Last Week’s Market Wrap

Last Friday we saw a crash in the USD which is the last safe haven remaining and a surge in risk assets, as China gave some strong signals about reopening after three years of coronavirus restrictions. That would be great news for trade in general and the sentiment improved sending stock markets higher, although over the weekend we heard comments which opposed the reopening news.

So, commodity currencies and other risk assets opened with a bearish gap lower at the start of the Asian session. Although the sentiment picked up again and we saw a continuation of Friday’s price action and EUR/USD moved above parity once again. Although there was less volatility as traders prepare for the US midterm elections and the Inflation report later this week.

This Week’s Market Expectations

So, today’s focus will be on the US Congressional midterm elections, with polls favoring a Republican win. Markets are feeling positive if this scenario takes place, although there might be some time before the results come out. Cryptocurrencies are certainly favoured if Republicans take the House, since the current administration has opened a war on cryptos. A split government could result in political gridlock that stymies major policy changes, an outcome that investors see as favorable for equities.

Forex Signals Update

Yesterday we saw a reversal again, as markets started with the risk sentiment being negative at the Tokyo open on Chinese denial of reopening, but reversed higher eventually. We opened three trading signals in total, two in Gold and one in EUR/USD, trading the parity.

GOLD Hesitating at Resistance

Gold has been bearish since March after reversing above $2,000 and we have been selling retraces higher, as it kept making lower highs. Although at times we have traded the upside as well during strong retraces. On Friday Gold surged higher but buyers are hesitating at the $1,680 level which used to be supported previously.

XAU/USD – 60 minute chart

Going Long on USD/JPY at the 20 SMA    

USD/JPY continues to be on a strong bullish trend despite the recent weakness after the intervention from the Ministry of Finance of Japan and the smaller and more frequent interventions from the BOJ.  The highs have been getting lower although the 20 SMA (gray) is acting as support, so we decided to open a long term buy signal here.

EUR/USD – Daily chart

Cryptocurrency Update

Cryptocurrencies have been bullish in the last two weeks, as Elon Musk bought Twitter and risk sentiment improved as well. Today’s midterm elections might offer another push higher for the crypto market, especially if Republicans win, which would be welcomed by crypto traders after yesterday’s bearish retreat.

 ETHEREUM Retesting the 200 SMA

Ethereum continues to show buying pressure since reversing below $1,000  in July, making higher lows and recently the previous resistance around $1,500 has turned into support. Although the 200 SMA (purple) is acting as resistance, but buyers are keeping the price close to it which shows that they will probably push above this moving average.

ETH/USD – H4 chart   

 BITCOIN Returning Below $21,000

Bitcoin was trading in a rage above and below $20,000 for a few months, but it seems like the range might have been broken now, as buyers take control. In the last week of October, they pushed the price above $21,000 and the 20,000 level has turned into support now. BTC bounced off that level after the retreat and the 100 SMA (green) also helped, so buyers remain in control.

BTC/USD – H4 chart