP Holds the Range
As I mentioned in one of our forex updates early today, the UK services report was going to be released in the morning. The construction sector yesterday took a dive as it posted 47 PMI points, which is below the breakeven level at 50. Below 50 PMI points and the sector is in contraction.
The construction report yesterday was terrible, so the market got a signal that things are not going well at the moment in the UK. I was expecting this report to miss expectations to be honest. Construction is a service in my book, so it definitely shows the trend of the services sector.
So, it wasn?t a big surprise that the UK Services report missed. It was expected at around 54 PMI points, but it came at 51.7 points. It?s a big miss, but as I said, the market was sort of expecting this. As a result, GBP/USD turned lower and it continues to slide as I speak.
Although, the range between 1.40 and 1.41 is still alive. If the report would come below 50 PMI points, then surely the bottom of the range would have been broken. But, I got this feeling that GBP/USD is going to break below 1.40 today, so I?m making a bet with myself, let?s see.
Cryptocurrencies Turn Bearish Again
Cryptocurrencies have been on a bearish trend for more than three months. Although, in the last few days they tried to make a reversal to the upside. As you can see from the daily Bitcoin chart, this cryptocurrency found support at the 200 SMA (purple).
This moving average provided solid support throughout the weekend. The price pierced it a couple of times but the daily candlesticks couldn?t close below it. Eventually, Bitcoin reversed higher and climbed around $1,000 in a few days.
So, it seemed as a decent bullish retrace was taking form. But yesterday, the buyers gave up and the sellers took control. Bitcoin lost around $700 yesterday which is more than the gains it made in the last two days.
This means that yesterday?s candlestick should be a big bearish engulfing one and that?s what it is. It engulfs both of the bullish candlesticks. Besides that, the price has moved below the 200 SMA again.
If it doesn?t turn above this moving average soon, then today might close below it which will be considered a proper break. So, the situation looks quite bearish for cryptos today, although they are not making new lows, so fingers crossed.
It looks like the 200 SMA is getting broken
Trades in Sight
- The trend is bearish
- The 50 SMA is providing resistance on the H1 chart
- The 200 SMA just got broken on the H4 chart
The 50 SMA is providing resistance today
As you can see from the H1 chart, the 100 SMA (green) has been providing resistance for EUR/USD in the last few days and has pushed this pair lower. But today, the 50 SMA (yellow) is doing this job. When the smaller moving averages become active, it means that the downtrend is picking up pace. Also, the 200 SMA has just been broken on the H4 chart, so it looks like this pair is poised for some more downside.
The US Dollar is making some gains against the Euro, the GBP and the Yen, but the commodity dollars are finding some decent bids against the Buck. This means that the market sentiment is positive at the moment, so let?s try and make use of it with one or two trades.