Forex Signals Brief for June 1: Can Chinese Manufacturing Unclog the Supply Bottleneck?
Skerdian Meta • 3 min read
Yesterday’s Market Wrap
Yesterday the risk sentiment of the previous days in the financial market faded and most markets showed uncertainty again. Risk currencies retreated against the USD during the European session, as did stock markets, but then in the US session, they reversed higher again to close the day mixed. Crude Oil continued the surge after the EU decided to go ahead with sanctions on Russian Oil, but then reversed after rumors that OPEC members wanted to suspend Russia from OPEC+ and increase the output in the next few months. US WTI reversed from $120, to end the day at around $115.
Chinese manufacturing PMI posted a decent improvement in May, but it still remains in contraction, while French Q1 GDP showed a contraction, which will probably end up in recession in Q2. Eurozone CPI inflation continued to grow as well, reaching 8.1% in May, beating the estimates, as did the consumer confidence in the US which is a positive thing.
The Data Agenda Today
This morning the GDP figures from Australia showed a slowdown in Q1, while Chinese Caixin manufacturing showed an improvement in May. The unemployment rate in the Eurozone is expected to remain steady, while the ECB president Christine Lagarde is expected to hold a speech later on.
In the US session, the US ISM manufacturing is expected to remain unchanged while the Bank of Canada is expected to deliver another bps rate hike. Although, the commentary from the BOC will be more interesting because housing has started to slow in Canada, which is directly linked to interest rates.
Forex Signals Update
Yesterday there was some nice price action across all markets, as USD buyers returned again while the risk sentiment flip-flopped. We opened nine trading signals and had some difficulties in the Asian session, but made up in the European and US sessions, ending up with five winning signals.
GOLD – Sell Signal
Gold has been bullish since the reversal higher by the middle of last month, although it failed to push above the 20 SMA (gray) on the daily chart. That moving average has been providing resistance for several days and after the previous two candlesticks we decided to turn bearish yesterday, opening two sell Gold signals, both of which closed in profit.
XAU/USD – Daily chart
SILVER – Buy Signal
Silver was on a steep bearish trend from the middle of April until the middle of May, when precious metals reversed higher as the sentiment started to improve and the USD started to retrace lower. Moving averages that were providing resistance during the decline have turned into support, particularly the 20 SMA (gray) and the 50 SMA (yellow). We decided to open a buy signal at the 50 SMA last Friday after the retrace down but the signal hit stop loss yesterday as precious metals turned bearish.
XAG/USD – 240-minute chart
Cryptocurrencies turned bearish again in the first two weeks of May, but in the last 2-3 weeks they have been consolidating in a tight range with a bearish bias as highs kept getting lower. In the last few days, we saw a retrace higher but the retrace might have ended.
Shall We Sell BITCOIN at the 200 SMA?
Bitcoin crashed to $25,500 early in May, but it retreated back up pretty quickly which showed buying pressure down there. BTC consolidated in a range for most of the month, with smaller moving averages acting as resistance at the top. In the last few days, we have seen a decent bullish move, but it has stalled at the 200 SMA (purple). So, this seems like a good opportunity to sell Bitcoin if the larger bearish pressure remains.
BTC/USD – Daily chart
Shorting Ripple at the 50 Daily SMA
XRP/USD crashed to $0.38 earlier this month during the fall in crypto market, but has been consolidating since then. Although, highs have been getting lower and after yesterday’s gain stalled at the 50 SMA (yellow) on the H4 chart and we decided to open a sell signal below that moving average, as the stochastic indicator became overbought, suggesting a bearish reversal soon.