Forex Signals Brief for May 12: The Rout in Cryptocurrencies Resumes
Skerdian Meta • 3 min read
Yesterday’s Market Wrap
Risk sentiment took the attention yesterday after it improved slightly on Tuesday. The decline resumed again in stock markets and cryptocurrencies. Although the risk-off sentiment was not widespread, with European equities closing with some small gains. Commodities also made some gains after being quite bearish previously and US WTI crude oil returned above $100.
The CPI (consumer price index) inflation reports from China and the US showed an increase again. The market was leaning towards a ‘peak inflation’ trade in the countdown to the April CPI report so when the numbers came in above expectations, there was an immediate rout in both stocks and bonds. The US dollar initially jumped then retreated but in the end, it closed the day near the highs again. Perhaps, the ECB President Christine Lagarde today may have introduced a new era in the global economy when she said that “It looks increasingly unlikely that the disinflationary dynamics of the past decade will return”. With that, she signaled a gradual rise in interest rates, without setting an upper limit.
The Data Agenda Today
Today it starts with inflation expectations from the Reserve Bank of New Zealand (RBNZ) which should go up. Although I don’t think it would help the NZD much since commodities and commodity dollars are following the market sentiment now.
The UK quarterly and monthly GDP figures were released earlier in the European session, but the GBP remains bearish on long-term charts. US PPI (producer price index) inflation figures are expected to show a cool-off in April, which would help cool off CPI inflation as well in the coming months.
Forex Signal Update
Yesterday we had a great run with forex signals. We opened 5 signals yesterday on major pair and all of them hit the take profit target, giving up 150 pips in profit. That was a nice bounce from us, after the drawback on cryptocurrencies during the crash in recent days.
USD/JPY – Buy Signal
We continue to buy the dips in USD/JPY and yesterday we decided to open another buy signal here, after the retrace lower to the 50 SMA (yellow). The price bounced higher to the 20 SMA (gray), hitting the TP target, but this pair has retraced lower so we are thinking of opening another buy signal, this time at the 100 SMA.
USD/JPY – 240 min chart
NZD/USD – 2 Sell Signals
NZD/USD turned bearish about a month ago and attempts to reverse higher have all ended up with a reversal and a new low. Commodity dollars are getting hammered on fears of a recession in China, despite rate hikes from the RBNZ. Yesterday we decided to open two sell signals here, both of which closed in profit.
NZD/USD – 240 min chart
Cryptocurrencies have turned really bearish, having resumed the selling pressure again yesterday. Terra LUNS is leading the decline after crashing to $1, as its stablecoin UST fell below $1. There is panic in the crypto market, which is keeping the pressure bearish.
Looking for Another Terra LUNA Buy Signal
Terra LUNA has been totally crashing in the last week or so. in April we decided to buy this cryptocurrency since this cryptocurrency was the most bullish among major crypto coins for many months, as it continued to make higher highs until late March. LUNA/USD almost reached $120 that month but retreated lower again. We decided to open a buy signal at the 100 SMA (green) which held as support initially but was eventually broken as Terra LUNA crashed lower, breaking below the 200 SMA. The support zones were broken so the LUNA coin trades close to120. We are thinking about buying this coin around here, although we will observe the price action first.
LUNA/USD – Daily chart
Bitcoin Breaks 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 around $30,000 where the main support zone stands before the next one at $20,000.