Yesterday’s Market Wrap
After the FED decision to hike interest rates by 75 bps on Wednesday evening, the risk currencies turned bullish while the USD went through a strong retreat. Yesterday we saw a continuation of that market sentiment which sent most currencies higher against the USD, since the market is convinced now that there won’t be any such large hikes in the near future.
The Q1 GDP from New Zealand surprised the market with a decline during Q1, followed by a surprise 50 bps rate hike from the Swiss National Bank which took them from -0.75% to -0.25%. The Bank of England also raised rates, by 25 bps to 1.25% and GBP/USD turned quite bullish, although it is not clear whether this is due to the rate hike since markets now are expecting two 50 bps to follow, or due to the USD decline.
The Data Agenda Today
Early this morning we had the meeting from the Bank of Japan where they left unchanged, although CPI (consumer price index) inflation remains pretty normal in Japan and China. But, after the surprise hike from the SNB yesterday every meeting matters. In a while, we have the final inflation figures from Europe, with the headline CPI expected to stay at 8.1%. In the afternoon, FED chairman Jerome Powell will hold a speech, which might chnage the course for the USD.
Yesterday was another volatile day, as the USD continued the Wednesday evening retreat, as a relief rally after the 75 bps from the FED. We opened six trading signals across most markets, one of them in Gold, one in Ethereum and four in forex. We ended up with three winning signals at the end of the day, which is pretty good, considering the volatility, while the Ethereum signal remain open.
GOLD – Sell Signal
After the sell signal in Gold on Wednesday which closed in profit, we decided to take another short yestyerday during the decline post BOE rate hike. Gold turned bearish in early March after it pushed above $2,000 on the Ukrainian conflict. Since then the trend has been bearish and Gold has lost the safe haven status which was shown by yesterday’s rally with risk currencies, and at some point, it fell below $1,800. We decided to sell Gold as it was declining but we saw a sudden shift and XAU turned bullish.
XAU/USD – H4 chart
WTI Oil – Sell Signal
Crude Oil has been on a bullish trend for two years and since March the uptrend has picked up pace, making higher highs until Wednesday, with moving averages acting s support on the H4 chart. But we saw a reversal by the middle of the week as Natural Gas crashed more than $2 lower. Moving averages were broken and we decided to open a sell signal yesterday with a take profit target above the 200 SMA (purple) and booked profit before the bounce higher.
US WTI Oil – 60 minute chart
Cryptocurrencies started slipping lower again last week, after consolidating for about a month since early May and they made some new lows. Ethereum, where we opened two crypto signals earlier this week, tested the $1,000 zone as it fell to $1,020 while Bitcoin survived the $20,000 level after the price bounced just above that zone yesterday.
Buying Ethereum Above $1,000
After the consolidation during most of May, cryptocurrencies resumed the decline earlier this month, with ETH/USD falling close to $1,000. The zone above this major round level has held for several times and we think that it is time for a bounce higher before the decline resumes. So we decided to open a buy signal above the $1,000 level.
ETH/USD 240 minute chart
Will the $20,000 Suvive in BITCOIN ?
Bitcoin turned quite bearish again after the decline resumed again in the crypto market. BTC headed for $20,000 and we decided to open a sell signal here during the bounce on Tuesday. We booked profit as the price returned to the $20,000 level yesterday, before the reversal higher.
BTC/USD – 240 minute chart