Forex Signals Brief for February 27: China’s Rebound to Improve Sentiment

This week China's services and manufacturing are expected to show a jump into expansion, which will be great for risk sentiment

The Chinese dragon is coming back

Last Week’s Market Wrap

Last week we had some important economic events being released, starting with manufacturing and services from Europe and the US. Manufacturing continues to remain in contraction, but services are improving as inflation cools off and consumer sentiment improves. Services are well into expansion globally now, which is a strong indicator of a rebounding economy.

The RBNZ hiked the official cash rate by 50 basis pointsand held a hawkish statement but the NZD ended up lower against the USD, although it was stronger than most commodity dollars. The FOMC Meeting Minutes were hawkish, with several members pushing for a 50 bps hike in this month’s meeting, while the US Prelim GDP was revised slightly lower for Q4, although it didn’t deterr the bullish momenmtum in the USD, as the core PCE price index continued to increase.

This Week’s Market Expectations

This week starts with the US Durable Goods Orders whic are expected to post a decent decline in January after the strong jump in December. Canmadian GDP for Decmeber is expected to remain flat at 0.0%, while the US CB consumerm confidence is expected to show an improvement. The Australian GDP for Q4 is expected at 0.7%, while the monthly CPI is likely to remain elevated despite a cool off from 8.4% to 8.1%. US ISM services PMI are expected to keep the pace of expansion this month after the jump in January, despite a small slowdown. The Eurozone headline CPI inflation is expected to post a small cool-off as well but it still rmeains high above 8% and the previous month was erevised higher for both the core and headline numbers.

Forex Signals Update

Last the volatility was low but it was good to trade. We remained long on the USD as the bullish momemntum conitnued, which proved to be a good strategy, since we ended up with 17 winning signals out of 23 trading signals in total, giving us a 74/26% win/loss ratio.

Remaining Short in GOLD

Gold prices have been facing resistance from the 20 Simple Moving Average (SMA) on the H1 chart, which has been pushing it down. The 50 SMA on the H4 chart has also been acting as resistance, signaling a bearish momentum for gold prices. Moreover, the Relative Strength Index (RSI) has also been hovering in the oversold territory, indicating that the bearish momentum is strong.

XAU/USD – 240 minute chart 

GBP/USD Testing the 100 SMA

the bullish momenutm has ended in GBP/USD and it has stopped climbing since December, while making lower highs this month. The 200 SMA (purple0 was acting ad siupport on the daily chart, but this moving average has been broken and the 100 SMA (green) is the next target now.

GBP/USD – Daily chart

Cryptocurrency Update

Cryptocurrencies have been on an uptrend since January, with Bitcoin pushing above $25,000 but pulled back down last week as the USD resumed the bullish momemtum and risk sentimet deteriorated. They are now in another consolidating period, although we saw some bullish momentum pick up yesterday, so let’s see if buyers will come back this week.

MAs Trunign into Resistance for BITCOIN

Bitcoin retreated lower last week and slipped below $23,000, as USD buyers returned. BTC had pushed above $25,000 three times earlier this month as the uptrend resumed from January, but buyers have failed to hold gains above it and BTC has retreated below it. Yesterday we saw a reversal and the  price climbed back above $23,000.

BTC/USD – 240 minute chart

  ETHEREUM Remains Supported

Ethereum is also looking bullish now after yesterday’s reversal although it is facing as moving averages above now. It was displaying buying pressure for most of January as the lows kept getting higher. But last week buyers gave up and sellers took over, pushing the price below $1,500. Although the 200 SMA turned into support on the daily chart and now the price bounced back up.

ETH/USD – 240 minute chart
ABOUT THE AUTHOR See More
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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