Forex Signals US Session Brief, May 18 – Canadian Inflation the Highlight of the Day
Skerdian Meta • 3 min read
The CPI inflation from Canada is the highlight of the day today. The Canadian Dollar has been going up and down this week in anticipation of the inflation report today, so this report will likely give USD/CAD the direction for today and probably next week. The protection in the daily chart in cryptocurrencies has now gone, but there is one more line of support further below. Let’s see where the next support comes for Bitcoin.
Canadian CPI Report
The Canadian inflation report and the retail sales will be released soon. Inflation has been a headache for all major central banks, but in the previous two months we saw some decent inflation numbers from Canada. The monthly CPI (consumer price index) was at around 0.6%-0.7% in February and March, but in April inflation was slashed in half.
The retail sales report in May was even worse. In March, retail sales came at 0.9% and were revised higher to 1.0%, but in April they took a dive and fell flat at 0%. So, there is increased interest for both, retail sales and CPI inflation reports.
Oil prices have been on the rise this week as global political tensions increase. Oil and the CAD are heavily correlated, but as I highlighted in one of our forex updates yesterday, that correlation weakened as the week progressed.
I associate that with the approaching schedule for the CPI and retail sales report. After the terrible numbers we saw last month for both sectors, the market is worried that we see another horrible round of data which would be the beginning of a trend. That would scare CAD traders and push USD/CAD higher, probably to 1.29 and above.
One Defence Line Gone in Bitcoin, One Last One Remaining
On Wednesday, I highlighted the last defence line in Bitocin. That defence line was provided by the 50 SMA (yellow) on the daily chart. The picture was similar in most major cryptocurrencies, whether be it the 50 MA or the 100 SMA:
The price had a go at that moving average at the beginning of the week but it resisted well and reversed the price higher. The sellers had another go at it on Wednesday though. They pierced it briefly but the daily candlestick closed above it, so that was a promising sign for buyers like us.
If you remember, we have a long term buy signal here which we opened earlier this week. We opened it right above the 50 SMA. Well, yesterday the price finally broke below the 50 SMA and the daily candlestick closed there. That was a bit of a blow for us, but we are still confident in this trade.
The price is back above the $8,000 level now and the daily candlestick looks like a doji which is a reversing signal. There’s still a lot of time until the day closes, but just in case the sellers keep pushing lower, we have another line of protection further below.
As you can see form the weekly chart, the 50 SMA has been the line in the sand for Bitcoin. It has held the uptrend in previous years and it held the steep declines this year. Right now, it seems like the price is heading towards it, so let’s see if the sellers will remain in charge or whether the buyers will reverse the price back up before reaching the 50 SMA.
Trades in Sight
- The bearish move looks exhausted
- Stochastic is oversold
- The previous candlestick closed as a doji
- A support area has formed in the 1.3450-60 region
GBP/USD turned bearish a few hours ago, but the support area at 1.3450-60 held once again. This is a sign that there might be a reversal taking place from down there. Stochastic is oversold, so the bearish move seems exhausted. Besides, the reverse on the H1 chart has started already as the current H1 candlestick suggests.
Our EUR/GBP signal that we opened yesterday is going in the right direction, albeit pretty slowly. The Canadian inflation report and retail sales are to be published soon, so let’s see what’s in the store for the CAD today. Donald Trump is on again mumbling and threatening everyone, so be careful out there.