Yesterday’s Market Wrap

Yesterday there was bloodbath in financial markets, as the bearish momentum from late last week spilled into this week. All risk assets crashed lower, with all major currencies declining against the USD which was the bigger beneficiary, while the JPY tried to make a comeback but in the end USD/JPY closed bullish.

The selling intensified in stock markets during the European morning trade and alongside another rout in Italian bonds, turned the sentiment pretty sour in the morning session which continues in the US session as well. The implosion in cryptocurrencies since the weekend also accelerated as Bitcoin fell. The negative UK GDP reading for May added further to the bearish momentum.

The Data Agenda Today

Today we have the UK employment report and the average earnings, which are expected to increase, although not as fast as inflation. From the Eurozone and Germany, the ZEW economic sentiment is expected to improve but still remain negative. The US PPI (producer price index) inflation figures will be released in the afternoon, which are expected to increase again and will keep the FED on the hawkish pedal.

Forex Signals Update

Yesterday there was a lot of volatility in all markets, as the risk sentiment turned even more negative, which accelerated the selloff in risk assets. We got caught on the wrong side of the JPY on three trades, as the Yen suddenly benefited from the safe-haven status for once this year and received some strong bids. But, we made up during the US session as the USD/JPY reversed higher.

USD/CAD – Buy Signal

USD/CAD has been on a bearish trend for a month, but late last week we saw a reversal around 1.25 and so far this pair has climbed 4 cents. The uptrend has been very steep, as shown by the 20 SMA (gray) which has been acting as support during this surge. Yesterday, my colleague opened a buy signal at that moving average and booked profit as the price bounced off of it.   

USD/CAD – 60 minute chart

USD/JPY – Buy Signals

We continue to keep a bullish bias for this pair as it has been bullish for two years, although the bullish momentum has picked up pace since March, with the lows getting higher, as it heads to 2002 highs. Since March, the uptrend has picked up an incredible pace, and USD/JPY has pushed to new highs.

In the last three days, sellers tried their luck, but eventually, the price closed near the highs, which is a bullish signal. So, we continue to remain bullish on this pair and will try to pick bottoms again this week during pullbacks l0wer.  

USD/JPY – Daily chart

Cryptocurrency Update

Cryptocurrencies consolidated after the next leg down a month ago and traded in a range until late last week, with several attempts to turn things around from buyers. But those attempts failed, which was a bearish signal for the crypto market. Last week the selling resumed again and we are seeing many cryptos break some major support zones, as they continue lower, so the bearish momentum continues in the crypto market.

 BITCOIN Heading for $20,000

Bitcoin almost reached $65,000 in April last year, before the crackdown on cryptocurrencies started and it made a new high just shy of $70,000 in November. But since then the trend has been bearish and it seems like BTC is completing the fifth wave of the Elliot Wave Pattern, which is the last one. So, it seems like BTC is heading for $20,000 and we will watch the price action around there to see if that major level will hold.  

BTC/USD – Daily chart

ADA/USD Hitting the TP Target As the Decline Resumes Again

The Cardano token ADA displayed some bullish momentum last week, as Cardano prepares for the launch of the Vasil hard fork at the end of this month. It held the gains better than most other cryptos during the last bullish attempt last week and it is still trading above the resistance after the rejection by the 50 SMA (yellow) and the bearish reversal. We decided to sell ADA/USD below this moving average last week and booked profit as the price slipped lower.

The 50 SMA Rejecting Cardano Again