Yesterday’s Market Wrap

Yesterday we saw an unraveling of the USD trade that we have seen these last two weeks. The USD has been on a strong bullish trend as the FED raised interest rates by 0.75% last Wednesday, while FED officials continue to comment on further strong rate hikes. ED’s Bostic said yesterday that the baseline scenario right now is for a 75 bps increase in November and a 50 bps increase in December.

Although that didn’t help the USD which made a strong bearish reversal for no particular reason, apart from the market being extremely long and needing to unwind a little before the next move higher. All assets turned higher as risk sentiment improved. The Bank of England intervened by buying UK guilts which helped lower the yields after the surge of the precious days, so this might have been a factor as well in yesterday’s risk reversal.

Today’s Market Expectations

After yesterday’s surge in most markets, we will see if certain assets can keep the bullish momentum today, or if that was just a USD move. Yesterday the data was light, while today we have the GDP report from Canada and the US, both of which are expected to show a contraction. The Canadian GDP report will be for July, while the US report will be the last revision of the Q2 GDP report. The RBNZ Gov Orr’s speech will also be important, since he implied a pause in rate hikes in the last speech, so we’ll see if he will keep that stance.

Forex Signals Update

Yesterday we started it on the right foot after two very profitable days, but continued to remain long on the USD. The bearish reversal in the USD was quite ferocious and we got caught on the wrong side of it, particularly as Gold prices soared, although we’ll try to get back on track today.

Buying GBP/JPY 

This pair has been on a bearish trend in recent weeks, as the GBP has turned quite bearish due to the surge in UK bond yields, while the Bank of Japan intervened in the markets last week, which sent the JPY 5 cents higher. Although we saw a reversal yesterday and my colleague Arslan opened a buy signal, which closed in profit.

GBP/JPY – H1 chart

Selling GOLD 

Gold has been bearish as well as the sentiment has remained negative and the USD remained bullish. We have opened many sell Gold signals during the retraces higher at moving averages which have been doing a good job as resistance indicators. We kept selling Gold again yesterday, first at the 50 SMA (yellow) which has been acting as resistance and then at the 100 SMA (green) but both moving averages were broken as XAU/USD surged nearly $50 higher.

XAU/USD – H1 chart

Cryptocurrency Update

Cryptocurrencies continued the rollercoaster ride yesterday, as they made some decent gains after the surge and the bearish reversal in the previous two days of this week. We were looking to buy Bitcoin after the decline on Tuesday, but it climbed higher pretty fast so we didn’t get in on this trade.

BITCOIN Heading for $20,000 Again 

The $18,500 zone continues to hold as a support area for Bitcoin which has been declining since the middle of August when cryptocurrencies made a bearish reversal. After the rejection at the 200 SMA (purple) on Monday, the price fell to that zone but it held as support, and yesterday BTC gained around $1,000 as it headed toward $20,000.

BTC/USD – H4 chart

Can MA’s Turn Into Support for ETHEREUM?

After the launch of the Ethereum Merge, this cryptocurrency turned bearish as the sentiment turned negative in the financial markets, instead of moving higher. The 20 SMA (gray) was acting as resistance during most of last week, showing strong selling pressure, then the 50 SMA (yellow) came into play. But yesterday buyers pushed above these two moving averages again, so let’s see if buyers can hold the price above them today.

ETH/USD – H4 chart