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5 Things To Watch Next Week + Chartbook

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2800 Level in Focus in the S&P 500

S&P 500 Futures, 4-Hour Chart Analysis

The trendline breaks that we pointed out last week, which were triggered by the jump in Treasury yields led to an unexpectedly volatile selloff in US markets, while dragging lower stocks globally too. Now, as the technicals shifted bearish in almost all major markets, at least from a short-term standpoint, a more defensive approach is advised even for short-term traders, while we were already defensive with regards to the long-term outlook for US stocks, given the valuation extremes.

Next week, Friday’s oversold bounce could continue in the US, but stiff resistance is ahead not far from the current price levels, in the 2800-2810 area in the S&P 500 the most-watched index. An advance to 2850 would provide a great short-term selling opportunity, but as small-caps, which led the market lower recently remain weak, a reversal off the 2800 level is also in the cards. In any case, a new swing low is likely in the coming weeks, with a test of the 2675-2700 area.

Another Week of Heavy Trading Expected in Treasuries

US 10-Year Treasury Yield, 4-Hour Chart Analysis

The week will start with a crucial economic release in the US, and the Retail Sales report will likely cause further volatile trading in Treasuries and stocks alike. After pulling towards the end of the week, Treasury yields could head higher again, especially if a strong report revives inflation and rate hike fears.

The meeting minutes of the recent Fed meeting will also be released on Wednesday, and although we don’t expect huge surprises, the Treasury market will likely have another volatile session. The Dollar, which has been drifting lower against its major peers last week, will also be in the center of attention, since despite the correction, the broader trend is bullish, and the reserve currency could be ready for another leg higher.

Keep an Eye on the VIX!

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

We have been following the break-out in the Volatility Index (VIX) in the past couple of weeks and despite the bounce in stocks, the measure remains above the line-in-the-sand 20 level. While the February collapse of the short-VIX trade is unlikely to happen again, there is a good chance that in the coming weeks we will see outsized moves in stocks.

A persistently high VIX would be consistent with the deterioration in market internals that we observed lately, and we don’t expect a quick decline towards the 10 level, as it was the case after every correction in 2017 before the February crash.

Emerging Markets and Europe Trading at Multi-Year Lows

DAX 30 Index CFD, 4-Hour Chart Analysis

There were clear positive catalysts in the second half of the week for emerging markets, with the much wider than expected Chinese Trade Balance and Turkey’s surprising step to release Pastor Brunson helping to ease trade war fears and the pressure on the Turkish Lira respectively. That said, the fresh standoff between Donald Trump and Saudi Arabia could trigger another wave of selling in the assets of the most vulnerable countries, erasing the Friday bounce.

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

As we expected emerging market equities underperformed currencies during this selloff, and as measured by the EEM ETF, the segment hit new lows together with the main European benchmarks. This widespread weakness is an alarming sign for bulls, and although a larger bounce could follow from these oversold levels, there is nothing bullish in the recent price action of the lagging assets.

Earnings Season Heating Up

After the record-breaking second quarter the 3Q earnings are starting to come in, and although analysts have been steadily reducing their estimates across the board, we don’t expect huge negative surprises in the US, as economic momentum remained strong despite slowing global growth. With that in mind, earnings could help in stabilizing the market after last week’s rout, even if a broader trend change is likely underway.

Among the most-awaited reports, we find Johnson & Johnson (JNJ), Bank of America (BAC), Goldman Sachs (GS), Morgan Stanley (MS), Netflix (NFLX), IBM (IBM), and Procter & Gamble (PG), with Tuesday being the busiest reporting day.

ChartBook

Major Stock Indices

Nasdaq 100 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 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

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 399 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

Stellar Price Analysis: XLM/USD Spared from Huge Punishing Downside; Stellar added to BitOasis Listings

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  • Stellar’s XLM has been listed on Dubai-based exchange, BitOasis, with zero transaction fees until 27th
  • XLM/USD price action caught by the lower support of a vital pennant pattern.

XLM/USD has been victim of excessive swings over the past going on two weeks now. This is in line with the general downside pressure that has hit the entire market. XLM/USD has lost some 35% since 12th November. The latest daily candlestick, at the time of writing, has been saved by a known serving area of demand.

During this period of heavy volatility, market volumes have spiked hugely. They were seen at their highest levels since the back-end of September when the price had a fast-short-term bull run to then see this as short-lived. It would go on and see these gains swiftly given back after running into some strong touted resistance.

Stellar Listed on BitOasis

BitOasis, a Dubai based cryptocurrency exchange, has added Stellar’s XLM token to its platform. They have detailed that XLM can now be purchase using AED, with no transaction fees, until 27th November.

It worth noting, back in July, Stellar obtained its Sharia certification, making it permissible to facilitate transactions within Islamic countries. XLM is available to trade for UAE, Saudi Arabia, Bahrain, Oman and also Kuwait citizens.

XLM/USD Fall

XLM/USD daily chart

The price has been moving within a pennant pattern structure, similarly to several of its peers. XLM/USD has been contained within since mid-July. It was moving within a consolidation and narrowing nature. Market bulls were then able to push for a breakout north, which came with a daily close on 4th November.

Upon this move out of the pennant structure, a small bull run was observed. XLM/USD had rallied some 20%, before buyers became exhausted. As a result, resistance was seen within the early $0.2800 region. This price area was also in proximity to the 61.8% Fibonacci, which had also seen a similar rejection between 23-24 September.

XLM/USD was then forced back down to retest the broken technical pattern structure. This failed to provide support to the falling force. The bears able to smash through, back down towards the original lower supporting trend line. This is seen tracking just sub-$0.2000 level. Further support was enforced by a demand zone, sitting just below.

Upside Targets

Thanks to the above-mentioned support coming to the rescue, it has provided some firmer ground for the bulls to build upon. The first challenge will be the 23.6% Fibonacci, in proximity to the upper trend line of the pennant. Both are tracking around the $0.2200 price area. The bulls have much to breakdown again.

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 60 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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Altcoins

XRP Price Analysis: Deadly Daily Close Below Vital Support

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  • XRP/USD was moving within a pennant pattern for 10 weeks, but the bears have forced a daily closure below.
  • Eyes are on a retest of the mentioned structure; a failure to breach back above could be punishing.

XRP/USD has closed in the red firmly over the past two consecutive sessions. However, generally in comparison to its peers, it has held ground well. This being the case within the large bear market currently being observed for cryptocurrencies. The downside pressure seems to have finally taken its toll on XRP bulls. XRP/USD saw a daily candle closure below a key supporting trend line.

XRP/USD daily chart

Broken Pennant Pattern

Price action had been moving within a pennant pattern structure, since the 21st September. This came after the excessive upside movements that were seen. XRP/USD at the time had aggressively spiked up towards $0.8000, before quickly retracing back south. As a result of these big moves, the price went into consolidation mode, forming a pennant.

The bulls attempted a breakout to the upside form the pattern on 30th September and then again on 6th November. Rejection was served to those attempts. Market bears, on the other hand, worked their line of support on several occasions in October and November. No doubt that this consistent testing of this area caused an eventual break to the downside, as has been seen.

On the daily closure of 20th November, the price finished the session below the lower supporting trend line of the pennant. This leaves the odds stacked heavily in the bears favor. Eyes will now be on a potential retest of the structure above. Such a move, as playing to the textbook, could invite again some heavy selling pressure from the bears.

Support Levels

Looking to the downside, just underneath the mentioned technical pattern, there is a strong touted demand zone. Between the months of October and November, this area has proven to be of assistance. The last legs of this would be around the psychological $0.4000 mark down to $0.3850. A breakout to the downside from this could be extremely punishing.

The next major area of support, after the above-mentioned region, is seen deep south. There isn’t much in the way of support, until down at the $0.3000-0.2500 range. XRP/USD was last seen trading here on 18th September. An area that was clearly very attractive for buyers, seeing a large push to the upside from this territory.

Resistance Levels

In terms of upside resistance, as mentioned earlier, this should now be noted underneath the breached pennant pattern. A retest would likely to the $0.4800 come into force. Should odds be defied and the bulls earn a break above, the upper trend line of the pennant would likely be tested, tracking around $0.5300.

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 60 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

Crypto Update: Short-Term Swing Low Forming?

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After the two-day rout that kicked off the week, the major cryptocurrencies continue to trade in a very volatile manner, with several wild swings in both directions in the last 24 hours. Most of the top coins held up above the initial spike lows of yesterday, although Bitcoin fell to a marginal new low later on Tuesday.

While selling pressure remains apparent in the segment, the volatile consolidation is likely a part of a short-term bottoming process, which could set up a more sustained bounce following the selling panic. The most important reference price levels for short-term traders are the $4450 level in Bitcoin and the $130 level in Ethereum.

Despite the possible bounce, the long-term setup in the segment is still overwhelmingly bearish, and any new positions should be considered ultra-short-term, and traders should apply strict risk management.  With the strong bearish leadership still clearly present, even in the case of a durable bottom, an extended period of volatile consolidation will likely precede a confirmed trend change.

BTC/USD, 4-Hour Chart Analysis

Bitcoin is still trying to form a short-term swing low, despite being relatively weak in the past 24 hours from a technical perspective, and the $4450-$4500 support zone remains in the center of attention. The coin got close to the $4000 level during yesterday’s volatile spikes, with the initial bounce topping out just above the $4700 resistance level.

Further levels of interest are ahead near $5350 and $5600, while primary support is still found between $4000 and $4050, and traders should still only consider very short-term positions in BTC. Volatility will likely remain very high in the coming period and the long-term sell signal is clearly in place in our trend model.  

ETH/USD, 4-Hour Chart Analysis

Ethereum managed to hold above its initial spike despite falling back below the $130 level several times yesterday. The coin is showing early signs of stability, but given the steep long-, and short-term downtrends and the extended period of relative weakness, traders and investors would need significant technical improvements to consider new positions in ETH.

That said, playing a bounce to the $150-$160 zone is likely in the coming period, with even the previous bear market low near $170 possibly in sight after the rout, but odds still favor at least a test of the recent lows before a sustained rally.

Ripple Still Strong as Stellar Tests Support Zone

XRP/USDT, 4-Hour Chart Analysis

Ripple continues to hold above the key $0.42-$0.46 long-term support zone, clearly being the strongest among the majors from a technical standpoint. Despite that, our trend model is still on a sell signal with regards to the short-term time-frame, and the coin’s relative strength have been waning somewhat in the past couple of days, so traders should still not enter new positions here. Further support levels are still found near $0.375 and $0.355, with resistance ahead at $0.51, $0.54, and $0.57.

Stellar/USD, 4-Hour Chart Analysis

Stellar got dragged significantly lower by the latest round of the segment-wide crash, and although it held up above the prior bear market low, the short-term setup is still clearly bearish in the relatively strong coin’s market as well.

The long-term picture is neutral and the support zone between $0.1830 and $01930 is still looking strong, but traders and investors shouldn’t enter new positions here, with strong resistance ahead at $0.21 and between $0.2350 and $0.2450.

LTC/USD, 4-Hour Chart Analysis

One of the bearish leaders of the segment, Litecoin also showed signs of stability yesterday, and that’s positive news for the whole market, at least concerning the short-term outlook. The coin managed to hold on above the initial spike low, and although it’s still stuck below the $34.50 resistance level, a larger bounce could be ahead, possibly up to the $38 level. That said, the broader downtrend is clearly dominant and there is still no sign of a sustained bottom in the market of LTC.

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 399 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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