Yesterday’s market wrap
Yesterday, the risk sentiment of previous days in the financial market faded and most markets showed uncertainty again. Risk currencies fell against the USD in the European session, as did the stock markets, but in the US session they reversed again to end the day on a weak note. Crude oil continued to rise after the EU decided to go ahead with sanctions on Russian oil, but then reversed after rumors that OPEC members wanted to suspend Russia of OPEC+ and increase production in the coming months. WE WTI reversed $120, ending the day at around $115.
China’s manufacturing PMI showed a decent improvement in May, but it still remains in contraction, while France’s Q1 GDP showed contraction, which will likely end in recession in Q2. Eurozone CPI inflation also continued to rise, reaching 8.1% in May, beating estimates, as was consumer confidence in the United States, which is a good thing.
The data agenda today
This morning, Australia’s GDP figures showed a slowdown in the first quarter, while China’s Caixin manufacturing showed an improvement in May. The unemployment rate in the euro zone is expected to remain stable, while ECB President Christine Lagarde is expected to deliver a speech later.
During the US session, the US manufacturing ISM should remain unchanged while the Bank of Canada should propose another base rate hike. However, the BOC’s comment will be more interesting because housing has started to slow in Canada, which is directly related to interest rates.
There was some nice price action in all markets yesterday as USD buyers returned again as risk sentiment flipped. We opened nine trading signals and had some difficulty in the Asian session, but made up for it in the European and US sessions, ending up with five winning signals.
GOLD – Sell signal
Gold has been bullish since reversing to the upside in the middle of last month, although it failed to break above the 20 SMA (grey) on the daily chart. This moving average provided resistance for several days and after the previous two candles, we decided to move lower yesterday, opening two gold sell signals, both of which closed in profit.
XAU/USD – Daily Chart
SILVER – Buy signal
Silver was on a strong downtrend from mid-April to mid-May, when precious metals reversed higher as sentiment began to improve and the USD began to retrace lower. The moving averages that offered resistance during the decline turned into support, especially the 20 SMA (grey) and the 50 SMA (yellow). We decided to open a buy signal at the 50 SMA last Friday after the downside retrace, but the signal hit the stop loss yesterday as the precious metals turned bearish.
XAG/USD – 240 minute chart
Cryptocurrencies turned bearish again in the first two weeks of May, but over the past 2-3 weeks they have been consolidating in a tight range with a bearish bias as the highs continued to decline. Over the past few days, we have seen a higher retracement, but the retracement could have ended.
are we going to sell Bitcoin at 200 SMA?
Bitcoin crashed to $25,500 in early May, but it pulled back quite quickly, which showed buying pressure there. BTC has been consolidating in a range for most of the month, with smaller moving averages acting as resistance at the top. Over the past few days we have seen a decent bullish move, but it stalled at the 200 SMA (purple). So, this looks like a good opportunity to sell Bitcoin if the most significant downside pressure persists.
BTC/USD – Daily Chart
Shorting Ripple at the 50 Daily SMA
XRP/USD crashed to $0.38 earlier this month during the crypto market plunge, but has since consolidated. However, the highs went down and after yesterday’s gain, they stalled at the 50 SMA (yellow) on the H4 chart and we decided to open a sell signal below this moving average, because the stochastic indicator has become overbought, suggesting a bearish reversal soon.