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5 Things To Watch Next Week

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Regime Shift in Volatility?

The Volatility Index (VIX) closed at its highest level since the first days of July on Friday, and it also broke the dominant trendline that has been in place since March. As the US stock market has the most important safe-haven for bulls for several months now, with the rest of the world entered a grueling downtrend, a persistent shift in volatility could signal troubles ahead for risk assets globally.

VIX (US Volatility Index), 4-Hour Chart Analysis

The VIX fell as low as 11, in September, and now it should return below 14 quickly to avoid a regime change that could lead to a deeper correction in stocks. The trigger of the move was the swift rise in Treasury yields, but form a broader perspective, the fundamental reason of the turmoil, as in the case of emerging markets, is the slow shift to Quantitative tightening by the central banks. This month will mark the turn when the global “extraordinary” monetary operations enter negative territory, and financial markets might already be starting to show the symptoms of that.

Trendlines Broken in the US, What’s Next?

S&P 500 Futures, 4-Hour Chart Analysis

The first few days of the week saw a push to new highs by the major US indices as we expected, but the narrow rally abruptly halted and the market rolled over in the second half of the week. While small-caps were already signaling troubles ahead, large-cap US stocks were only broken by the historic break-out in Treasury yields, multi-year highs cross the curve.

The rising short-term trendlines are now violated by all of the crucial benchmarks, following in the tracks of the Russell 2000, which already tested its 200-day moving average on Friday. While it’s early to say that the longest bull market in history is ending, we have been urging a defensive long-term positioning for investors despite the bullish technical setup. Valuations are still sky high in US looking at every historically reliable measure, but until a confirmed trend change, traders could still buy the dip, as soon as the indices get oversold.

EUR/USD Headed for Test of Lows?

EUR/USD, 4-Hour Chart Analysis

The most traded forex pair breached the 1.15 level this week, as we speculated, and although the Euro ended the week on a slightly positive note, technicals now point to a test of the August lows in the near future. The debate surrounding the Italian budget, coupled with the rising US yields created a hostile environment for the common currency, and the US-Canadian trade agreement removed a huge risk factor with regards to the Dollar.

While a valid argument can be made that the fiscal expansion in the US should hurt the Dollar, the Euro’s structural problems are of a different magnitude, and a broader risk-off shift will likely favor the Dollar, especially if US growth remains strong.

Emerging Market’s Leading the Way Lower Again?

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

While emerging markets haven’t shown the same panicky signs that we witnessed in August, the US selloff and the Dollar’s weekly gains still hurt the segment. We expect weakness in Chinese assets next week, as the US midterms are approaching and President Trump will likely go all-in on the trade war following the US-Mexican-Canadian trade agreement.

The People’s Bank of China eased monetary conditions over the weekend, by cutting reserve rates and releasing liquidity to get ahead of a possible Monday rout, but the Dollar/Yuan pair will still likely see fireworks next week. That said, given the selloff in equities in the US, this time around we expect larger moves in stocks too. In any case, investors should keep a close eye on the most vulnerable countries, since they might lead the way lower yet again.

US CPI and PPI on Tap, Surge in Yields to Continue?

It will be a relatively quiet week with regards to economic releases, but given the few crucial inflation related events, huge swings are still possible across asset classes. The US CPI and PPI indices will be the most important indicators coming out, and after last month’s lower than expected numbers, analysts expect a monthly rise of 0.2% in both measures.

Treasuries could remain volatile especially in the case of an upward surprise in inflation and that could have a profound effect on global markets. The European Central Bank’s Policy Meeting Accounts might be important to forex markets too, but all-in-all technicals could be more important next week.

ChartBook

Major Stock Indices

Nasdaq 100 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

Forex

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Gold Futures, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 443 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Analysis

Crypto Update: Coins Drift Lower but Damage Remains Limited

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The major cryptocurrencies continue to trade in narrow ranges following last week’s decline and this week’s failed rally attempt. While Bitcoin is stuck near the $3600 support, the other top coins have been losing ground today, with Ethereum dipping below the $120 level, Ripple violating the $0.32 price level and Litecoin testing the $30-$30.50 support zone yet again.

Trading volumes and volatility remain very low across the board, but correlations are still high between the majors, and despite the quiet environment, we haven’t seen bullish signs in the market. That said, the trading ranges that developed this week are still intact, and although the overwhelmingly bearish long-term picture still makes the continuation of the decline more likely, a failed break-down pattern could still develop in the segment, should the top coins recover above their weekly highs in the coming days.

For now, our trend model remains on sell signals on both time-frames in case of most of the majors, and traders and investors should still stay away from entering new positions here, with still no bullish leadership being present.

BTC/USD, 4-Hour Chart Analysis

Bitcoin is still relatively stable even in the very quiet environment, and the most valuable coin is trading right at the $3600 support/resistance level. BTC formed a volatility compression pattern in recent days, and that formation points to a more significant move in the coming days, with a move out of it being inevitable as soon as this weekend.

Bulls are still looking for a move above $3850, towards the key zone between $4000 and $4050, but the bearish long-term setup continues to favor a dip below $3600, with support zones still found near $3250 and $3000, and traders and investors should still not enter positions here.

ETH/USD, 4-Hour Chart Analysis

Ethereum failed to get close to the $130 resistance level again, and as it dipped below primary support, the test of the swing low near $112 is likely in the coming days. The coin remains on sell signals on both time-frames in our trend model, and a move towards the key support zone and between $95 and $100 is likely in the coming weeks, barring a quick reversal above $130. Further resistance is ahead at $145, $160, and near $180 while the bear market low is found near $80

Ripple Under Pressure Again in Weak Environment

EOS/USD, 4-Hour Chart Analysis

Altcoins continue to trade without a clear direction despite today’s dip, but the bearish drift of the recent days means that the key support levels could be in focus during the weekend, should the volatility compression finally end. The few major coins showing signs of strength haven’t been able to maintain the bullish momentum, like EOS, which gave back yesterday’s gains today.

XRP/USDT, 4-Hour Chart Analysis

While the market of Ripple is still very quiet, the coin fell below the $32 support yet again, and it remains relatively weak compared to its closest peers. It is also on sell signals on both time-frames in our trend model, and a dip below $0.30 will likely be the next significant move. Further strong support is found near the $0.26 level, with resistance ahead near $0.3550 and $0.3750.

LTC/USD, 4-Hour Chart Analysis

Litecoin is trading just above the key $30-$30.50 support zone, and it sill failed to get anywhere near the next major zone near the $34.50 price level. Given the hostile long-term setup and the short-term sell signal our trend model, traders should stay away from the coin here, with a move toward the $26 level being likely in the coming weeks. Further strong resistance is ahead near $38 and $44 and with another support level found near $23.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 443 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Analysis

Binance Coin Update: Wyckoff Breakout in Progress

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Binance Coin (BNB/BTC) is the altcoin market’s ultimate comeback kid. It was dead in the water on November 17, 2018 when it broke support of 0.0014. The market flipped the support into resistance two days later on November 19 to confirm the breakdown.

Binance Coin was supposed to enter a long bear winter. However, the market had other plans as it whipsawed everyone who panic sold the breakdown. In this article, we show how the Wyckoff Breakout is in progress in Binance Coin.

Wyckoff Spring

On November 28, 2018, Binance Coin dropped to as low as 0.001233. At that point, participants were convinced that the market broke down from either the large head and shoulders pattern on the longer time frame or a descending triangle on the shorter time frame. Even though the market was ripe for a bounce, almost everyone expected it to be the dead-cat type. Nevertheless, Binance Coin showed why it is always best to be prepared for both bull and bear scenarios.

The market suddenly rallied and took out both the head and shoulders neckline and the diagonal resistance of the triangle in one fell swoop. It then flipped both resistances into support on December 20, 2018. This is a classic example of a Wyckoff Spring.

BNB/BTC bear trap

As you can see, this price action is bullish. The smart money most likely accumulated positions from August 14 to November 17, 2018 while Binance Coin was range trading between 0.0014 and 0.0016. The breach below the support was the smart money’s method to tap into more liquidity. They shook the tree in order to accumulate more positions in a short amount of time. When they were done, they triggered the rally and the reversal.

Now that we know the smart money accumulated between 0.0014 and 0.0016, we can form the expectation that they will defend this range. More importantly, with the bear trap sprung, we can assume that Binance Coin is ready for the next stages of the model: the throwback and the markup.

Throwback

According to the Wyckoff model, Binance Coin is scheduled for a pullback before it can launch a bull run. The brief retracement is actually bullish. It would flip the former resistance into a firm support. This would enable the market to trend higher.

Wyckoff Model (Source: ScanStockCharts)

So far, Binance Coin has gone through the first three phases: accumulation, spring and breakout. The market is now trading above 0.0016, which used to be the range high. However, it is starting to show signs of weakness. Binance Coin is showing a bearish divergence on the daily RSI while trading close to overbought territory. On top of that, it is creating a rising wedge on the daily chart, which is a bearish pattern.

BNB/BTC bearish signals  

These signals are aligned to the next step of the Wyckoff Model, which is the throwback. The pullback will be healthy for the market. It will enable technical indicators to cool off as well as allow the market to establish a new base of buyers.

If you’re considering placing long positions in the market, the throwback to 0.0016 is a very good chance to do so.

Markup

Should Binance Coin pull back and stay above 0.0016, then the market would be ready for the next phase: the markup. This would be the start of the market’s bull run.

From Binance Coin’s market structure, we can see three heavy resistances: 0.002008, 0.0002287, and 0.00258. These would be the target prices to look for.

BNB/BTC heavy resistances

If all goes well, those who will be buying the throwback can potentially grow their investments by over 60%.

Bottom Line

Binance Coin is an altcoin that should be languishing in a bear winter. Instead, the market has managed to reverse its fortune through the Wyckoff model. It is likely that this market is on the brink of a massive bull run.

 

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.8 stars on average, based on 310 rated postsKiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Analysis

EOS Price Analysis: EOSIO 1.6 Update Enhances Speeds and is Cost Effective; Downside Price Risks Remain for EOS/USD

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  • EOSIO developers have released 1.6 upgrade, which sees enhanced speeds and is more cost efficient.
  • EOS/USD price action is ranging; given current behavior, a breakout may just be imminent.

The EOS price on Friday is seen trading down in minor negative territory. The price is caught in a very stubborn range. This behavior being observed could prove to be damaging in the coming sessions if the bulls do not break above resistance. EOS/USD is being dictated by a tough acting supply area, which is seen tracking from $2.60-$2.50 range. Then to the downside, a near-term demand zone is keeping the price propped up for now, $2.35-$2.25.

EOS/USD is moving within this consolidation mode, which has come into play since breaching a vital part of the bull’s recovery. An ascending trend line was seen tracking from 7th December 2018, right up until it was breached by the market bears on 10th January 2019.  This had coincided with the price running into chunky resistance at the psychological $3.00 price mark. It has not convincingly been above this region since the back-end of November 2018.

EOSIO 1.6 Release

EOSIO developers, who have been working on a system upgrade, have now announced the release of an upgraded version 1.6.0 of EOSIO. In terms of the impact of this development, they have instantly been noticeable and signaling a large improvement.  This new release does boast further features and fixes to improve upon the cumulative patches, which were implemented to enhance v1.5.

Details were provided by the company within an official Medium blog post. Updates on the EOSIO software will enhance efficiency for the peer-to-peer networking layer in addition to seeing real-time transactions improve overall transaction speed. They further stated that this release is something that had been planned as part of their progressive goals to improve their performance. They have intentions to maintain the fastest protocol across the market.

The development team tweeted, “Tests show upwards of a 35% increase in likely transaction speed. We are projecting noticeable improvements to sustainable transactions per second. In addition, reduced CPU costs, and lower latency on all EOSIO based blockchains.”

Technical Review – EOS/USD

EOS/USD daily chart.

The key for a new committed trend is to see a breakout from the confinements of the mentioned supply sitting above and demand zone below. Given the earlier detailed break below an ascending trend line, vulnerabilities remain, with the range-block formation.

Should the bears manage to force a drop below $2.25, then a new wave of selling will likely come into force. The next major area of support should be noted down towards the December 2018 low. $1.83 and then then $1.55 regions should be sought for potential comfort.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 110 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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