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5 Things To Watch Next Week + ChartBook

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Crucial Brexit Vote On Tuesday

GBP/USD, 4-Hour Chart Analysis

The all-important vote in the British Parliament got even more likely to fail this week, since Theresa May lost several battles already, and the math just doesn’t work for the Prime Minister, for now. Risk assets sold off sharply towards the end of the week, in part of the Brexit related fears and the Great British Pound is hovering near key technical levels ahead of the decision.

While the GBP avoided a major breakdown against the US Dollar so far, holding on near the 1.27 level, the currency remains relatively weak, and should the uncertain situation persist, the pair will likely move below the 1.25 level soon. The broader downtrend is clearly intact in the GBP/USD, and technicals support a bearish move too, following the more than three-month-long consolidation.

Stock Markets Breaking Down?

Dow 30 Futures, 4-Hour Chart Analysis

We had another crazy week on Wall to a lesser extent the global stock markets, as the swift changes in the US-Chinese relations caused wild swings in equities across the globe. While the real reasons behind the broad bearish shift in risk assets are the quantitative tightening by the key central banks and the global economic slowdown, trade headlines continue to dominate trading, together with the large moves in yields.

Even as yields fell sharply last week, that wasn’t enough to stabilize equities, and several key benchmarks hit new bear market or deep correction lows. The major US indices are trading very close to their October lows, and on a negative note the Russell 2000, the main small cap index already closed on its lowest level since February. While seasonality still favors a bounce in stocks, we still view all rallies as selling opportunities, and we expect the bearish shift to be persistent in risk assets.

Gold Finally Turning Bullish?

Gold Futures, 4-Hour Chart Analysis

We have been favoring gold as a key long-term investment for a long time now, and we continue to think that it should be a key component of a long-term portfolio, and last week, finally technicals seemed to be shifting in the precious metal’s market as well. Should gold hold above the $1250 level, a short-term trend change would be confirmed and that could open up the way to the yearly highs just above $1350.

The bearish shift in risk assets, the collapsing yields, and the Dollar’s sideways drift all helped gold in the recent period, but it’s important to note, that compared to the other major currencies, the metal already acted in a bullish fashion ever since August, and we expect that trend to continue in the coming months.

Dead Cat Bounce in Crude Oil?


WTI Crude Oil, 4-Hour Chart Analysis

The OPEC countries and Russia agreed on a larger than expected 1.2 million barrel/day production cut this week, and following a tectonic shift in the market of crude oil in the past two months, we only saw a weak intraday bounce in the crucial commodity.

The WTI contract is still only slightly above the $50 per barrel price level, and with the US turning into a net exporter for the first time in 75 years last week, thanks to the record production levels, fundamentals remain weak, even as the commodity is still severely oversold. The slowing global growth and the re-escalation in the US-Chinese relations also weigh heavily on the price of oil, and given the broad bearish technical shift the long-term trend will likely remain negative.

Inflation Worries Likely Taking a Back Seat

As for economic releases, the British and the US indicators will likely steal the show next week. The British GDP and Manufacturing Production will be coming out on Monday, while the British Employment Report is scheduled for Tuesday, together with the German ZEW Sentiment and the US Producer Price Index (PPI).

Wednesday will be highlighted by the US Consumer Price Index (CPI) and given the current consensus of no rate hikes in 2019, barring a huge surprise, the measure will likely have a smaller-than-usual impact on markets. The ECB’ s monetary meeting will be held on Thursday, and following the recent turmoil in financial markets, together with the clear economic slowdown, it’s hard to imagine a hawkish shift in the central bank’s stance.

The week will end with the US Retail Sales Report and the European flash PMIs, and it will be interesting to see how Europe faired in November following three months of disappointing releases.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Nasdaq 100 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

Shanghai Composite Index CFD, 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

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

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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Altcoins

XRP Price Analysis: XRP/USD Behavior is Demonstrating Strong Downside Vulnerabilities

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  • Ripple’s XRP was trading up with modest gains in the latter part of Wednesday, just some 0.60%.
  • XRP/USD continues to move within a narrowing range-block formation. The price is subject to a breakout, with risks pointing to the downside.

Recent Price Behavior

Ripple’s XRP is seen holding very modest gains of 0.6% in the latter part of Thursday’s session. Price action remains limited, given the narrow trading range, in which it is moving in. There is a lack of commitment from both sellers and buyers, and as a result a range-block formation can be eyed. XRP/USD has been within the confinements of this for the past seven sessions now. Currently, there aren’t any technical suggestions of the bulls recovering and picking up the mid-December momentum again.

Given the above-detailed price behaviour, risks point to the downside. One of the key reasons for this is XRP/USD moved into consolidation mode after a recent hard fall on 10th January. Prior to the drop, the price was trading sideways, which was seen from 19th December, apart from the freak spike to $0.46 on 24th December. A technical breakout was then observed, as mentioned on 10th January, where XRP/USD dropped a huge 20%. Keeping in mind the described recent journey for the price, similar movements are currently playing out.

Range-block

XRP/USD 4-hour chart.

A breakout is imminent, given that price action is getting tighter. It is worth noting the key levels around this range-block. In terms of the lower support, this should be noted at the $0.3200 mark, the recent low area of 13-14th January. The upper part of this technical formation is eyed at $0.3450, the high from 11th and 14th January.

If the bears manage to force a breach of the above-described, then XRP/USD will quickly be forced to give up the psychological $0.3000 mark. A large area of demand is seen tracking from $0.3000-$0.2500. This has proven to find strong buyers on several occasions – December 2017, August and September 2018.

Furthermore, to see XRP/USD fly the way it has in the past will require a serious amount of upside momentum. Given all of this sideways trading and consolidating, the price is building new areas for itself to have to break down. In terms of upside resistance, this should be noted running from $0.3500 up to $0.4000. Lastly, the price as mentioned earlier, was ranging here between 19th December to 10th January.

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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4.5 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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Analysis

Price Prediction: Bull Trap Pattern Complete in EUR/USD, New Lows Likely Ahead

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Still Diverging Economies, Converging Monetary Policies

While the long-term trend is still negative in the EUR/USD, the most traded forex pair had a very active start to the year, and it seemed that after a long period of weakness, will finally experience a meaningful counter-trend rally against the Greenback. The European common currency moved above key resistance in the wake of the dovish shift by the Federal Reserve, despite the disastrous industrial production reports and the dismal PMIs from the Eurozone.

The weakening US economic numbers also helped the rally attempt, but despite the move above 1.15, the currency failed to extend the move and it plunged back below resistance, to the previously dominant trading range, completing a bull-trap pattern which will likely lead to the continuation of the long-term trend, with all eyes on the previous low near 1.1215.

Long-Term Chart Analysis

EUR/USD, Daily Chart Analysis

Looking at the daily chart, the trend is clearly bearish in the pair, and even though the steeper of the two main declining trendlines have been briefly violated during the recent rally, which made a stronger counter-trend rally a possibility, the broader trendline is in no danger. The oversold MACD readings that developed in the pair have been cleared back in December, and now the indicator is bearish for the first time since early November.

There is considerable support in the 1.1275-1.13 zone, but given the lack of follow-through after the break-out attempt, and the competed bull trap pattern, odds clearly favor a new swing lower in the ongoing long-term downtrend. Targets for the move are found near 1.1135 and in the 1.0850-1.0950 zone.

Short-Term Chart Analysis

EUR/USD, 4-Hour Chart Analysis

The pair is slightly oversold from a short-term perspective, and a move back to 1.1440 is in the cards here. That said, given the proximity of the 1.15 level and the risk/reward ratio of a long-term trade, traders could enter right away, ignoring the short-term setup. A dip below the lower boundary of the broader consolidation pattern would further confirm the continuation of the long-term trend, but should the global risk rally continue, a period of range trading could still be ahead before a test of the lows near 1.1215.

Key Events Ahead for the Pair

Tomorrow we will have the US Industrial Production and Prelim Michigan Consumer Sentiment coming out. Next week, Tuesday will likely see all the US indicators which have been delayed because of the government shutdown, such as Retail Sales, Housing Starts, Existing and New Home Sales, and the Trade Balance. The Eurozone Manufacturing and Services PMIs will be out on Thursday, while all eyes will be on the ECB’s rate decision and the following press conference, and on Friday the Durable Goods report could cause a sizable move in the pair.

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

Longest Bear Market in Crypto History?

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In just 30 days, cryptocurrencies will have entered their longest bear market in history, according to Ran NeuNer, host of CNBC’s Cryptotrader show. The frenzied selloff since early 2018 has delivered a beat down to retail traders, hedge funds and long-term crypto holders. However, for one small corner of the market, business is thriving.

Bear Market Drags On

As of Thursday, the cryptocurrency bear market of 2018-19 has reached 391 days. By this time next month, the bear market would have stretched beyond the 420 days seen in 2014-15. Officially, it will be the longest bear market in crypto’s short history. (To refresh your memory, a bear market is defined as a drop of 20% or more from a recent high).

Of course, frantic selloffs are nothing new for cryptocurrencies. Since 2011, bitcoin has experienced at least five epic meltdowns, with losses ranging from 37% to 84%. Each time, the market has come back stronger than ever, culminating in the 2017 bull run that drove bitcoin toward $20,000.

At the height of the bull market in early 2018, cryptocurrencies were valued at a whopping $840 billion. Less than 12 months later, the market bottomed at just over $100 billion. The bearish trend is expected to resume until at least mid-2019, according to a combination of technical analysis, market sentiment and history of monthly momentum. There are, of course, other reasons to expect the bears to maintain control. These include regulatory uncertainty, hesitation on the part of institutional investors to participate and the fallout from the long-winded ICO boom.

Read why 2019 is bitcoin’s year of accumulation.

Interestingly enough, bitcoin has managed to set higher lows in six of the last seven years. In other words, bitcoin’s price bottom is incrementally higher almost every year stretching back to 2012.

Creditors Capitalize

As the bear market stretches on, crypto traders and startups are turning to creditors to fund their shortfall. As Bloomberg recently reported, crypto creditors are finding strong demand from traders who don’t want to sell their coins at depressed prices as well as from big investors looking to short virtual currencies.

Much like hedge funds, most crypto lenders began their operations in 2017 during the market boom. Hedge funds have struggled since the market downturn took effect while lenders have seen their business thrive.

As Olga Kharif notes, the crypto bust is putting lenders on both sides of the equation: “Helping believers pay their bills while awaiting a rebound, and also enabling bets by people who think the drop has further to go.”

As crypto ventures continue cutting staff, companies like BlockFi have grown their revenues and customers tenfold in just six months. Aave, which owns ETHLend, recently opened an office in London and will soon expand in the United States. A company by the name of Salt Lending already employs 80 people. (Keep your eye on Salt, as the U.S. Securities and Exchange Commission (SEC) is probing the company’s initial coin offering.)

The Future

Predicting crypto bottom is notoriously difficult, and many analysts have been burned trying to come up with logical answers to a market that is still in its infancy. In the next 12 months, the evolution of the crypto industry will be dictated by several factors, including the SEC’s regulatory oversight of the market, its ruling on a hotly debated bitcoin ETF and appetite for physical bitcoin futures among institutional investors.

Related: As Race for Bitcoin ETF Heats Up, SEC Identifies Cryptocurrency as a Top Priority in 2019

The ICO model that dominated 2017-18 is also undergoing a massive shift toward security tokenization and even initial exchange offerings. While it’s still too early to gauge the impact of these new funding models, it’s clear that the ICO market is on its last leg. Case in point: token projects raised $1.5 billion in January 2018. By December, that figure had fallen to just $59 million.

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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4.7 stars on average, based on 740 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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