GBP/USD faced rejection near 1.2700 and declined heavily.
A major bearish trend line is forming with resistance at 1.2670 on the 4-hour chart.
EUR/USD is also trading in a bearish zone below 1.0700.
The US Gross Domestic Product could grow by 1.3% in Q1 2024.
GBP/USD Technical Analysis
The British Pound failed to recover above the 1.2700 resistance against the US Dollar. GBP/USD started another decline and traded below the 1.2665 support.
Looking at the 4-hour chart, the pair settled below the 1.2665 level, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour). It seems like the bears are aiming for a move below the 1.2600 support.
On the upside, the pair is facing resistance near the 1.2655 level. The next resistance sits at 1.2670. There is also a major bearish trend line forming with resistance at 1.2670 on the same chart.
The first major resistance is near the 1.2700 level and the 200 simple moving average (green, 4-hour). A clear move above the 1.2700 resistance might send it toward the 1.2725 level and the 100 simple moving average (red, 4-hour).
The main resistance is now near 1.2780. Any more gains might call for a move toward the 1.2850 level in the near term. If not, the pair might continue to move down.
Immediate support is near the 1.2600 level. The next major support is near the 1.2565 zone. A downside break and close below the 1.2565 support zone could open the doors for a larger decline. In the stated case, the pair could decline toward the 1.2420 level.
Looking at EUR/USD, the pair gained bearish momentum below the 1.0720 level and there are chances of more downsides below 1.0675.
Economic Releases
US Initial Jobless Claims – Forecast 236K, versus 238K previous.
US Durable Goods Orders for May 2024 – Forecast 0% versus +0.6% previous.
US Gross Domestic Product for Q1 2024 – Forecast 1.3% versus previous 1.3%.
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I am bullish on bitcoin over the longer term, so if we get some type of pullback toward the $67,000 level, I will step in and start buying bitcoin, with a stop loss at the $65,000 level, and a target of $72,000 above.
In other words, it is a “buy on the dips” market.
The bitcoin market rallied quite nicely during the trading session on Wednesday, as we have bounced from the crucial $67,000 level. The $67,000 level is a large, round, psychologically significant figure that a lot of people will be paying attention to, and it’s probably worth noting that the 50-Day Exponential Moving Average will continue to be of interest as well. With that being the case, I think it’s a situation where we continue to do much of the same behavior that we have seen over the last several weeks.
FOMC and CPI
The Consumer Price Index came in 0.1% less than anticipated in the United States, and as a result traders are already starting to jump the gun and suggest that the Federal Reserve is likely to start cutting sooner rather than later. I don’t know if that’s the case, but it’s obvious that the market is running with that narrative.
The Bitcoin/USD pair looks as if it is trying to go looking to the $73,000 level, which of course is a large, round, psychologically significant figure, but more importantly, it is an area that has been resistant previously. However, we need to look at the idea that the FOMC meeting is later in the day, so it makes a certain amount of sense that we will continue to see a lot of volatility. With this being the case, the market is likely to continue to remain a “buy on the dips” market, but if we get the FOMC press conference sounding a bit more dovish than anticipated, bitcoin could really take off to the upside.
If we were to break down below the $66,000 level, then it’s possible that the market could go looking down to the $62,500 level, and then after that we would have a potential fight at the $60,000 level underneath which is a large, round, psychologically significant figure. Ultimately, this is a market that I think continues to see a lot of volatility, but there are plenty of buyers out there willing to get involved.
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Bitcoin price started another decline from the $72,000 resistance zone.
BTC traded below a key bullish trend line with support near $68,250 on the 4-hour chart.
Gold prices consolidate near the $2,320 resistance zone.
The Fed is likely to keep interest rates at 5.5%.
Bitcoin Price Technical Analysis
Bitcoin price failed to clear the $72,000 resistance zone and started a fresh decline. BTC/USD traded below many supports such as $70,000 and $69,200.
Looking at the 4-hour chart, the price traded below a key bullish trend line with support near $68,250. The price settled well below the 100 simple moving average (red, 4 hours) and tested the 200 simple moving average (green, 4 hours).
However, the bulls are now active near the $66,500 support zone. If there is another increase, the price could face resistance near the $67,800 level.
The first key resistance is near the $68,400 zone. The next resistance is near $69,200 and the 100 simple moving average (red, 4 hours). A successful close above $69,200 might start another steady increase. In the stated case, the price may perhaps rise toward the $70,000 level.
Conversely, Bitcoin might extend losses. Immediate support is near the $66,500 level. The main support sits at $66,000. Any more losses might send the price toward the $62,500 support zone.
Immediate resistance is near the $72,000 level.
Today’s Economic Releases
US Consumer Price Index for May 2024 (MoM) – Forecast +0.1%, versus +0.3% previous.
US Consumer Price Index for May 2024 (YoY) – Forecast +3.4%, versus +3.4% previous.
Fed Interest Rate Decision – Forecast 5.5%, versus 5.5% previous.
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EURUSD was not triggered, as there was no bullish price action when the support level at $1.0863 was first reached.
Today’s EUR/USD Signals
Risk 0.75%.
Trades may only be taken prior to 5pm London time today.
Short Trade Ideas
Short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.0784, $1.0834, or $1.0856.
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.
Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to ride.
Long Trade Ideas
Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.0758, $1.0722, or $1.0709.
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.
Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to ride.
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 previous analysis of the EUR/USD currency pair on 20th May, I wrote that the technical picture had become more bullish, with the Euro one of the strongest major currencies. I thought that there may be a chance for a long trade from a bounce at the support level at $1.0863 but this did not set up. I also said there were better assets to trade that day, and that certainly turned out to be true.
The technical picture now is more bearish, but not decisively so. The price was basically consolidating within a predictable range until the shock of Sunday’s calling of a general election in France following terrible EU Parliament election results for President Macron’s party. Macron has no majority in the French Parliament, so he is gambling that the far-right’s very strong showing last weekend might galvanise more centrist voters into voting for Macron again. However, the polls show the far right as likely to assume power, which would be a major political earthquake in France and the EU and will impact the Euro negatively if it happens.
These political events caused the Euro to plummet yesterday, before finding some support above $1.0700 and especially at the key support level at $1.0758 which seems to be holding as the first higher low. The key thing to watch for now is whether this level, let’s call it $1.0750 as that is a confluent major quarter level, holds up over the course of the day. The longer it holds, the more likely we are to see a continued recovery.
The Euro will now come into focus as a currency over the next few weeks and will probably show a higher level of volatility. Although the major far right party in France no longer support an exit from the EU, the Euro will likely trade lower the more polls show it on course for victory.
I think we will eventually see more downwards movement here, although that may be determined over the short term by the US Dollar and its key CPI and FOMC data coming tomorrow.
I think the best approach here is to look for short trades from and failed tests of key resistance levels, and to hold for a swing or even position trade if possible.
There is nothing of high importance scheduled today concerning either the EUR or the USD.
BTC/USD Forex Signal: Inverse Head and Shoulders Pattern Forms
Bullish view
Buy the BTC/USD pair and set a take-profit at 73,650.
Add a stop-loss at 67,000.
Timeline: 1-2 days.
Bearish view
Set a sell-stop at 69,000 and a take-profit at 67,000.
Add a stop-loss at 72,000.
Bitcoin price continued to consolidate in the evening session as investors waited for the upcoming Federal Reserve decision. The BTC/USD pair has been stuck below the key resistance point at 70,000 in the past few days.
BTC/USD technical analysis
Bitcoin bottomed at $56,450 in May and has crawled back in the past few weeks. It rebounded and moved to the crucial resistance point at 70,000. The BTC/USD pair has moved above the 50-day and 25-day moving averages.
Most importantly, it has formed an inverse head and shoulders pattern and is now sitting near its neckline. The inverse H&S pattern is one of the most bullish signs in the market.
Also, the Awesome Oscillator has moved above the neutral point at zero. Therefore, the pair will likely have a bullish breakout in the next few days or weeks. If this happens, the initial level to watch will be last week’s high of 71,870. A break above that level will see it rise to the YTD high of 73,650.
GBP/USD Forex Signal: Ripe for a New Bearish Wave
Bearish view
Sell the GBP/USD pair and set a take-profit at 1.2650.
Add a stop-loss at 1.2765.
Timeline: 1-2 days.
Bullish view
Set a buy-stop at 1.2735 and a take-profit at 1.2800.
Add a stop-loss at 1.2650.
Fed and BoE rates
The GBP/USD pair tilted upwards ahead of the upcoming UK jobs numbers, which will provide more information about the country’s wage growth. According to Bloomberg, analysts expect the data to show that the country’s unemployment rate remained at 4.3% in April while wage growth, including bonuses jumped by 5.7%.
A higher wage growth figure than expected will complicate the BoE’s rate cut outlook by signalling that the tight labor market was stirring inflation. That would make it difficult for the BoE to start easing interest rates, which sit at the highest level in 16 years.
The Bank of England is expected to start cutting rates as soon as in its July meeting since inflation has dropped recently. However, a rate cut may be complicated by the upcoming election in July where the Tories are expected to lose big.
There will be no other economic event in the UK on Tuesday. Therefore, focus among traders will be on the upcoming Federal Reserve decision. In it, the bank is not expected to slash interest rates.
Instead, the committee will provide more color on when the first cut will happen. This meeting will come at a time when the US is sending mixed signals. On the one hand, a report showed that the country’s manufacturing sector has moved into a deep contraction.
At the same time, the labor market is strong, with the economy adding over 272k jobs in May last year. Wage growth also continued accelerating, risking more inflation trends in the country.
GBP/USD technical analysis
The GBP/USD pair has rebounded from last week’s low of 1.2688. This rebound happened after the pair formed a morning star on the four-hour chart. It has moved above the lower side of the ascending channel shown in red.
The pair has also jumped above the 23.6% Fibonacci Retracement point level. However, the 25-period and 50-period moving averages are about to form a bearish crossover, which is a popular bearish sign.
Therefore, the pair will likely resume the bearish trend as sellers target last Friday’s low of 1.2688. A move below that level will point to more downside as sellers target the key support at 1.2650.
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Bitcoin has stalled a little bit at the $66,000 level, which is an area that has been important previously.
With that being said, I think that if we can break above that level, then it’s possible that we could go looking to the $73,000 level.
This is an area that has recently seen a lot of resistance, so it does make sense that would end up being a bit of a target.
If we can break above there it would obviously say a lot of things, but right now it is going to be a market that simply looks at that as a potential possibility.
Short-term pullbacks should be buying opportunities
Short-term pullbacks should continue to be buying opportunities with the 50-day EMA below and the $60,000 level both offering support. Ultimately, I don’t have any interest in trying to short this market and I think that pullbacks continue to be buying opportunities. In fact, that’s exactly how I’m going to trade the BTC/USD market because I do believe that we have a range that is very much intact.
The support level at the $60,000 level is crucial, but you should keep in mind that it extends down to the $57,000 level. If we can break out to the outside and clear the $73,000 level, then I think Bitcoin has much further to go. Quite frankly, I think it’s probably only a matter of time before all that happens anyways.
But at this point in time, I like the idea of looking for a little bit of value and taking advantage of it. In general, this is a market that I think continues to see a lot of volatility. But as long as people are worried about the Federal Reserve loosening monetary policy decisions, and of course, cutting back a little bit on quantitative tightening through its balance sheet, it does make a certain amount of sense that Bitcoin will continue to try to go higher. As long as that’s the case, I think that there will be plenty of people out there willing to get involved in bitcoin still.
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Bitcoin has drifted a little bit lower during the early hours on Wednesday, as we continue to see interest rates in the United States cause issues for crypto in general.
Keep in mind, things have changed. Bitcoin is no longer trading like crypto because it’s also held by a lot of people on Wall Street. They are concerned about interest rates. So, if interest rates stay higher for longer, it’s very likely the Bitcoin will struggle.
Breaking below the $60,000 level would be negative, but if we were to break down below the latest swing low, then I think Bitcoin has a real shot at dropping all the way down to the $52,000 level. This would bring the 200-day EMA into focus as potential support. If you give that up, then the trend is over.
While I am not calling for that right now, I’m just laying out the possible scenarios. If we turn around and break above the $66,000 level, then I think it’s likely that we will go look into the $73,000 level above, which of course is an area where we’ve seen a lot of resistance previously. This area would obviously attract a lot of attention, and therefore volatility as well. A break above it could open up a move to the $80,000 level fairly quickly.
Are We Forming a Base?
In general, this is a market that I think is in the midst of trying to form some type of base, and therefore you would expect a lot of volatility. 60,000 does matter. And at this point in time, I think you will continue to look at that as a magnet for action in the market. It is worth stating that we are still in an uptrend, but the recent swing high was lower than the one before it. So, beware of how this market can move, as it is historically volatile, and the last thing you want is to be on the wrong side of a Bitcoin move, as they can be quite brutal.
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Buy the BTC/USD pair and set a take-profit at 66,000.
Add a stop-loss at 62,000.
Timeline: 1-2 days.
Bearish view
Set a sell-stop at 63,000 and a take-profit at 60,000.
Add a stop-loss at 66,000.
Bitcoin price staged a strong recovery in the past few days as a sense of calm returned to the market. The BTC/USD pair surged to over 64,000, which was much higher than this month’s low of 56,540.
A sense of calm returns
Bitcoin and other risk assets like global stocks have rebounded in the past few days as bad news became good news for the market. The Dow Jones index rose to over $38,800 while the Nasdaq 100 and S&P 500 soared to $17,900 and $5,130, respectively.
Meanwhile, the US dollar index (DXY) tumbled to a monthly low of $104.51 while bond yields slumped. The 10-year yield dropped to 4.50% while the 30-year and the 5-year fell to 4.66% and 4.48%, respectively.
This performance happened after the US published weak economic numbers last week, signaling that the Fed may deliver more rate cuts than expected. The first report came from the Conference Board, which revealed that consumer confidence dipped to its lowest point since 2022.
Further data by the Institute of Supply Management (ISM) revealed that the manufacturing and non-manufacturing PMI numbers retreated in April. That is a sign that the economy was slowing.
And finally, the most-anticipated jobs report revealed that the economy added fewer jobs than expected while the unemployment rate rose to 3.9%. The economy added 175k jobs, down from 315k in March. The average hourly earnings fell to 3.9%, missing the estimated 4.0%.
The implication of all this is that the Fed will start to cut interest rates in the coming months. Analysts see the bank delivering two cuts later this year. This is in line with the Fed’s meeting, in which the officials noted that they would be data-dependent.
BTC/USD forecast
The BTC/USD pair has been in a strong recovery in the past few days as some Bitcoin ETFs added some inflows. On the 4H chart, the 25-period and 50-period moving averages have formed a bullish crossover.
Bitcoin has also formed a bullish pennant pattern, which is a positive sign. The MACD indicator has moved above the neutral level while the Relative Strength Index (RSI) is approaching the overbought point.
Therefore, the pair will likely continue rising as buyers target the key resistance at 66,000. The alternative scenario is where it drops to the intersection of the 25 and 50-period moving averages at 62,000.
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Trades must be entered before 5pm Tokyo time Thursday.
Long Trade Ideas
Long entry after a bullish price action reversal on the H1 timeframe following the next touch of $59,544 or $55,425.
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.
Remove 50% of the position as profit when the trade is $100 in profit by price and leave the remainder of the position to ride.
Short Trade Ideas
Go short after a bearish price action reversal on the H1 timeframe following the next touch of $60,765 or $61,468, or $62,013.
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.
Remove 50% of the position as profit when the trade is $100 in profit by price and leave the remainder of the position to ride.
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 BTC/USD analysis about three weeks ago that the best opportunity was likely to be a bearish breakdown below the ascending trend line and the horizontal support level at $68,507. This was a good call over the longer term, as the bearish breakdown eventually came, but it did not come that day.
The technical picture has become much more bearish and seems to have reached a crucial point as the price weighs heavy on an area of support confluent with the round number at $69,000. This area has acted as support over recent week, holding several times, but seems ripe for a breakdown.
There are no support levels below until about $55,000 so the price has quite a lot of room to fall.
This bearishness is part of a longer-term pattern of a topping out above $70,000. The price chart below is dominated by a descending bearish trend line, and new lower resistance levels printed by the price action.
There are fundamental and sentimental reasons which reinforce the bearish technical picture:
Risky assets, especially commodities, are selling off, and Bitcoin is no exception.
The US Dollar is strong, trading very close to its 6-month high.
The Federal Reserve is taking a hawkish approach, which tends to boost the US Dollar against risky assets such as Bitcoin.
So, I will look for a short trade today. The best entry signal will probably be two consecutive lower hourly closes below $59,000. This will be likely to lead to a sharp drop if it happens, hopefully allowing some quick profit for day traders.
Regarding the US Dollar, there will be releases today of the ADP Non-Farm Employment Change forecast at 1:15pm London time, Final Manufacturing PMI at 2:45pm, ISM Manufacturing PMI and JOLTS Job Openings at 3pm, and the Federal Funds Rate and FOMC Statement at 7pm.
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Rehana William |Financial Consultant _Forex_Gold Xauusd| Fund Manager 