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Yesterday’s Market Wrap
Yesterday, attention turned to the Bank of England meeting which was expected to mark the sixth straight rate hike and the first worth 50bps (basis points). They met expectations and hiked rates to 1.75%, but the BOE’s economic and inflation forecasts were quite gloomy, sending the GBP lower after the rate decision.
BOE’s Bailey said in the press conference that Britain is likely to enter a recession later in the year. The BOE warned of the longest recession since the global financial crisis and also provided a subtle shift in guidance à la RBA ie “not in a predetermined way‘ indicating a slowdown in rate hikes, and they are not wrong. Earlier today, the construction PMI report showed that the sector contracted in July.
The data agenda today
Minutes of the Reserve Bank of Australia meeting were released earlier this morning and reiterate the stance taken by the RBA at the last meeting, meaning that future rate hikes will not be set in stone, unlike at previous meetings. German and French industrial production fell in June while we have the US and Canadian jobs and earnings reports this afternoon. US WTI crude continued to decline yesterday, falling below $90 a barrel for the first time since the conflict in Ukraine began.
Volatility and uncertainty continued for most financial markets yesterday, with the USD unable to match the previous day’s bullish momentum. However, we took advantage of the bearish momentum in Crude Oil and opened a few signals there, all of which closed in profit.
EUR USD sell signal
EUR/GBP GBP has been bearish since early July as euro weakness compounded on deteriorating euro-zone consumer and investor sentiment. Moving averages acted as support below, but they have turned in Resistance and the 20 SMA (grey) has recently taken over, suggesting reasonable selling pressure on this pair. We have decided to enter here forex-To open a sell signal below this moving average during yesterday’s retrace to the upside ahead of the Bank of England meeting today.
EUR/GBP 60 minute chart
GOLD – 2 buy signals
Gold has turned bullish for a few weeks as uncertainty reigned supreme, keeping sentiment bullish on XAU. Yesterday we opened two buy signals as the bullish momentum continued. The first signal closed in profit as the bullish momentum continued in the European session, but we were caught by the second gold signal as the price retreated more than 100 pips lower.
XAU/USD – 60 minute chart
cryptocurrencies showed buying pressure on Wednesday but resumed bearish momentum yesterday as the retracement continued. Ethereum and Bitcoin pulled back from resistance indicators earlier this week but we are following them to buy lower later this week.
The 20 SMA still holds as support for Bitcoin
Bitcoin stopped rising since it plunged below $200 in June and has since made higher lows. BTC has formed a bullish channel and the moving averages have now turned into support as BTC is making higher and higher highs as well. For the past few days we have seen the crypto market decline lower, but the decline ended at the 20 SMA (grey) for Bitcoin, which is another bullish sign as buyers jump in before hitting the bottom of the channel. We’re already long bitcoin, so we’re sticking to our signal here.
BTC/USD daily chart
ETHER Being squeezed between 2 MAs
Ethereum fell below $1,000 in June during the last crypto crash but turned bullish in mid-July. Buyers surged above the 50 SMA (yellow) which was the first bullish signal and after the first failure at the $1,700 support and resistance level, ETH/USD surged above it as the 20 SMA (grey) turned into support. But the 100 SMA (green) continues to act as resistance on top, although chances are that ETH will rally above it once the price gets stuck at this moving average.
ETH/USD daily chart
Source: Crypto News Deutsch