Market Analysis for Yesterday
The credit rating agency Fitch announced Monday that it had lowered the United States’ AAA rating to AA+. Investors became more risk-averse as a result of this event, driving down stock prices and commodity prices while driving up demand for bonds.
The value of the US dollar against the Japanese yen dropped from its morning high of 142.90 to a low of 142.25 as early buyers showed interest in the Japanese currency. In spite of the USD’s strength, the pair has shown signs of recovery. During the European session, the US dollar held its ground against European counterparts, while the Australian dollar (AUD) and New Zealand dollar (NZD) were hit hardest by selling as investors became more risk averse.
As market mood shifted towards caution during Asia trading, the AUD/USD exchange rate fell to its lowest level in two months, touching the low 0.65s. The focus then shifted to the reactions of US traders to the ADP employment report out of the US. Despite a large decrease in EIA inventory, crude oil prices fell as a result of the ADP employment report for July, which sent the US dollar soaring.
Today’s Market Expectations
Caixin Services PMI data released first thing this morning from China confirmed that sector is declining as well, following last month’s drop in manufacturing. Recent bearishness in risk assets and commodities currencies will be exacerbated by this.
The Bank of England’s planned rate increase will take centre stage later. As inflationary pressures persist and wage growth remains robust, the Bank of England (BOE) is expected to raise its benchmark interest rate by another 25 basis points (bps) at its meeting this week. An interest rate increase has been widely anticipated. The central bank must act to counteract inflationary pressures, but the question is how far it must go.
New Forex Trading Signals
As investors await additional economic data, yesterday’s volatility spiked again as traders waited on the results of the Fitch downgrading of the US rating and the release of US ADP employment statistics. Three of yesterday’s six trading signals were profitable, and Gold was the winner of the day for the long haul.
Gold Price Drops Below 200 SMA
In the last two weeks, gold has been following a bearish pattern, with lower highs each week. This indicates that sellers have been dominant. The 200 simple moving average (purple) on the H4 chart turned into support last week, allowing for a $30 rally from $1,942 to $1,972. However, the price later reverted lower, and yesterday saw another drop to the previous low, where sellers once again met the 200 SMA, holding the decline.
AUD/USD Heads for 0.65
After the RBA decided to leave rates steady at 4.10%, the AUD/USD fell, and data from China has been deteriorating. As a result, we opted to open a sell forex signal here, which turned a profit towards the end of the day as selling pressure remained strong until then. We are now considering selling retraces higher since we have turned bearish on this pair.
We are issuing the following trading signal in light of the current market situation:
- AUD/USD Sell Signal
- Entry Price: 0.6630-40
- Stop Loss: 0.06670
- Take Profit: 0.6605-10
Cryptocurrency Update
The Price of Bitcoin Rises Again Above $29,000
Since falling below the $30,000 support level, the price of bitcoin has been steadily declining. As sellers continue to press the highs down, BTC is encountering resistance at the moving averages. As selling pressure has increased recently, the 50 SMA (yellow) has moved into that position. Yesterday, the price dropped to $28,616, but it has since recovered to trade above $29,300 once more, indicating that buying pressure is strong below that level.
Again playing the range, we opened a buy signal for Bitcoin on Monday, this time at a price just above $30,000.
- Entry Price: $28,600
- Stop Loss: $27,000
- Take Profit: $31,300
The 100 Daily SMA Holds for ETHEREUM
Earlier this month, Ethereum experienced a significant uptick, rising beyond $2,000 as purchasers remained in control. Since the beginning of 2023, when the lows started to grow lower, the trend has been negative, and there have been many long-term purchase signs for Ethereum. Ethereum has been more resilient than Bitcoin despite subsequent bearish pressure. Because we expect the moving averages to function as support and maintain the retreat, we opened a buy ETH signal on Monday after the pullback. The 100 SMA (green) appears to be doing its job.
- Entry Price: $1,860
- Stop Loss: $1,740
- Take Profit: $2,020
