Last Week’s Market Wrap

The negative events for the risk sentiment in the financial market accumulate further last week, which had a negative impact on risk assets, such as stock markets and cryptocurrencies. The UK economy posted a contraction in April for the second month, weighing further on the GBP. Retail sales and the Empire State manufacturing index turned negative in the US just ahead of the FOMC meeting. The FED delivered a 75 basis points (bps) rate increase on Wednesday, as markets were expecting and the USD initially ran higher, but turned around in the following two days, as a relief rally.

The Swiss National Bank delivered a 50 bps rate hike, taking interest rates from -0.75% to -0.25%, which sent the CHF on a strong jump higher. Bank of England also delivered the fifth rate hike in a row, although all these hikes and the ones that are to come further this year, are hurting the sentiment and weighing on risk assets, as many analysts see central banks sending their economies into recession and they’re not going to have any impact on inflation either. Crude Oil made a major bearish reversal, as it fell below $110, losing around $10 on Friday, which probably means that a global recession is coming.

The Data Agenda This Week

This week there are not that many important news releases on the economic calendar to make a big difference, apart from speeches from central banks, so the market sentiment will decide the price action. Things should get worse anyway, which should keep the risk sentiment bearish. On Wednesday we have the UK and Canadian consumer price index (CPI) inflation report, which is expected to increase further, while toward the end of the week the manufacturing and services figures will be released from Europe and the US.

Forex Signals Update

This week was one of the most volatile in financial markets. We saw some big turnarounds in forex which were challenging for all traders. We opened many trading signals across all markets, but at the end of the week, we had more winning signals, particularly in forex.

EUR/USD – Sell Signal

EUR/USD has been bearish for more than a year, but since March the uptrend has picked up pace, as CPI inflation has been surging in the US and the FED has picked up the pace of rate hikes. As a result, we have been bearish on this pair, opening many sell forex signals, as the ECB remains behind the FED on rate hikes. Even the latest rally in this pair has failed, so we’re keeping a bearish bias, after several winning signals last week.

EUR/USD – H4 chart

USD/JPY – Sell Signal

We have also been keeping a bullish bias for USD/JPY since the uptrend on this pair has been picking even more pace, as the Bank of Japan is still remaining on hold, while the FED is running away with rate hikes. We have had several buy signals on this pair last week, the vast majority of which closed in profit.

USD/JPY – 240 minute chart

Cryptocurrency Update

Cryptocurrencies have resumed the downtrend again at the end of the first week of June, after trading in a range for about a month. Ethereum (ETH) broke below $1,000 while Bitcoin (BTC) broke below $20,000 on Saturday, although yesterday we saw a strong reversal which is a positive sign. So, perhaps this was a stop hunt before the big reversal?

Cardano Forming A Triangle

Cardano has been bearish since September last year, after the release of the Alonzo upgrade. We have seen several attempts to turn this crypto bullish, but buyers have failed every time and the decline has continued. Although a support zone has formed around $0.45 and together with the descending trendline, they are forming a descending triangle. So, ADA/USD is likely to break on either side, but the pressure remains to the downside though.

ADA/USD daily chart

BITCOIN Dips Below And Reverses Above $20,000

Bitcoin turned bearish again as the decline resumed again in the crypto market. BTC found support above $20,000 for some time but on Saturday sellers pushed below that level and closed the day well below there. Yesterday though, we saw a major bullish reversal and the price climbed above the $20,000 level again, engulfing the previous day’s candlestick which is a bullish reversing signal. 

BTC/USD – 240 minute chart