Forex Signals Brief May 23: PMI Services and Manufacturing Day

Yesterday’s Market Wrap

Yesterday markets were pretty quiet, with most assets trading mostly in a tight range in the absence of any decent economic data, apart from a couple of releases from the Eurozone. The Eurozone March construction output came at -2.4%, showing a decline in this important sector, while consumer confidence fell to -17.4 points in May versus -16.8 estimated.

The comments from FED members remained contradictory after Chairman Powell refused to mention more rate hikes on Friday, instead mentioning cuts. But today Bullard who is a non-voter said that the FED will have to go higher on the policy rate, perhaps by 50 bps, followed by Kashkari who said that it’s a close call on whether to raise or pause in June. Those comments kept the uncertainty on, which sent the markets up and down in a tight range.

Today’s Market Expectations

Today started with the flash manufacturing and services from Australia and Japan, which showed that manufacturing activity remains in contraction while services remain steady in expansion. The same trend continues in Europe, with Eurozone and UK manufacturing activity in contraction. The US manufacturing showed some promising signs earlier this year as it started to expand again, but today the PMI number is expected to fall flat at 50.0 points for May.

Forex Signals Update

Yesterday markets were quiet and price action was slow as most assets traded within a range, so we only opened three trading signals, with another three remaining open from last week. We only had two signals closed, both in Gold, one Buy and one Sell signal, playing the range.

GOLD Moves Above the 20 SMA

On the larger charts, Gold is still bullish, but on the H4 chart, we see that Gold made a bearish reversal and fell below moving averages earlier this month. The 20 SMA(gray) was acting as resistance for some time, but it got broken. However, we saw a jump on Friday which pushed the price above this moving average which has now turned into support.

XAU/USD – H4 chart

MAs Keeping AUD/USD Down

AUD/USD has been bearish in the last two weeks, as USD buyers came back on better economic data and sent this pair around 2 cents lower. moving averages have turned into resistance on the H1 chart and we opened a sell forex signal here at the 100 SMA (green) which remains open.

AUD/USD – Daily chart

Cryptocurrency Update

BITCOIN Finding Resistance at the 50 SMA

Bitcoin has been in a bearish trend since April, making lower lows, although we have seen consolidation for around 10 days, above and below the $27,000 level. The price fall below the 50 Simple Moving Average (yellow) on the H4 chart which is acting as resistance now.

BTC/USD – Daily chart

ETHEREUM Sticking to the 100 SMA

In recent weeks, the buying pressure for Ethereum has slowed down, and we have witnessed a retreat in its price over the last few days. However, the correction appears to be nearing completion as the BTC/USD 50 SMA (yellow) is holding as support. Additionally, the stochastic indicator is showing an oversold condition. Considering these factors, we decided to open a buy signal for ETH some time ago.