Yesterday’s Market Wrap

Inflation has been one of the main points since last year, as it has been surging for two years, reaching unseen levels previously. Yesterday the Spanish and German inflation was the focus as the European Central Bank (ECB) prepares to start raising interest rates. Annual consumer inflation in Spain increased past 10% for the first time since 1985 while in Germany, price pressures abated although it wasn’t actually broad-based according to the state readings at least.

The only thing to takeaway from that is at least markets won’t be too jumpy about a 50 bps rate hike in July by the ECB, which is surely feeling the pressure both ways. Crude Oil pushed higher in the European session reaching $114, but it made a strong reversal, ending the day below $110. The USD continued the bullish reversal it started on Monday, while risk assets such as stock markets continued to slide lower.

The Data Agenda Today

Today started with the manufacturing and non-manufacturing reports for May from China, which were expected to show the country coming out of contraction after the coronavirus lockdowns. The final GDP report from the UK for Q1 was released a while ago, showing no change at 0.8% from the previous reading. The unemployment rate for the Eurozone is expected to remain unchanged as well at 6.8%, while in the US session the Canadian GDP report for April will be released, which is expected to show a slowdown but not a contraction yet.

Forex Signals Update

Yesterday we had a good run with trading signals, particularly in forex. We remained long on the USD which paid off, as we closed the day with four winning signals and a losing signal in Gold. The direction of markets was quite predictable as the sentiment remained negative after the reversal on Monday.

WTI – Selling Oil After the Rejection at the 200 SMA

Crude Oil has been bullish for more than two years, and the upward momentum picked up pace in March as geopolitical tensions increased, sending US WTI to $130. But, we saw a reversal earlier this month which sent Oil toward $100. In the last few days, Oil has to retrace higher, but it failed at the 200 SMA (purple) and reversed back down yesterday. Our sell signal closed in profit eventually.

US Oil – 240 minute chart

EUR/USD – Sell Signal

This pair has been on a bearish trend for more than a week and we decided t open a sell forex signal yesterday as this pair resumed the decline which started on Monday. The decline accelerated as risk sentiment deteriorated further and the price hit our take profit target.

EUR/USD – 60 minute chart

Cryptocurrency Update

Cryptocurrencies resumed the decline again in the last several days after recovering for around a week since the small crash early in June, which sent BITCOIN below $20,000, which has lost importance as a major support and resistance level. On Monday sellers returned after comments from the SEC chairman made some warning comments about this market, but they don’t look confident either.

[[Cardano]] Signal – Expecting A Bullish Breakout

Cardano turned bearish in September last year and has been on a steep downtrend since the beginning of April, making lower highs and lower lows. Moving averages have been acting as resistance at the top side and recently, with the 50 SMA (yellow) acting as resistance. Although a support zone has formed around $0.40 and the price is heading toward the top of the triangle, so a bullish breakout is expected. We decided to open a buy signal, hoping for a bounce off the support.

ADA/USD Daily chart

 LTC/USD MAs Turning into Resistance 

LTC/USD  has been bearish since November last year, but since earlier this month we have seen a retrace higher, which is shown as bullish momentum on the H1 chart. In recent days the sentiment has turned bearish in the crypto market and as a result, this crypto pair has been declining. We opened a short term signal as the price was declining but there was a retreat higher before the decisive bearish move.

LTC/USD – 60 minute chart