Last Week’s Market Wrap

The main theme of the markets last year as trading risk sentiment and the USD, meaning that when risk turned sour in financial markets the USD rallied, which continued for most of the year until October. Then, risk sentiment improved as the FED rhetoric softened and the US and global economies showed increasing weakness. During the last two weeks though, markets have been all over the pace, with a volatile price action both ways, as traders were trying to decide the path of central banks and particularly the FED in 2023.

Although, the thin liquidity during the holiday period played a part in these irrational moves and this week traders turned to trade the risk and the USD again. We saw some decent numbers from the ADP and US NFP employment reports last week, which sent the USD higher and the terminal top for the FED rates above 5%. But the swift decline in the US ISM services which showed that this sector fell into contraction in December reversed the sentiment and sent the USD crashing lower, while everything surged higher.

This Week’s Market Expectations

We’re starting this week with positive momentum in financial markets after the dive in ISM services on Friday’s report, as the terminal top for FED interest rates falls back below 5% again, while risk assets are bullish. Although we’ll see if the positive sentiment will continue since FED chairman Jerome Powell is speaking at the Riksbank’s International Symposium on Central Bank Independence, in Stockholm on Tuesday, so traders are waiting for that speech. Besides that, the US CPI consumer inflation report is also on traders’ radar and that’s expected to show another slowdown to 6.5% in December.

Forex Signals Update

Last week the volatility increased after the Christmas pause, although moves were in both directions, so it wasn’t easy to trade. Although we ended up with 14 winning forex signals and 6 losing ones, out of 20 trading signals in total, giving us a win/loss ratio of 70:30%.

Buying the Dips in GOLD 

We have seen many retraces lower in Gold but the lows keep getting higher, which means that buyers continue to remain in charge, as they continue to push higher. Last week we saw another retreat as the USD turned bullish in the first few days of the year but XAU/USD resumed the bullish trend again and pushed to $1,870.

XAU/USD – 240 minute chart 

Turning bearish on USD/JPY

USD/JPY was retracing higher on a bullish trend since the crash post BOJ pivot in the third week of December, but the upside momentum didn’t continue. The 200 SMA (purple) stopped the retrace on Friday and we saw a strong reversal down after the US ISM services report. SO the larger bearish trend continues and we will try to sell retraces higher.

USD/JPY – 240 minute chart

Cryptocurrency Update

Cryptocurrencies are showing some buying momentum at last, as they pushed higher last week, while on Friday we saw a decent bullish move in a softer US Dollar. They have continued to crawl higher over the weekend as the sentiment remains positive in financial markets, with expectations for the US inflation to slow down again.

MAs Turn Into Support for BITCOIN

Bitcoin continues to trade in a range, mostly below $17,000 but it moved above this level over the weekend, showing that buyers are in control at the moment, but not then nor the sellers have the courage to take the situation into their hands. Yesterday we saw some buying but the 200 SMA (purple) held as support on the H4 chart and BTC pulled back lower.

BTC/USD – 240 minute chart

 The 20 SMA Keeping ETHEREUM Bullish

Ethereum crashed lower by the middle of December as the sentiment turned positive after the last central bank rate hikes back then, but has been bullish for more than a week. Moving averages are providing support during retraces lower with the 20 SMA (gray) holding on the H4 chart. Now Ethereum seems to be heading for $1,300.

ETH/USD – 240 minute chart