Looking for trading opportunities in calm markets

Forex Signals Brief August 8: Another Quiet Day Expected, With Light Data

Posted Tuesday, August 8, 2023 by
Skerdian Meta • 3 min read

Looking for trading opportunities in calm markets

Yesterday’s Market Wrap

The last two weeks have been quite volatile, as some central banks continued to tighten the monetary policy and raise interest rates again, while a couple held steady, as we head into the end of the tightening cycle. As a result, the price action has been all over the place, although yesterday the situation calmed, with the economic data being very light.

The German Industrial Production posted a decline of 1.5% against -0.4% expected, which shows that the European economy is diving down fast, after the ECB raised interest rates in a hectic manner. The Sentix Investor Confidence showed some improvement for the Eurozone though, but it still remains negative.

The notable thing was some willingness to return to the USD, after the strong retreat following last Friday’s Non-Farm Payrolls. We saw an attempt for the USD to come back late on Friday which continued yesterday, with FED’s Bowman making comments on more rate hikes. Although, there is a lot of uncertainty yet, especially regarding the next FED meeting which is visible in the price action.

Today’s Market Expectations

Today is another light day for the economic calendar, with trade reports mainly. Earlier this morning we had the Average Cash Earnings from Japan which remained stable, while Household Spending continues to decline at a rate of 4%. Although, we will follow the price action to see if the sentiment surrounding the USD will continue to strengthen, as we approach the CPI consumer inflation and the PPI producer inflation.

Forex Signals Update

Yesterday we opened several trading signals and a couple of forex signals carried on from last week. The price action was slow so the majority of signals remained open. The Gold signal approached the SL target on Friday but after a bearish reversal yesterday as USD buyers started to come back it approached the TP target but remains open, as do the forex signals.

For more detailed updates, please refer to the section below.

GOLD Approaching Both Targets

The price of gold has been showing a pattern of falling highs since the middle of last month, indicating a resurgence of selling pressure. This trend has led to the breach of moving averages on the H4 chart. Last week, the 200 Simple Moving Average (SMA) turned into a resistance level after being initially broken. Subsequently, there was a further decline in price to $1,925.

However, this particular moving average was surpassed on Friday due to a bullish reversal, which was triggered by the release of a weaker-than-expected Non-Farm Payrolls (NFP) report. This report led to a decline in the USD, causing the XAU/USD pair to surge by $22, reaching a value of over $1,947. Although the price missed the SL target and after the reversal lower yesterday it approached the take profit target, but missed that as well.

XAU/USD – 240 minute chart

Considering the current market conditions, we are providing a trading signal as follows:

Gold Sell Signal
Entry Price: $1,937.36
Stop Loss: $1,951.36
Take Profit: $1,929.36

The 50 SMA Hold in USD/JPY

USD/JPY has been bullish for months and after the deep pullback early last month, buyers returned and this pair resumed the bullish trend again. We have been trying to buy retraces lower in this forex pair, which has proved to be a good strategy, since most of our forex signals here, especially the long term ones have closed in profit. The price dived to the 50 SMA (yellow) on Friday last week after the soft NFP numbers, but that moving average held as support and we saw a reversal yesterday, as the price bounced off the 50 SMA, returning back to the entry level. Although the 20 SMA (gray) stopped it from climbing higher.

USD/JPY – H4 chart

Considering the current market conditions, we are providing a trading signal as follows:

USD/JPY Buy Signal
Entry Price: 142.48
Stop Loss: 141.08
Take Profit: 143.28

Cryptocurrency Update

Steady Downttrend in BITCOIN

Bitcoin has been declining gradually ever since it fell below the critical support level of $30,000. This particular level had previously served as a robust support, but it has now transformed into a resistance point. The moving averages are also contributing to this resistance, especially the 50-day Simple Moving Average (SMA), which is currently impeding the price due to sustained selling pressure.

Recent developments saw the price drop to $28,616; however, it encountered substantial buying support in this region, leading to a rebound above $29,300. The price continues to fall although we are seeing buying pressure below the $29,000 level, which implies that there is an influx of buying interest below there.

BTC/USD – Daily chart

We’re looking to open another buy Bitcoin signal on Monday, playing the range again, buying BTC/USD just above $30,000:

Entry Price: $28,600
Stop Loss: $27,000
Take Profit: $31,300

The 100 Daily SMA Holds for ETHEREUM

Ethereum made a strong bounce and moved above $2,000 earlier this month as buyers remained in charge. We have had quite a few long term buy Ethereum signals since the trend has been bearish since the beginning of 2023, with the lows getting lower. Although since then the pressure has been to the downside, but Ethereum has still shown more resilience than Bitcoin. So, we decided to open a buy ETH signal on Monday after the retreat, so we’re betting on moving averages to act as support and hold the retreat and the 100 SMA (green) seems to be holding.