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5 Things to Watch Next Week: Byzantium, Bitcoin Stretched, Gold’s Strength, The Next Fed Chair, Kirkuk and Crude Oil

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1.            Ethereum’s Byzantium Upgrade is Here

In only a few hours time the second largest blockchain network will go through one of its biggest upgrades yet, when the block 4,370,000 is hit sometime around 6:00 UTC on Monday. The large Byzantium upgrade, the first part of Metropolis, seems to be in for a smooth start, but the coin is headed into the much-awaited event with mixed price action. The digital currency first hit a 5-week high above $340 on Saturday, thanks to the positive prospects of the fork, but it pulled back today to trade back below the crucial $330 support/resistance line.

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Should the hard-fork upgrade go as planned, the price of the token might follow the path of Bitcoin after the Bitcoin Cash fork, and approach all-time highs in the coming weeks. In any case, volatility should increase significantly tomorrow, so short-term traders should be controlling position sizes even more than usual.

ETH, Daily Chart Analysis

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2.           Bitcoin Overbought but Will that Matter?

The most valuable coin had a great run, gaining almost 100% since the latest deep correction. The digital currency was the definite leader of the segment, storming past the historic $5000 price level and the previous all-time high, while altcoins lagged behind. With Ethererum and Litecoin gathering strength and Monero also showing signs of activity, another round of “rotation” might be happening in crypto world.

Low correlations are the hallmarks of bull markets, and a healthy correction in BTC would be a welcome development for bulls. That said, with the great fundamental background the coin might be in for another mind-blowing surge, so keeping some chips on the table is a good idea, without forgetting the rising correction risk, of course.

BTC, 4-Hour Chart Analysis

3.           Gold Defying Gravity

The precious metal is after an orderly correction that followed the much-awaited beak-out above the long-standing resistance at $1300. Gold spiked below the $1275 level before turning north again, and with the short-term environment for the metal being mixed at best, its performance is encouraging for bulls.

As we expect the headwinds to change in the coming months, gold might be ready to take the next step in the developing bullish trend and even reach the zone between $1375 and $1400 in a matter of weeks.  With equities still looking stretched a risk-off turn in financial markets could supply the fuel for such a move.

Gold, 4-Hour Chart Analysis

4.           Yellen or Somebody New Will Lead the Fed?

The first (?) term of Janet Yellen is ending soon, and the speculation regarding the Fed Chair is getting heated. The stakes are high, and the POTUS, as usual, has been very vague about his nomination plans. For now, Mrs. Yellen’s chances for a second term are slim, but she might turn out to be the safe bet for the sensitive position. Kevin Warsh has been the favorite for quite a while, but the hawkish candidate has lost ground to Jerome Powell lately after Trump met all the major contenders for the post.

We all know that Yellen is uber-dove when it comes to monetary policy, and both of the major candidates (Warsh is a prior while Powell is a current Fed governor) would likely be stricter with regards to interest rates and balance sheet decisions. That said, Warsh is considered to be the more hawkish of the two, and the Dollar and Treasury yields would likely rally on his nomination, with an even stornger reaction to the newly emerged name of John Taylor.

The timing of the decision is a bit shaky, as the President indicated mid-October, but even a few more weeks could pass before the real thing, so investors should be on alert for volatility spikes in bonds and currencies in the coming period.

The prediction market of the next Fed Chair as of October 15, Predictit.org

5.           The Kurdish-Iraqi Standoff Reaching the Next Phase?

Following the somewhat tricky Kurdish independence vote, which was most likely a slight bluff from the Pesmerga leadership, the Iraqi army started to assemble forces near the strategic city of Kirkuk. The territory is known for one of the largest oil reserves of the world, and as such it’s not a surprise that Iraq wants to control it, although they miserably failed against ISIS to do so. With only a few kilometers between the opposing forces, a conflict is not out of the question, although there is still chance for a peaceful solution.

The outcome could be vital for the future of the autonomous region, as Iran and Turkey are also against an independent state, and with the threat of ISIS declining the US might also back away from the Kurds. Oil could pop higher in the case of an escalation, but with the fundamental picture being mixed at best, we wouldn’t bet on a structural change in the energy market.

Key Economic Releases Next Week

Day Country Release Expected Previous
Monday CHINA CPI 1.6% 1.8%
Monday CHINA PPI 6.3% 6.3%
Monday US Empire Manufacturing Index 20.3 24.4
Tuesday AUSTRALIA RBA Meeting Minutes
Tuesday UK CPI 3.0% 2.9%
Tuesday GERMANY ZEW Sentiment 20.3 17.0
Tuesday EUROZONE Final CPI 1.5% 1.5%
Tuesday US Capacity Utilization Rate 0.4% 0.2%
Tuesday US Industrial Production 76.2% 76.1%
Wednesday EUROZONE Mario Draghi Speaks
Wednesday UK Average Earnings 2.1% 2.1%
Wednesday UK Claimant Count 3,200 -2,800
Wednesday UK Unemployment Rate 4.3% 4.3%
Wednesday CANADA Manufacturing Sales -2.6%
Wednesday US Building Permits 1.25 mill 1.27 mill
Wednesday US Housing Starts 1.18 mill 1.18 mill
Wednesday US Crude Oil Inventories -2.7 bill
Thursday AUSTRALIA Employment Change 15,200 54,200
Thursday AUSTRALIA Unemployment Rate 5.6% 5.6%
Thursday CHINA GDP 6.8% 6.9%
Thursday CHINA Industrial Production 6.4% 6.0%
Thursday UK Retail Sales -0.1% 1.0%
Thursday US Unemployment Claims 245,000 243,000
Thursday US Phill Fed Index 22.2 23.8
Friday CANADA CPI 0.1%
Friday CANADA Core Retail Sales 0.2%
Friday US Existing Home Sales 5.32 mill 5.35 mill

Featured image from Shutterstock

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Analysis

Long-Term Cryptocurrency Analysis: Bitcoin Flirts with $8000 as Altcoin Bull Persists

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Bitcoin’s swift recovery was the main topic of the week, as the most valuable coin not just regained its steep losses, but hit a marginal new high towards the end of the period. The entire segment is experiencing capital inflows as the total value of the coins climbed above $230 billion for the first time ever after finally leaving the vicinity of the $200 billion mark.

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BTC breached the $8000 level before turning slightly lower on Friday, but despite the severely overbought daily chart, it is still trading near its all-time highs. As the long-term picture still suggests a deeper correction, investors should wait with opening new positions and traders should also control position sizes here. Key support levels are found at $7700, $7000, and $6700, while the recent key break-out level at $5000 still hasn’t been re-tested.

BTC/USD, Daily Chart Analysis

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Dash is still the most bullish altcoin from a technical standpoint, despite this week’s short-term correction, as the coin is trading above its prior all-time high, and this weekend, it looks ready to test the break-out high near $500. Support levels are still found at $400, $360, and $330, and as the long-term picture is approaching overbought territory, investors should only hold on to their positions here.

DASH/USD, Daily Chart Analysis

The other major altcoins are also mostly in bullish setups, with some of them already in the latter stages of this cycle, like Monero and IOTA, but elsewhere in the segment, there are still opportunities for both traders and investors. Let’s see the detailed long-term view.

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Analysis

Technical Analysis: Litecoin and NEO Jump as Bitcoin Trades near $8000

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The cryptocurrency segment continued its bullish run, as the total value of the coins climbed above $230 billion for the first time ever, while Bitcoin also posted marginal new highs. The most valuable currency is still overbought regarding the long-term picture, and we continue to expect a deeper correction in the coming period, despite the recent strong rally. Support levels are still found $7700, $7000, and $6700 while the $8000 level is ahead as a major obstacle.

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BTC/USD, 4-Hour Chart Analysis

Litecoin has been the most active major besides Bitcoin, as it rallied strongly after breaking out above the key $64 resistance and it breached the next target at $75 before heading below $70 again. The coin remains in bullish long- and short-term patterns, and we expect a move above the major resistance zone ahead with the next target found at $82.50.

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Litecoin/USD, 4-Hour Chart Analysis

NEO is showing strength in the second half of the session, while Monero is recovering well from a short-term dip, similarly to IOTA and Ethereum Classic. Ethereum continues to represent stability in the segment, while Ripple failed to build up momentum so far after yesterdays spike higher. With still most of the altcoins being in bullish setups, let’s see the short-term charts.

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Analysis

XRP Looking to Make a Significant Rally

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The XRP/USD pair went into a deep correction after hitting 0.29490 a month ago. It nosedived to the major support level of 0.19052. The pair consolidated for a few weeks which gave the market the legs to test resistance at 0.22924.

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Technical indicators show that the pair was ready to breach its immediate resistance, which it did this morning. Now that resistance has broke at 0.22924, it’s time to buy. This successful breakout will take the pair to 0.23997 first and 0.26563 next before hitting the target of 0.26796 which is coincidentally a major resistance level.

Technical indicators hint that the market would most likely be overbought by the time it hits 0.26796. Should it respect the major resistance level, the likelihood of the market turning extremely bearish increases. Therefore, it is recommended to closely watch your trail stops to preserve your gains.  

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Summary of Strategy

Buy: As close to 0.22924

Support: 0.22224 and 0.20081

Target: 0.26796

Stop: If the market breaches 0.20081 as next reliable support is 0.19052

 

Disclaimer: The writer 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.

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