Yesterday’s Market Wrap

The USD has been under pressure in the last two weeks, as the FED prepares to slow down with rate hikes, which has improved the sentiment in financial markets. So, the USD started on the back foot yesterday, still sliding lower during the European session after the release of the last services PMI figures from Europe. But we saw a sudden risk reversal right before the US session started, which sent the US surging back up and risk assets tumbling lower.

That came after the US ISM non-manufacturing report, which showed a decent expansion of the activity in the service sector. That came as a bit of a surprise after the services PMI fell in contraction earlier in the day, while ISM manufacturing also fell in contraction last week. So the path of least resistance was buying the USD since it had been sold aggressively in the past two weeks, relieving the overbought conditions. A new debate about if/when the FED will have to go above 5% is starting to brew which hurt the sentiment, with crude Oil losing more than $5.

Today’s Market Expectations

Today started with the Average Cash Earnings and Household Spending from Japan which showed a cool-off from the previous reading, particularly spending. Although the highlight of the day was the Reserve Bank of Australia (RBA) meeting which produced yet another rate hike. This was the eighth consecutive hike worth 25 basis points (bps), which took them from 2.85% to 3.10%. The UK Construction PMI report was just released and showed another slowdown, while later we have the US and Canadian trade balance figures for November. So, the economic calendar is light.   

Forex Signals Update

Yesterday the volatility continued and it picked up indeed, as the sentiment turned negative and the USD surged higher. At first the USD was declining but then the sudden reversal came and we got caught on the wrong side with some trading signals, but reversed sides and got back on our feet, making some winning signals in commodities in the second half of the day.

Turning Bearish on GOLD

Gold turned bullish in November after being bearish since March when it peaked above $2,000. Buyers pushed above the 50 SMA (yellow) on the daily chart which was acting as resistance and today XAU/USD reached $1,810, where it met the 200 SMA (purple). Then we saw a reversal after the US ISM services report and lost around $45, so we decided to turn bearish and booked profit on our sell Gold signal.

XAU/USD – 60 minute chart

Selling the Decline in WTI Oil

Crude Oil turned bullish early yesterday as the sentiment continued to be positive from last week and climbed to $82.70s. But reversed after the US ISM services report and suffered some heavy losses, with the smaller moving averages such as the 20 SMA (gray) and the 50 SMA (yellow) acting as resistance. We decided to open a sell signal at these MAs which closed in profit as the decline continued.

US Oil – 1 minute chart

Cryptocurrency Update

Cryptocurrencies resumed the risk assets status again, following other risk assets in financial markets after the FTX headwind was over. They have been crawling higher since the middle of November, with the sentiment being positive and the USD being weak. But yesterday we saw a bearish reversal, although it wasn’t as strong as is the forex and commodities markets.

BITCOIN Failing at the 200 SMA

Bitcoin pushed above the 50  and 100 SMAs which were acting as resistance on the H4 chart as the sentiment was improving post FTX crash. We opened a buy BTC signal below $17,000 and yesterday buyers pushed the price above $17,400 where the 200 SMA (purple) was waiting on the H4 chart. It rejected the price as the USD buyers returned and BTC fell below 17,000 again.

BTC/USD – H4 chart

LITECOIN Overcoming the 50 SMA

Litecoin has been making gains since June and the FTX event which sent the crypto market through another crash didn’t affect LTC too much. In the last several weeks we have seen some bullish momentum which has pushed the price above the 20 SMA (gray). This moving average has turned into support now while the 50 SMA (yellow) turned into resistance but buyers managed to push LTC above it yesterday, which ended up with gains after all.

LTC/USD – Weekly chart