Last Week’s Market Wrap

Last week market resumed the theme from Q4 of last year, which was to sell the USD and buy almost everything else. We saw a pause of that in December after the last rate hike from the FED and other major central banks. But inflation posted another decline in December as shown in last week’s report, while the US economy is slowing further, which puts more pressure on the FED to stop rate hikes.

That improved risk sentiment considerably, and risk currencies resumed the bullish trend, while the USD resumed the decline. Although, as inflation slows in the US, the consumer becomes more confident, which makes a case for an economic recovery this year, given that employment numbers are holding up well.

This Week’s Market Expectations

So, as inflation slows and consumer sentiment improves, the US economy will recover, so the USD decline migh be limited this week. Today we don’t expect much volatility since US marketa are closed for Martin Luther King Day. The economic dagta from elsewhere is light as well today, but there will be may important economic release in the week ahead, starting with the Chinese GDP reports early tomorrow, while the annual World Economic Forum is already underway in Davos, which will announce the future of the globe for the coming years.

Forex Signals Update

Last week the volatility was decent and presented us with some nice trading opportunities, although it was a bit tioo high at times, which caught thw markets off guard. We remained short on the USD, long on Gold and on most other risk assets, with 20 trading signals in total. We had 13 winnnig signals and 7 losing ones, with a win/loss ratio of 65%:35%.

GOLD Picking Up Pace

Gold made a strong reversal in early November as the USD turend bearish and pushed above all moving averages eventually. The 20 SMA (gray) has been acting as support on the daily chart with the trend remaining bullish, but in the last two weeks the buying has picked up and Gold has left behind the 20 SMA. So, buywrs remain in control and we will try to buy piullbacks lower.

XAU/USD – Daily chart 

 Reamining Bearish on USD/JPY 

USD/JPY has been bearish since October and the pace of the decline looks to be stronger than during the bullish trend earlier last year. The 20 SMA is acting as resistance here on the daily chart, rejecting the price. We have been bearish on this pair and well continue to remain so as long as sellers are in charge.

USD/JPY – Daily chart

Cryptocurrency Update

Cryptocurrencies turned bearish in November 2021 as the war on cryptos escalated and they have been making lower highs since then, without showing much buying pressure. The highs continue to be lower, but they showed some really strong buying pressure last week, which was probably the best week since the bearish trend started.

BITCOIN Trading Above $20,000

Bitcoin resumed the decline in November last year and made some new lows, falling below $16,000. But, we saw a reversal in the first week of this year and last week the bullish momentum accelerated as buyers [ushed the price above the 200 daily SMA, sending BTC/USD above $20,000, so we booked profit on our BTC buy signal.

BTC/USD – Daily chart

Booking Profit on ETHEREUM 

Ethereum continues to make lower highs as well in the larger time-frame charts, but last week buyers pushed the price above the 200 daily SMA (purple). This is an important break because ETH/USD hasn’t been above this level since early April last year. Over the weekend ETH hit our take profit target so we closed two winning crypto signals last week.

ETH/USD – Daily chart