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5 Things To Watch Next Week + ChartBook

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US-Chinese Talks Resume as Chinese Markets Re-Open

Shanghai Composite Index CFD, 4-Hour Chart Analysis

After one week of holidays Chinese markets will reopen on Monday, and there will be plenty of catalysts to digest after the hiatus. Last week, we saw some trendline breaks in some of the key risk assets following the post-Christmas surge, which was led by US stocks, but another downswing is not yet confirmed.

Chinese stocks have been relatively weak for a long time now, especially from a long-term perspective, with the slowing economic growth and the trade worries weighing on them, and although the PBOC is doing everything in its power to reignite growth, that didn’t help equities out of their bear market.

We will have a very busy week for Chinese assets, with the crucial Trade Balance and both the CPI and PPI indices coming out, while the trade talks with the US will also resume in Beijing. While this week, President Trump and White House adviser Larry Kudlow both made negative comments about the negotiations, causing some turmoil in financial markets, we expect some progress during this round, with the March 1 trade deadline, but in any case, the pressure on Chinese assets is unlikely to ease unless, the central banks stimulus attempts succeed.

Litecoin Leads Crypto Rally

LTC/USD, 4-Hour Chart Analysis

The cryptocurrency segment has experienced yet another rally attempt this week, and as it was the case last time around With Ripple, one coin, LTC triggered a broader spike higher in the market. Litecoin hit its highest level since November, topping the $44.50 level in the process, and thanks to the technical progress our trend model improved in the case of most of the majors, at least from a short-term perspective.

Once again, the fate of the rally attempt will be decided by the strength of the follow-through move in the segment, and although we saw new short-term highs on Sunday, but due to the relative weakness of Bitcoin and Ripple, we remain suspicious of the pop higher, especially in the light of the still hostile long-term technical setup.

That said, the coming week could see some fireworks in the market, and a short-term trend change and a more sustained rally could be ahead, but traders should still consider it a bear market rally, and only enter short-term positions with strict risk management rules even in the relatively stronger coins.

Dollar Continues Winning Streak?

Dollar Index, 4-Hour Chart Analysis

While the USD had been under pressure in the second half of January, mostly because of the broad risk rally and the Fed’s dovish shift, following the recent Fed meeting, the Greenback scored a 7-day winning streak, which is still intact after Friday’s session. With almost all global central banks now joining the cautious bandwagon, this week it was the RBA, the BOE, and the Reserve Bank of India, the relatively strong US economy and the relatively high interest rates continue to squeeze the reserve currency higher.

The Dollar Index (DXY) still faces stiff technical resistance just above the 97 level, coinciding with the support in the EUR/USD pair, but the long-term trend remains bullish, and we expect that trend to continue in the coming months. Investors should pay special attention to this week’s inflation-related US economic releases, since a higher-than-expected CPI reading could be the trigger for a break-out in light of the still stable US growth and the sharp global slowdown. A bearish shift in investor sentiment would also likely support the Dollar, even though the Yen could be back in focus, should volatility in stocks spike higher again.

Short-Term Top or Orderly Pullback in US Stocks?

S&P 500 Futures, 4-Hour Chart Analysis

While the German DAX, which has been leading the way for global stocks in recent months, seems to already have rolled over in earnest this week, the major US indices are still relatively strong following the historic short squeeze of January. That said, the benchmarks broke their rising short-term trendlines, and from a fundamental standpoint, it’s hard to point out the positive catalysts that could propel stocks even higher.

The data-dependant dovish shift by the Fed is unlikely to be enough in light of the bearish global trends, and the two-faced quarterly earnings season showed that profits could be headed south in the first quarter of 2019, even as the previous quarter still saw dynamic earnings growth in the face of the weakening global outlook.

All in all, short-term technicals are not terrible, but given the long-term pressures, a crucial short-term top might form, and the major indices could already be headed back towards the December lows. Should the key Chinese and European indices start to show strength, the immediate outlook could change but for now, bulls are facing very strong headwinds.

US Data Dump with Another Government Shutdown Looming

We will have a very busy week regarding economic releases, and besides the already mentioned US and Chinese indicators, the Great British Pound will likely be in focus. On Monday the British GDP, Manufacturing Production will likely steal the show, on Tuesday, the speeches by fed Chair Jerome Powell and BOE Governor Carney could move markets ahead of the real data dump.

Wednesday will see the release of the British CPI and PPI indices, together with the crucial US CPI report, while on Thursday, we will have the Japanese prelim GDP print, the Chinese Trade Balance, the prelim German GDP, the flash Eurozone GDP, and the US Retail Sales and PPI reports. The week will end with the Chinese CPI, British Retail Sales, and the prelim US UOM Consumer Sentiment Index, so the second half of the week could be very active across asset classes.

ChartBook

Major Stock Indices

Nasdaq 100 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 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

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

Forex

EUR/USD, 4-Hour Chart Analysis

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 465 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: Another Spike Fails in Crypto-Land

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The major cryptocurrencies continue to follow the pattern which consists of sudden spikes followed by choppy sideways periods. Today, the top coins jumped higher, with the strongest currencies testing their recent swing highs, but the move quickly failed. The market continues to be dominated by low liquidity and the bearish long-term forces, making it difficult to make money trading the long side.

That said, the short-term break-outs, which were formed one week ago, remain intact and our trend model is also on short-term buy signals in the case of the relatively stronger coins. Despite the buy signals, traders should remain cautious with new positions, as the long-term forces continue to work against bulls here.

The leadership of last week’s move continues to be weak and without a new batch of coins hitting new short-term highs, it’s hard to see what could propel the market higher. The top 3 coins haven’t been able to pull their weight either, so odds clearly favor the continuation of the bear market from a broader perspective.

BTC/USD, 4-Hour Chart Analysis

Bitcoin remains stuck below the $3600 level despite today’s spike, and the bearish drift that started last week in the coin continues. BTC’s relative weakness is a negative sign for the whole segment, and although it’s still above the support/resistance zone just north of $3450, the long-term setup continues to point of the $3250 and $300o support levels.

That said, the short-term buy signal is still in place in our trend model, and traders could open small, speculative positions in BTC, with strong resistance zones being ahead near $3850 and between $4000 and $4050.

XRP/USDT, 4-Hour Chart Analysis

Ripple has also been showing relative weakness in recent days, and today it dipped back below the key $0.30 support/resistance level following the failed rally attempt. While the coin once again avoided a move towards the next main level of interest at $0.28, it is still likely to violate that level and test the August low near $0.26.

With that in mind, traders should stay away from XRP, with our trend also being on short- and long-term trend signals, and barring a move above $0.32, the immediate outlook is also negative, with further resistance levels ahead near $0.3550 and $0.3750.

Litecoin Tests $44 Level Again as Ethereum Clings to $120

LTC/USD, 4-Hour Chart Analysis

After settling down near the $41 price level, last week’s star LTC spiked as high as $44 today, but it failed to break-out above the key resistance zone. While the break-out remains intact and the MACD indicator still only points to a correction, the market-wide trends remain negative, and the previously leading coin hasn’t shown signs of relative strength in the last couple of days.

Traders could still hold their positions here even though a swing low is not yet confirmed, but strict rsik management rules should still be applied. A move back below $38 would trigger a downgrade in our trend model, which is still on a short-term buy signal. Above the initial resistance at $44, further levels are ahead near the recent swing high near $46 and at $51, while support below $38 is found near $34.50 and between $30 and $30.50.

ETH/USD, 4-Hour Chart Analysis

Ethereum has been trading in a narrow range today and the recent short-term swing high capped the rally attempt in the second largest coin. While the coin is still holding on to most of its gains from last week, trading well above the $112 level, the lack of bullish follow-through is a negative sign even regarding the short-term outlook.

The hostile long-term setup raises the odds of a failed short-term rally, and although pour trend model remains on a short-term buy signal, traders should only consider small, speculative positions here. The $120 level continues to be at the center of attention, with another strong resistance above that being found near $130, while further support is found in the $95-$100 zone.

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 465 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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Altcoins

XRP Price Analysis: XRP/USD Could be in Serious Trouble as Test of Major Support Back in Play

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  • Ripple’s XRP price is seen trading marginally in negative territory towards the latter part of Friday, with XRP/USD heading for a weekly closure in the red.
  • Ripple has announced a newly improved XRP Ledger 1.2.0 for improved censorship resistance.

XRP/USD: Recent Price Behaviour

Ripple’s XRP price continues to cool, running towards is a third consecutive session in the red as the bulls fail to sustain any upside. XRP/USD has dropped more than 5% over the mentioned period, with the bears set to the test the big psychological $0.3000 mark once again. The price had not traded below this area since 8th February, when it received a chunky amount of buying pressure.

Ripple Announces Newly Improved XRP Ledger 1.2.0

Ripple, the San-Francisco-based blockchain startup, released an updated version of its XRP ledger 1.2.0. The update is expected to significantly improve user experience, in addition to expanding upon the range of services within its offering.

Details provided by the Ripple team suggest that this update has seen its resistance to censorship improve. In other words, a single entity will not be able to decide success or fail. No one will have the ability to alter any transaction once added to the ledger.

Moreover, the upgrade has introduced the MultiSignReserve amendment. Ripple has further streamlined the process, reducing the number of barriers for those involved in signing the transactions. The amendment will now allow just a reverse of 5 XRP, in comparison to the prior of between 15-50 XRP.

The blockchain startup has also announced a bounty program, inviting developers to review their updates in the new version. Should any vulnerabilities or errors be detected, Ripple will reward those who communicate such to them.

Users of the ledger should update to the latest version before 27th February 2019. It is critical that users complete the upgrade, as the server will not be able to determine the authenticity of the ledger. Without the upgrade, transactions will not process and cannot be submitted.

Technical Review – XRP/USD

XRP/USD daily chart.

Last week, the XRP/USD bulls managed significant double-digit gains of around 11%, breaking out of a descending wedge pattern formation. The bearish structure had contained price action since the back-end of December 2018. It was forced to drop around 30% while moving within this wedge after such a promising initial recovery started from the middle of December.

In terms of support to the downside, eyes will be on a retest of the upper part of the wedge pattern. It can be seen tracking around the high-mid $0.28000 region. A significant buying area is also in proximity, ranging from $0.3000 to $0.2500; an area that has on several occasions proven to attract decent sized buyers. Any failure of this providing necessary comfort will expose $0.2000 as the next target.

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 123 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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Analysis

The “Accessibility Premium”: How Coinbase’s Overseas Expansion Could Affect Crypto Prices

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The accessibility premium refers to the affect on a cryptocurrency’s price when it is added to Coinbase. The $8 billion valued exchange is now looking to expand beyond its U.S-based institutional trading business to offer institutional services worldwide. Bitcoin, Bitcoin Cash, Ethereum, and Litecoin may end up being the greatest beneficiaries. These cryptocurrencies could gain from increased accessibility; the new “Coinbase Effect”.

In 2018, as the exchange added more cryptocurrencies, some writers wrote about a perceived “Coinbase Effect”, like Ari Paul. They theorize about an “accessibility premium”, in which those crypto-assets that are more accessible rise in price. With Coinbase bringing crypto to worldwide investors, it could bolster demand for those coins that are listed on the San Francisco-based “Goldman Sachs of Crypto”. They would be more accessible. When a new cryptocurrency or token hit the exchange, traders might expect a bump in price. 

On May 3, 2017 Coinbase integrated Litecoin, resulting in a 30% increase in the price. When Coinbase listed Bitcoin Cash on December 19, 2017, trading on global exchanges skyrocketed. Bitcoin cash closed at $4,000. Two days prior, its price had been $2,200. Volume increased from $2.5 billion on December 18 to nearly $12 billion on December 20 for a 380% increase.

Coinbase added Ethereum on July 21, 2016, resulting in a modest 14% rally. Things changed when Brave browser’s token, BAT, launched on Coinbase. It declined in price. Further data is needed to know the truthful dynamics. By the time BAT was listed, the price of crypto had long since started a consolidation, leaving sentiment low.

Fast forward Q1 2019, and Coinbase is expanding overseas. It is laying down infrastructure for the long-term as it looks towards Asian markets, amid moves to attract international institutional money to cryptocurrency trading. (Coinbase’s product GDAX offers US-based institutional trading) New traders might find Coinbase’s familiarity welcoming. Higher volumes would be to expected for the cryptocurrencies offered by the Silicon Valley giant. 

So, the popular exchange is undergoing an extensive expansion. Coinbase customers residing outside of the U.S. can now trade without a domestic bank account. This could be a boon to the prices of cryptos offered by Coinbase, led by Bitcoin.

There has been discussion about the correlation between simplicity and demand. Opinions on the effect ease of use has on demand are not entirely aligned. As Donald Norman says in his book “Living with Complexity”:

… the so-called demand for simplicity is a myth whose time has passed, if it ever existed.

Make it simple and people won’t buy. Given a choice, they will take the item that does more.

Features win over simplicity, even when people realize that features mean more complexity. You do too, I’ll bet. Haven’t you ever compared two products side by side, feature by feature, and preferred the one that did more? …

Would you pay more money for a washing machine with fewer controls? In the abstract, maybe. At the store, probably not.

Ultimately, Norman argues for managed complexity. But, the demand for simplicity – or at least clarity – seems logical in a chaotic, complex world. In a blog on their website called “The Customer Demand for Pervasive Simplicity”, Cisco writes of this perception, and how it tailors its products towards this end.

A bastion of crypto-simplicity, Coinbase has long courted institutional investors in the U.S., but now its targets are clearly set on a global institutional book. The stage is set for crypto’s first truly global exchange, though Coinbase will need to first successfully assimilate into new countries, with their unique business practices languages, laws, and regulations. Currently, differing regulations in different countries keep crypto’s exchange ecosystem quite regional.

Coinbase holds 5 percent of all bitcoin, 8 percent of all ethereum, and 25 percent of all litecoin in circulation in cold storage. Its success overseas would likely underpin their prices if the “accessibility premium” holds true.

Marcus Hughes, recently appointed as lead counsel for Coinbase in the United Kingdom, has been tasked with overseeing cross-border expansion: “Coinbase takes the long view on bitcoin and wider cryptocurrency prices,” Hughes said, “We need to move beyond the speculation phase of bitcoin and cryptocurrency to the utility phase.”

He added: “The utility phase will mean bitcoin and crypto becomes more widely accepted and understood.”

This solidifies bullish sentiment from the exchange which will be strengthened should it be successful in its bid to attract ‘big money’, not just from a core user base in the U.S. but also from thriving crypto markets in countries such as Japan.

Coinbase reports that, “In the past twelve months, hundreds of crypto-first hedge funds have launched around the world, and many hundreds more traditional institutions have begun [actively trading digital assets]. High-volume clients across Asia will now have access to Coinbase’s flagship trading platforms for institutions. As part of this rollout, we now support inbound and outbound international (SWIFT) wire transfers, allowing Coinbase clients in Asia to fund their accounts from non-US bank holdings.”

Coinbase predicts a bright future for digital currency in Asia, it says, and looks to enter into a market that could help it to cement a role as one of the global leaders in crypto trading. But there remains a big question mark over cryptocurrencies, prominently over how regulation is going to play a role.

Marcus Hughes opines that this year will see a “massive change” for global bitcoin regulation. He says that Europe will gradually lead the way out of a “crypto winter” into regulated digital currency markets with more potential for long-term stability. But, in the short term, irrational trading might paint an entirely different picture. 

As we see Coinbase invest in the long-term it bolsters confidence in a currently inhospitable climate for bitcoin. Should prices continue to fluctuate market sentiment may dip, but it is the notion of institutional money that may serve to give cryptocurrency markets much-needed price stability. 

Image: David McBee, Pexels

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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5 stars on average, based on 2 rated postsJustin O'Connell is the founder of financial technology focused CryptographicAsset.com. Justin organized the launch of the largest Bitcoin ATM hardware and software provider in the world at the historical Hotel del Coronado in southern California. His works appear in the U.S.'s third largest weekly, the San Diego Reader, VICE and elsewhere.




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