Forex Signals Brief December 27: Markets Reopen But Mind the Thin Liquidity
Yesterday most markets were closed for Boxing Day, so the volatility remained low throughout the day for most assets, apart from Gold where the price action was decent enough for us to pull two trades, as XAU jumped more than $10 to $2,065 in early European trading, before reversing back down and giving it all back, only to turn bullish toward the end of the US session and end near the highs.
In forex, there was some price action, which once again pointed down for the USD, with risk assets finding some light demand in the holiday period. Commodity dollars made some slight gains, while USD/JPY traded in a very tight range, after comments from the Bank of Japan Governor Ueda. who said that they will consider changing policy if the positive wage-inflation cycle strengthens.
In terms of economic data, we had a couple of releases from Japan since they don’t celebrate Christmas too hard over there. The Unemployment Rate remained unchanged at 2.5% in December, while the Bank of Japan Core CPI (consumer price index) inflation declined by three points, falling to 2.7% in December, from 3.0% in November, while expectations were for another 3.0% reading.
Today’s Market Expectations
Today markets will reopen fully, although most traders are on holiday so we expect the volatility to be low, but on the other hand, don’t rule out spikes such as the ones we saw in Gold yesterday. The economic data is light again, with the BOJ Summary of Opinions which should leave things hanging in the air once again.
The Housing Starts are expected to show yet another decline in December in Japan, after a big decline in November. The Credit Suisse Economic Expectations have been deeply negative and are expected to remain the same, as is the Richmond Manufacturing Index.
BTC/USD has been one of the top-performing assets this year, however, it is currently in a consolidation phase following a 160% increase. Despite adverse economic conditions, the value of Bitcoin has soared above $44 and is expected to outperform traditional investments. It began at $40,000 earlier this month, but buyers have been very active, maintaining the price optimistic overall. However yesterday we saw a decent pullback, so let’s see if the 200 SMA will hold as support again.
BTC/USD – Daily Chart
ETHEREUM Remains Bullish on the Daily Chart
After suffering significant losses in the first two quarters of 2023 as it fell from near $5,000, Ethereum has been achieving greater highs, indicating that the trend has been bullish for more than a year. Ethereum has been consolidating between $1,100 and $1,400 for the majority of this month, but it appears that the bullish trend will restart, driving this pair higher as Ethereum prepares for the next upgrade. This week there has been a retreat but it seems like the 200 SMA might be holding as support.
Ethereum – Daily Chart
- ETH Buy Signal
- Entry Price: $1,947.38
- Stop Loss: $1,490
- Take Profit: $2,500
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