Last Week’s Market Wrap

Last week was packed with important economic data, starting with the Chinese GDP report on Monday, which showed that the Chinese economy is bouncing back again in Q3 after the slowdown in Q2 due to coronavirus lockdowns which still continue. The US and European services and manufacturing reports showed further decline into contraction for these sectors. Australian inflation remained higher at 1.8% in Q3, which is a hawkish sign for the RBA.

Although the main events started on Wednesday with the Bank of Canada raising interest rates but missing expectations of a 75 bps hike, increasing them by only 50 bps, to 3.75%, with a dovish bias as well. the European Central Bank raised interest rates by 0.75% on Thursday, but also had a dovish bias, which turned the Euro lower and EUR/USD below parity again. The 2.6% expansion of the US GDP in Q3 also helped the USD. On another note, Elon Musk finally acquired Twitter and he made quite an entrance.

This Week’s Market Expectations

This week starts with the consumer inflation report CPI from the Eurozone, which is expected to remain pretty much unchanged, with the headline CPI at around 10% and core CPI at 4.8%. The Eurozone GDP is expected to slow to just 0.1% in Q3, down from 0.8% in Q2. The RBA is expected to hike interest rates by 25 bps from 2.60% to 2.85%.

The US ISM manufacturing which is expected to fall into stagnation will be the last piece of data before the FOMC meeting which is expected to produce another 75 bps hike, although the presser will be more important for the USD since markets are expecting the FED to slow down. The Bank of England is expected to deliver a 75 bps hike on Thursday as well, while on Friday the Canadian employment report will be released.

Forex Signals Update

Last week was tough to trade as markets were choppy and they changed direction frequently. We opened 24 trading signals in forex, commodities and cryptocurrencies. We increased the number of long term signals due to the volatility and ended up with 15 winning and 9 losing signals, giving us a 63/37% win/loss ratio. This week is expected to be quiet until the FED rate decision on Wednesday evening, but volatility will probably pick up after that.

Turning Bearish on GOLD Again

Gold turned bullish early last week, even though that was more of a USD move, which has been retreating considerably. But, the USD buyers returned on Friday and Gold turned bearish after being rejected by the 50 SMA (yellow) at the top on the daily chart, following a doji candlestick which is a bearish reversing signal. Now the downtrend is resuming again, so we’ll try to sell Gold, although the FED meeting might change the situation on Wednesday.

XAU/USD – Daily chart

Is the Trend Changing for EUR/USD? 

EUR/USD has been on a strong bearish trend for more than a year, since it reversed above 1.23 and eventually fell below parity. The 50 SMA (yellow) has been doing a great job providing resistance at the top during retraces higher, thus keeping the trend bearish. But that moving average was broken last week as the USD retreated, although the 100 SMA (green) came to the rescue and rejected the price, so let’s see if this pair will fall below the 50 SMA again and resume the downtrend.

AUD/USD – 240 minute chart

Cryptocurrency Update

Cryptocurrencies are showing bullish signals as buyers keep coming back. They broke above the recent range early last week but pulled back lower. Although, after Elon Musk took over Twitter, Dogecoin surged around 250% higher, pulling higher Shiba Inu coin, as well as the rest of the crypto market. So, buyers seem to be stronger at the moment.

 BITCOIN Still Retesting the 100 Daily SMA

Bitcoin buyer [pushed the price above the top of the range last week, after trading in a range for nearly two months. The 50 SMA (yellow) was pushing the highs lower on the daily chart, but the breakout came and buyers pushed the price above the 50 SMA, but the 100 SMA turned into resistance. Although buyers are retesting that moving average, so there might as well be another bullish breakout soon.

BTC/USD – Daily chart

Bullish Breakout in [[Dogecoin]] 

Dogecoin was bearish like most other cryptocurrencies, although it was trading in a range since July. Moving averages were acting as resistance on the daily chart, particularly the 200 SMA (purple) but late last week we saw a surge after Elon Busk took over Twitter. DOGE/USD climbed above $0.15, so it is one of then most bullish cryptos right now.

DOGE/USD – H4 chart