Has the central bank stopped raising rates?
Usually, a currency will appreciate when it’s central bank is raising interest rates. Higher interest rates translate to higher yields and that attracts more demand for the currency. Likewise, currencies fall in value when the central bank cuts interest rates. Therefore, if you are sure that the central bank has stopped raising rates, the currency will most likely have peaked and will be about to turn down.Did the currency go up less than expected on a news release?
Let’s say that a wildly bullish news release comes out causing the forex pair in question to move higher. Perhaps GDP came in 2% higher than expectations, or maybe unemployment dropped sharply.Track the currency and see how it responds to the good news. If it can only manage a small 20 or 30 pip gain, then the chances are the currency has peaked. How a currency reacts to news releases is an important method traders use to gauge the strength of a currency.
Has the RSI hit 80?
The Relative Strength Index (RSI) is a popular tool among traders, particularly swing traders as it reveals tops and bottoms of a market with great accuracy. Normally, a market that moves past 70 is overbought and one that is below 30 is oversold. So, if a currency moves beyond 80, it is significantly oversold and there’s a high probability that it’s near a peak.Have moving averages crossed over?
Moving averages are a good way of objectively analysing the average price direction of amarket and crossovers usually signify important turning points. If a currency’s fast moving
average crosses under it’s slower moving average, it signals that a new downtrend has started and this gives a strong indication that the market may have peaked.
Are we near the top Bollinger Band?
Bollinger Bands use the standard deviation to show volatility and can indicate when a currency is oversold or overbought, according to it’s recent mean.If the currency pair trades near the top Bollinger Band, it’s likely that the currency will be near a peak. Usually, it will hit the top band then start to move back towards the middle area and sometimes down to the bottom band. This is particularly true for short term durations but always remember, on longer timeframes a breakout may be taking place leading to a new trend.
Editors’ Picks
AUD/USD remained bid above 0.6500
AUD/USD extended further its bullish performance, advancing for the fourth session in a row on Thursday, although a sustainable breakout of the key 200-day SMA at 0.6526 still remain elusive.
EUR/USD faces a minor resistance near at 1.0750
EUR/USD quickly left behind Wednesday’s small downtick and resumed its uptrend north of 1.0700 the figure, always on the back of the persistent sell-off in the US Dollar ahead of key PCE data on Friday.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
US economy: slower growth with stronger inflation
The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.
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