Forex Signals Brief September 16: Retail Sales Suffer from Record Prices

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Market review last week

All eyes were on the US retail sales report yesterday, following last week’s CPI inflation report. Although before that, there were a few economic releases such as New Zealand’s second quarter GDP report, which was expected to show a 1% increase, when it was 1.7% . Australian employment beat expectations over the same period, with the unemployment rate hitting 3.5%.

In the afternoon, US retail sales posted a decent number, up 0.3% vs -0.1% expected. Although the headline figure was disappointing, most of the other components were negative. July was revised down to -0.4% from 0.0%, core non-auto sales came in at -0.3% from +0.1% expected, while the control group fell at 0.0% against +0.5% expected. The Empire State’s manufacturing index improved this month while the Philadelphia Fed’s manufacturing index declined, so the divergence continues, although the US was little changed after the publication of reports.

This morning, retail sales and fixed asset investment showed weakness again in China as lockdowns continue across the country. UK retail sales recorded a further decline in the UK this morning, showing that soaring prices are starting to weigh on consumption. Later in the US session we will have preliminary UoM consumer sentiment in the US as well as inflation expectations.

The volatility wasn’t too high yesterday, although there was enough price action in the financial markets to pick good trades and keep risk low at the same time. We again opened four trading signals in total in Forex and Commodities, all of which closed in profit, so we are continuing with the positive performance.

Purchase USD/JPY to MAs

USD/JPY continues to remain bullish, despite yesterday’s pullback. The moving averages continue to provide support on the H1 chart, and we continue to open buy signals during the downside pullbacks. Yesterday we opened another buy signal at the 100 SMA which closed in profit.

US oil – 60 minute chart

continue to sell GOLD

Gold resumed its slide last Wednesday after US CPI inflation continued to post another increase in August. The price consolidated for several days after that, trading in a tight range, but the decline resumed on Wednesday this week and we started opening gold sell signals. Yesterday we opened two such gold signals, both of which closed in profit.

Gold XAU – 15 Minute Chart

Cryptocurrency update

Cryptocurrencies turned bearish again on Tuesday after being bullish for several days as they made decent gains. But, the reversal in risk sentiment drove them lower on Tuesday and yesterday buyers were nowhere to be found. The decline has resumed, but the selling pressure has been slow, so we may see a bullish reversal eventually.

Will the 20 SMA serve as support for Bitcoin?

Bitcoin was making solid gains since last Wednesday. It came back from the dead after falling below $19,000 and continued to climb above $22,500 and the buyers hit the 100 SMA (green) on the daily chart. But Tuesday’s post-CPI crash turned this cryptocurrency bearish, sending the price below $20,000. Although the 20 SMA (grey) acts as support and after Wednesday’s candlestick, it looks like the chart is forming a bullish reversal pattern.

BTC/USD – Daily Chart

Ethereum is still hovering around $1,600

ETHERUM was also showing buying pressure, but Tuesday’s crash discouraged buyers. Although the decline was not as large as in Bitcoin. ETH/USD briefly fell below $1600 but there was no follow through and price continued to hover around $1600 so we decided to open a buy signal which remains active.

ETH/USD – 240 minute chart

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