Forex Signals Brief for January 23: Choppy Price Action Expected Due to Economic Data
Skerdian Meta • 3 min read
Yesterday’s Market Wrap
In the first two weeks of this year, the market resumed the mode that it was during most of Q4 last year, the USD resumed the retreat while risk assets resumed the bullish momentum, as inflation and economic data showed a further slowdown. But, last week was more mixed, with choppy price action in all assets, as the data came out mixed.
China’s Q4 GDP and the UK employment report came out above expectations which is positive for Oil, while the US Empire State Manufacturing Index took a deep dive. The Bank of Japan didn’t shift the policy, which sent USD/JPY more than 300 pips up and down. UK consumer inflation slowed down but remains in double-digit value. US retail sales showed a bigger-than-expected decline in December, but it was due to cold weather around Christmas. The low unemployment claims showed that the US employment sector is still in decent shape, which will help avoid a deep recession.
This Week’s Market Expectations
This week is filled with important economic data which I reckon will be mixed again, and leave markets little changed, but with lots of volatility in between. Today we have ECB president Lagarde holding a speech in the afternoon, while tomorrow we have the European manufacturing and US manufacturing and services reports for December, which will show where these sectors are headed.
On Wednesday morning we have the CPI inflation figures from New Zealand and Australia, followed by the Bank of Canada rate decision. The US Advance GDP for Q4 of 2022 will be released on Thursday, as well as the durable goods orders, while the US Core PCE Price Index will close off the week.
Forex Signals Update
After two weeks of bullish momentum in risk assets, last week we saw many reversals as the economic data kept the price action choppy. We opened many signals and increased the number of long term trading signals, although we closed the week in breakeven with 13 losing and 13 winning trading signals in total, out of 26 trades. Although, most of our long term signals closed in profit.
Remaining Long on GOLD
We have been bullish on Gold during the first two weeks of this year since XAU has been bullish since October. But we opened a couple of sell Gold signals as it retreated lower early last week after printing a high of just below $1,930. But the 50 SMA (yellow) held as support on the H4 chart and Gold resumed the uptrend, so we turned bullish again and will remain so this week as uncertainty remains high.
XAU/USD – 240 minute chart
Is the Retreat Over in USD/JPY?
USD/JPY has been on a bearish trend since October and moving averages are helping keep it this year, as they have turned into resistance at the top. In the last two weeks, the 100 SMA (green) has stopped the retraces higher on the H4 chart so it seems like the downtrend is resuming again this week, so we are looking at USD/JPY shorts.
USD/CHF – H4 chart
It seems like the crypto winter might be over. Cryptocurrencies were displaying bearish pressure since November 2021, losing 80-90% of the value from the record high, but the decline might have ended. We have seen some bullish pressure so far this year and in the last two weeks we have seen the uptrend pick up pace further.
BITCOIN Trading Above $23,000
Bitcoin started turning bullish in the first week of this month, after trading sideways since early November and in the last two weeks the price has surged higher, gaining around 40% in value as it moves above 423,000. We saw a retrace lower last week but buyers came back so BTC is quite bullish at the moment.
BTC/USD – H4 chart
Will ETHEREUM Reach $2,000 Soon?
Ethereum was showing selling pressure last year but in the last two weeks, we have seen some strong buying momentum which sent the price above $1,600. Moving averages were doing a great job acting as support on the H4 chart and the latest bounce came at the 50 SMA (yellow).