The pair will likely continue falling as sellers target the next key psychological level at 0.6800.

Bearish view

• Sell the AUD/USD pair and set a take-profit at 0.6800.
• Add a stop-loss at 0.6953.
• Timeline: 1-2 days.

Bullish view

• Set a buy-stop at 0.6935 and a take-profit at 0.7025.
• Add a stop-loss at 0.6850.

The AUD/USD price retreated slightly ahead of the upcoming Jackson Hole Symposium in Wyoming and the second estimate of US GDP data. It was trading at 0.6900, which was slightly below this week’s high of 0.6966.

Jackson Hole and US GDP data

The AUD/USD price has been in a bearish trend in the past two weeks because of the substantially strong US dollar. The dollar index managed to recover from this month’s low of about $104 to $109 after the mixed minutes by the Federal Reserve.

The minutes showed that the bank’s officials were still concerned about the soaring inflation being entrenched permanently in the economy. At the same time, some members worried that the bank was possibly hiking too fast.

Therefore, investors will focus on the upcoming Jackson Hole Symposium where Jerome Powell will be the headline speaker. His statement will be notable since it will be the first one since the US published July’s consumer inflation data.

The data showed that inflation dropped from 9.1% in June to about 8.7% in July this year as gasoline prices dropped. Prices moved below $4 for the first time in months, signaling that inflation will also drop in August.

Fed officials usually use the Jackson Hole event to reset expectations. Therefore, there is a likelihood that the AUD/USD pair will show some volatility as it goes on.

The pair will also react mildly to the second estimate of US GDP data for the second quarter. In July, data by the statistics agency showed that the country’s economy contracted by 0.8% in Q2, after slowing by 0.9% in the previous quarter. As a result, the country moved into a technical recession in the quarter. The data will not have a major impact on the pair.

AUD/USD forecast

The AUD/USD pair has been in a bearish trend in the past few days. In this period, it has moved below the standard pivot point and the 25-day and 50-day exponential moving averages. At the same time, it has formed what looks like a head and shoulders (H&S) pattern, which is usually a bearish sign. The pair has moved slightly below the 38.2% Fibonacci Retracement level.

Therefore, the pair will likely continue falling as sellers target the next key psychological level at 0.6800. A move above the pivot point at 0.6955 will invalidate the bearish view.

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The pair will likely resume the bearish trend as sellers attempt to move below the support at 1.2000.

Bearish View

• Set a sell-stop at 1.2000 and a take-profit at 1.1900.
• Add a stop-loss at 1.2200.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 1.2135 and a take-profit at 1.2250.
• Add a stop-loss at 1.2000.

The GBP/USD price rose slightly ahead of the upcoming UK consumer and producer inflation data and the relatively weak US housing numbers. It rose to 1.2100, which was about 70 basis points above the lowest level this week.

UK Inflation and US Retail Sales Data

The GBP/USD price will be in the spotlight on Wednesday as investors reflect on key data from the United States and the UK.

The Office of National Statistics (ONS) will publish July’s inflation numbers. Economists surveyed by Reuters expect the data to show that inflation continued rising in July. Precisely, they expect that the headline CPI rose from 9.4% in June to 9.8% in July on a year-on-year basis. On a positive note, they believe that inflation dropped from 0.8% to 0.4%.

Excluding the volatile food and energy prices, analysts expect that the country’s inflation rose from 5.8% to 5.9%. On Tuesday, data compiled by Kantar showed that food prices in the country rose by 11.6% YoY in the four weeks to August 7. This was the biggest increase since the company started collecting the data in 2008.

The data will come a day after the UK published relatively weak jobs data as the unemployment rate rose from 3.7% to 3.8%. The employment rate dropped t 75.5% while the number of open vacancies dropped to 1.27 million.

The GBP/USD price will next react to the upcoming American retail sales numbers. With inflation soaring, analysts believe that sales dropped from 1.0% in June to 0.1% in July while core sales fell from 0.6% to -0.6%. On a positive note, top retailers like Walmart and Home Depot published strong results on Tuesday.

The pair will also react to the latest minutes of the FOMC. These minutes will provide more color about what the officials talked about in their meeting.

GBP/USD Forecast

The GBP/USD pair has been in a strong downward trend in the past few days. This decline started when the pair formed a double-top pattern at around 1.2288. In price action analysis, this pattern is usually a bearish sign. The pair rose in the overnight session after it hit the neckline of this pattern.

The GBP/USD pair remains below the 25-day and 50-day moving averages and the 38.2% Fibonacci Retracement level. Therefore, the pair will likely resume the bearish trend as sellers attempt to move below the support at 1.2000.

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Still selling off from yesterday’s spike to above $1.0350.

My previous EUR/USD signal last Thursday not triggered as there was no bearish price action when the key resistance level at $1.0121 was first reached.

Today’s EUR/USD Signals

Risk 0.75%.

Trades may only be entered between 8am and 5pm London time today.

• Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.0211 or $1.0245.
• Place the stop loss 1 pip above the local swing high.
• Move the stop loss to break even once the trade is 20 pips in profit.
• Take off 50% of the position as profit when the price reaches 50 pips in profit and leave the remainder of the position to run.

Long Trade Ideas

• Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.0073, $1.0042, or $1.0000.
• Place the stop loss 1 pip below the local swing low.
• Move the stop loss to break even once the trade is 20 pips in profit.
• Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

EUR/USD Analysis

In my last analysis of the EUR/USD currency pair on 4^th August, I noted that we were seeing strong selling every time the price got near the $1.0300 handle, but also strong buying every time the price approached the $1.0100 area.

This was a good call as the price remained ranging within this area until yesterday’s news about lower-than-expected US inflation sparked a selloff in the US Dollar, sending the price breaking out of its consolidating triangle chart pattern and spiking up to an area above $1.0350.

It is interesting that the spike not only did not last, but that we are seeing the price continue to descend consistently, with the price now trading well below $1.0300 and returning to the area of its medium-term consolidation.

This shows that the Euro is a relatively weak currency, so trading this pair long even when the US Dollar is weak is maybe not a good idea. There are other currency pairs that seem to be working better with Dollar weakness, such as any of the commodity currency pairs such as AUD/USD, NZD/USD, or USD/CAD.

Both the nearest support levels at $1.0250 and $1.0202, as well as the nearest support level at $1.0294, look firm and likely to hold at least for a while when next reached. I think scalping off reversals at any of these levels, especially $1.0250 which looks especially attractive, will be the best strategy to use in trading this pair today.

Concerning the USD, there will be a release of PPI data at 1:30pm London time. There is nothing of high importance scheduled today regarding the EUR.

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The pair will likely have a bearish breakout in the coming days.

Bearish View

• Set a sell-stop at 1.2025 and a take-profit at 1.1950.
• Add a stop-loss at 1.2160.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 1.2145 and a take-profit at 1.2250.
• Add a stop-loss at 1.2050.

The GBP/USD price moved sideways on Wednesday as investors continued reacting to the upcoming US inflation data. The pair dropped to a low of 1.2067, which was lower than this month’s high of 1.3000.

US Inflation Data

The GBP/USD pair retreated slightly on Wednesday morning as the market refocused on the upcoming US inflation data. Inflation is an important part of the economy since it forms part of the Federal Reserve’s dual mandate.

Consumer and producer prices have been in a strong upward trend in the past few months. This growth was attributed to the rising price of fuel and the ongoing supply shortages. The lockdowns in China and the ongoing flight chaos have fueled higher prices.

Recently, however, there are signs that inflation has eased slightly in the past few weeks. For example, the price of gasoline has dropped to about $4 in most parts of the country. At the same time, many retailers like Target and Walmart have expressed concerns about their inventories.

Further, commodities like copper and iron ore have declined while house inventories has risen. It is against this backdrop that analysts expect that US inflation dropped modestly in July even though they expect it to remain above the Fed’s target of 2.0%.

Economists expect that the headline CPI dropped from 9.1% to 8.7% in July. Excluding the volatile food and energy prices, they believe that inflation rose slightly. American bond yields retreated slightly ahead of these numbers. Yield of the 10-year government bonds declined to 2.7%.

Meanwhile, there are concerns about the cost of living in the UK. British households are expected to spend more than 4.4k pounds a year on energy, according to Cornwall Insight. This will be a major shock to households that have seen wages grow at a slower pace.

GBP/USD Forecast

The GBP/USD pair declined slightly ahead of the latest US inflation data. It has moved slightly below the 25-day and 50-day moving averages while the MACD has moved below the neutral point. The pair has also moved substantially below the important resistance point at 1.2291.

At the same time, it has formed a small head and shoulders pattern. Therefore, the pair will likely have a bearish breakout in the coming days. If this happens, the next key support point to watch will be at 1.1950.

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The pair will likely keep rising as bulls target the next key resistance point at 26,000.

Bullish View

• Buy the BTC/USD pair and set a take-profit at 26,000.
• Add a stop-loss at 22,500.
• Timeline: 2 days.

Bearish View

• Set a sell-stop at 23,800 and a take-profit at 22,000.
• Add a stop-loss at 25,000.

The BTC/USD price made a bullish breakout as demand for cryptocurrencies rose. The pair crossed the important resistance point at 24,000, which was the highest point since July 30th of this year. Bitcoin has recovered by more than 36% from its lowest level this year.

Cryptocurrency Recovery Continues

Bitcoin has had a relatively difficult year as worries of high-interest rates rose. It dropped from last year’s high of almost $70,000 to about $18,000. Recently, however, bitcoin and other cryptocurrencies have staged a strong recovery, bringing their total market cap to over $1.1 trillion.

This recovery has happened at a time when the Federal Reserve has ramped up its rate hikes. The bank hiked interest rate hike by 0.75%, bringing the total year-to-date increase to 225 basis points. Analysts expect that the bank will continue hiking rates this year, especially after the strong US jobs data.

Data by the Bureau of Labor Statistics (BLS) showed that the American economy added over 528k jobs in July. The unemployment rate dropped from 3.6% to 3.5% while wages continued rising. As a result, some Fed officials, including Mary Daly hinted that the bank will hike rates by 0.50% in September.

The next key economic data to watch will be the upcoming US consumer price index (CPI) data. Economists expect the data to reveal that the country’s inflation slipped slightly in July as gasoline prices retreated.

The BTC/USD price also bounced back because of the strong correlation between technology stocks and cryptocurrencies. The Nasdaq 100 index, which is made up of the biggest tech companies, has risen by about 20% from the lowest level this year. This means that the index is exiting the bear market.

BTC/USD Forecast

The four-hour chart shows that the BTC/USD price has been in a strong bullish trend in the past few weeks. The pair has moved above the 25-day and 50-day moving averages. At the same time, the MACD has moved above the neutral point.

Notably, the pair has formed an ascending triangle pattern that is shown in green. In price action analysis, this pattern is usually a bullish sign. It has moved to between the 50% and 38.2% Fibonacci Retracement level.

Therefore, the pair will likely keep rising as bulls target the next key resistance point at 26,000. A drop below the support at 23,000 will invalidate the bullish view.

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There is a sense that Bitcoin and other cryptocurrency prices have seen their worst period this year.

Bullish view

• Set a buy-stop at 23,200 and a take-profit at 24,500.
• Add a stop-loss at 21,200.

Bearish view

• Sell the BTC/USD pair and set a take-profit at 21,000.
• Add a stop-loss at 23,500.

The BTC/USD crawled back during the American and Asian sessions even after the hawkish decision by the Federal Reserve. Bitcoin retested the important resistance level at $23,000, which was still about 10% below the highest point last week.

Fed rate decision and US earnings

The Federal Reserve concluded its two-day meeting on Wednesday and did what most analysts were expecting. The bank decided to hike interest rate by another 0.75%, bringing its year-to-date hike increase to 225 basis points. The dot plot revealed most officials expect the rate hike cycle will continue in the coming months.

The Fed is facing the challenge of lowering inflation without causing a recession. Data published this month showed that the headline consumer price index (CPI) rose to 9.1% in July, which was the highest point in over 4 decades.

Excluding the volatile food and energy products, inflation rose by almost 6%. Historically, risky assets like Bitcoin and stocks tend to underperform in a period when the Fed is extremely hawkish.

The BTC/USD pair rebound coincided with the cautious comeback of American stocks. The Dow Jones, Nasdaq 100, and S&P 500 indices rose even after earnings by big-tech companies like Alphabet and Microsoft missed analysts’ forecasts.

Most companies have published weak results. According to FactSet, companies have published the slowest earnings growth since 2020. Still, investors believe that the earnings are not as bad as expected. In the past few weeks, there have been a close correlation between stocks and cryptocurrencies.

Meanwhile, on-chain data show that exchanges are seeing higher demand in the past few days as investors buy the dip. There is a sense that Bitcoin and other cryptocurrency prices have seen their worst period this year.

BTC/USD forecast

The four-hour chart shows that the BTC/USD pair rose to a high of 24,318 last week. This was the highest point since June 13th. This week, the situation faded, which saw the price drop to about 20,733. It has moved above the 25-day and 50-day moving averages and is slightly above the lower side of the ascending channel. It has also formed a head and shoulders pattern.

The Relative Strength Index (RSI) has moved from the oversold level to 62. The pair will likely continue rebounding as buyers target last week’s high of 24,320.

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Because of the hammer pattern, the pair will likely continue rising as bulls target the key resistance level at 1.0480.

Bullish View

• Buy the EUR/USD pair and set a take-profit at 1.0480.
• Add a stop-loss at 1.0375.
• Timeline: 1-2 days.

Bearish View

• Set a sell-stop at 1.0400 and a take-profit at 1.0350.
• Add a stop-loss at 1.04600.

The EUR/USD volatility rose after last Friday’s strong Eurozone consumer inflation data. The pair dropped to a low of 1.0366, which was the lowest level since June 15th of this year. It remains about 3.3% below the highest level in June this year.

European Inflation Surging

The EUR/USD pair saw elevated levels of volatility after Eurostat published the latest consumer inflation data on Friday. The numbers revealed that the bloc’s inflation soared to a record high in June as the cost of energy remained at an elevated level.

The headline consumer inflation data surge to 8.6% in June from 8.1% in May of this year. This increase was higher than the median estimate of 8.5%. Countries like France, Italy, and Spain published record inflation numbers during the week. At the same time, inflation in Germany declined slightly due to fuel tax cuts and public transport discounts, which are temporary.

These numbers came a few days after the European Commission said that consumer confidence has dropped sharply in the past few months. At the same time, many companies in the bloc like Zalando, Volkswagen, and BMW have reported a sharp decline in sales in the past few quarters.

Therefore, the ECB is in a difficult situation as it faces criticism of letting inflation surge substantially above the target of 2.0%. Analysts expect that the bank will deliver its first interest rate hike in over a decade this month. The base case is that the bank will hike by 0.25% although many analysts expect it to hike by 0.50%.

There will be several important economic data from Europe on Monday. Germany will publish the latest trade numbers while Eurostat will deliver the latest producer price index (PPI) data from the region. Analysts expect the data to show that producer inflation surged to 36.7% in June.

EUR/USD Forecast

The four-hour chart shows that the EUR/USD pair made a strong bearish breakout last week. As this happened, the pair formed a hammer pattern, which is usually a bullish sign. The pair is slightly below the important leve at 1.0450, which was the lowest level on June 17th. It is also below the 25-day and 50-day moving averages.

Therefore, because of the hammer pattern, the pair will likely continue rising as bulls target the key resistance level at 1.0480. A drop below the support at 1.0385 will invalidate the bullish view.

Ethereum will continue to struggle on multiple fronts. 

Ethereum has fallen yet again during the trading session on Thursday as it looks like we are going to threaten the $1000 level. The pattern that we are carving out on the chart is an “H pattern”, which is typically very bearish. The $900 level recently offered significant support, and if we were to pierce that level, it’s very likely that Ethereum will go much lower. This is what I’m hoping for because I would love to be able to accumulate Ethereum at low levels again.

Ethereum will continue to struggle on multiple fronts. The first problem of course is the fact that the Federal Reserve is tightening its monetary policy, so therefore risky assets such as cryptocurrency get decimated. In this scenario, Ethereum is no better than any other one, and it’s not until we see Bitcoin get a little bit of a boost that Ethereum can have a real shot. By extension, it needs to see the US dollar fall, because Bitcoin is getting killed by that very same greenback.

Furthermore, the Ethereum 2.0 rollout has been slow to say the least, and as long as that continues to drag on, there is a certain amount of ambivalence when it comes to this ecosystem. We have seen multiple lenders get crushed, and hacked on Layer-2 types of environments, which of course sit on top of Ethereum. At this point, crypto is entering a “crypto winter”, which is a time where people will accumulate crypto hoping for a major shot higher. I do think that there is some type of future for crypto, but I don’t think it’s going to be quite what most people anticipate. After all, we will have digital currencies coming out of central banks soon enough, and while the purest and libertarians argue about safety, Aunt Millie will be using those central bank assets.

If we were to turn around here, I think that the 50 Day EMA comes into the picture as major resistance, which sits just above the $1600 level. After that, you have a resistant barrier in the neighborhood of $1800 that could cause problems as well. Ultimately, I think this is a “fade the rallies” type of situation if you are planning on trading from both sides. Crypto is about as toxic as it gets right now, so that’s probably the prism you need to be looking at this market through.

The support level at $20,153 is under threat.

Previous BTC/USD Signal

My previous signal on last Thursday produced a minor short trade which broke even, setting up after the price action rejected the descending trend line shown in the price chart that day.

Today’s BTC/USD Signals

Risk 0.50% per trade.

Trades must be taken prior to 5pm Tokyo time Thursday.

Long Trade Ideas

• Go long after a bullish price action reversal on the H1 timeframe following the next touch of $20,153 or $19,164.
• Place the stop loss $100 below the local swing low.
• Adjust the stop loss to break even once the trade is $100 in profit by price.
• Take off 50% of the position as profit when the trade is $100 in profit by price and leave the remainder of the position to run.

Short Trade Idea

• Go short after a bearish price action reversal on the H1 timeframe following the next touch of $21,141.
• Place the stop loss $100 above the local swing high.
• Adjust the stop loss to break even once the trade is $100 in profit by price.
• Take off 50% of the position as profit when the trade is $100 in profit by price and leave the remainder of the position to run.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

BTC/USD Analysis

I wrote in my previous analysis last Thursday that I saw the outlook as remaining basically bearish if the price remained below the descending trend line, but I also noted we have seen buying below the big round number at $20k so we might see a pause in the trend here, or even a temporary reversal.

This was a good call as this did produce a short trade although one that barely made any profit at all, as the price initially moved down from the trend line.

However, the technical picture has become less bearish and more consolidative, as my note that the price may not be able to stay below $20k has been timely – we are still seeing buying down there, probably from long-term strong hands.

The short-term action is bearish and suggests that the price may well now break down below the support level at $20,153. A problem for trades is that the two closest key levels both look very questionable. It is the more distant levels at $23k and $19,164 which look likely to be more reliable as support and resistance.

I see the best potential opportunity which might set up today as a long trade from a bullish bounce at or very close to $19,164. First, the price will have to break down below $20,153 and fall quite strongly.

A daily close below $19,164 at the end of the New York session would be a very bearish sign and suggest that the price is ready to begin another leg down to the next key support level at $13,764.

There is nothing of high importance scheduled today concerning the US Dollar or Bitcoin.

The pair will likely keep rising as bulls target the first resistance level at 1.2450.

Bullish View

• Buy the GBP/USD and set a take-profit at 1.2450.
• Add a stop-loss at 1.2150.
• Timeline: 1-2 days.

Bearish View

• Set a sell-stop at 1.2170 and a take-profit at 1.2100.
• Add a stop-loss at 1.2250.

The GBP/USD price tilted upwards after the latest UK consumer price index data and testimony by Jerome Powell, the Fed Chair. It is trading at 1.2283, which is slightly above this week’s low of 1.2162.

BOE in a Fix

The GBP/USD price rose slightly after the latest inflation data from the UK. According to the Office of National Statistics (ONS), the country’s consumer inflation rose to a multi-decade high of 9.1%. This was the highest level that consumer prices have surged in over 40 years.

The country’s inflation was driven by the soaring food and energy prices. Indeed, excluding the two, the country’s inflation declined from 6.2% to 5.9%. Analysts were expecting this inflation to drop to 6.0%.

Analysts expect that the country’s inflation will keep rising in the coming months. The Bank of England expects that inflation will rise to over 10% in the next few months.

Therefore, the Bank of England is in a fix considering that the country is now in a period of stagflation. Stagflation is a period when slow economic growth is accompanied by high inflation. As such, hiking interest rates as the BOE has pledged, will have a negative impact on the UK economy.

The GBP/USD pair also rose after the latest testimony by Jerome Powell. In his statement, Powell said that the bank will continue hiking interest rates until it sees that inflation was falling to its target at 2%. He also warned that these hikes will likely lead to a recession. Powell’s testimony will continue on Monday.

Investors will also focus on the latest flash manufacturing and services PMI data. Analysts expect the data to show that the UK and US PMIs remained above 50 even as the cost of doing business soared.

GBP/USD Forecast

The GBP/USD pair formed a small hammer pattern on Wednesday. The lower side of this hammer pattern was at 1.2165, which was the lowest level in May. The pair is along the 25-day and 50-day moving averages. It has also moved slightly above the Woodie pivot point that is shown in blue while the Stochastic Oscillator has moved slightly above the neutral point.

Therefore, the pair will likely keep rising as bulls target the first resistance level at 1.2450. A drop below the key support at 1.2160 will invalidate the bullish view.