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Analysis

5 Things To Watch Next Week: Crypto-Bounce, Jobs Friday, Qatar Deadline, Dollar, Stock Market Correction

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1.            Cryptocurrency Correction Nearing its End?

Volatility has been in a declining trend in the crypto market since the Monday Massacre, and the major coins are all still well above their correction lows, despite this weekend’s dip. The long-term picture is getting more constructive as the overbought readings are being cleared across the board. With Bitcoin’s crucial month getting closer and closer, uncertainty in the segment is still apparent, despite the continuous string of ICOs. A broad rally to new highs might be ways off, and we do expect more sideways action, the stronger looking coins like Dash and Litecoin might get interesting soon even for short-term positions.

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ETH/USD 4-Hour Chart Analysis

2.           It’s Jobs Friday Again

While the US labor market is still OK compared to some other more forward-looking measures, and the low level of initial jobless claims points to more solid numbers, employment is always deceivingly good in late in an economic cycle. With that in mind, a good report would make for a good counter trade opportunity. The currency markets could get wild on Friday, as this week’s central bank confusion would get another boost should the Non-Farm Payrolls number surprise big in either direction. Also, the generally low summer volumes could exaggerate the moves, so caution is required especially from leveraged traders.

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3.           The Deadline of the Qatar Ultimatum

The ultimatum given by Saudi Arabia and its allies expires tomorrow, and the world still doesn’t have a clue what will happen next. Qatari officials communicated that the country is ready to face the consequences, meaning they called the bluff of the Saudis, or that they don’t realize the seriousness of the situation. We will see soon enough, but at this point, the whole crisis looks like muscle-flexing from the restructuring Saudi leadership rather than the start of an escalation with Iran. That said, any hint of a military conflict could turn markets upside down, and start a new chapter in the political saga of the Middle East.

4.           The Dollar Remains in Focus

We are seeing early signs of a major bottom forming in the Dollar, as the recent surge in the Euro ran out of steam towards the end of the week, and the supposed advantage of the European economies compared to the US is mostly a mirage. That said if the ECB doesn’t cool down tightening expectations and US economic numbers continue to disappoint we might see a quick jump and final selling wave in the already lengthy downturn in the Greenback. Also, if the stock market correction continues, the Dollar will likely gather strength and burn the late shorts that jumped on the train chasing momentum.

5.           Supports Crumble in Global Stocks?

As we stated last week, market tops are processes, not events, but when declines start they tend to get ugly quickly. European stocks got smacked down on Thursday when investors come to the realization that the European Central Bank will likely do it again (as in 2008 and 2011) and raise interests rate just before an economic downturn. The NASDAQ also continued to look shaky, and it is testing the rising trendline and the primary support just under the current price level. While there is no guarantee that the decline will last long, being patient already paid off, as most of the major benchmarks erased a couple of months of gains in a few days.

NASDAQ 100 Futures 4-Hour Chart Analysis

Key Economic Releases of Next Week

Day Country Release Expected Previous
Monday JAPAN Tankan Manufacturing Index 15 12
Monday JAPAN Tankan Services Index 24 20
Monday CHINA Caixin Manufacturing PMI 49.9 49.6
Monday SPAIN Manufacturing PMI 55.6 55.4
Monday UK Manufacturing PMI 56.4 56.7
Monday US ISM Manufacturing PMI 55 54.9
Monday US Vehicle Sales 16.7 mill
Tuesday AUSTRALIA Retail Sales 0.3% 1.0%
Tuesday AUSTRALIA RBA Rate Decision 1.50% 1.50%
Tuesday AUSTRALIA Monetary Statement
Tuesday UK Construction PMI 55.2 56.0
Wednesday UK Services PMI 53.5 53.8
Wednesday US Factory Orders -0.4% -0.2%
Wednesday US FOMC Meeting Minutes
Thursday AUSTRALIA Trade Balance 1.11 bill 0.56 bill
Thursday SWITZERLAND CPI Index 0.0% 0.25
Thursday EUROZONE Monetary Meeting Accounts
Thursday US ADP Employment Change 181,000 253,000
Thursday CANADA Trade Balance -0.4 bill
Thursday US Initial Jobless Claims 245,000 244,000
Thursday US ISM Non-Manufacturing PMI 56.6 56.9
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1 Comment

1 Comment

  1. flogy4031

    July 2, 2017 at 2:09 pm

    As I see it it’s a good time to buy safe-haven assets (Gold, Silver, even BTC). When markets start to shake, investors would go for these type of assets driving prices up.
    Have fun all 🙂

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Analysis

Daily Analysis: Dollar Falls, Gold Jumps after Yellen’s Final Move

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Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2668 -0.02%
DAX 13125 -0.45%
WTI Crude Oil 56.65 -0.68%
GOLD 1258.00 1.35%
Bitcoin 16,100 -6.32%
EUR/USD 1.1842 0.73%

The Federal Reserve hiked interest rates as expected today, and although the central bank’s monetary statement was slightly more hawkish than expected, the market’s reaction didn’t reflect the much-anticipated move. The worse than expected Core CPI reading that underlined the low-inflation narrative weighed on the recently strong Greenback, while stocks were unchanged after decision and bonds gained ground as yields retreated.

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EUR/USD, 4-Hour Chart Analysis

The major indices are hovering near their all-time highs with the DOW leading the way higher, hitting a new record for the second day in a row. While volatility Is expected to remain low as we approach the end of the year, market internals and valuation levels are still concerning from a long-term perspective, and stocks outside the US are also negatively diverging. The action in crude oil could be slightly more interesting as the commodity is starting to act in a slightly bearish manner after a grinding multi-month rally.

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WTI Crude Oil, 4-Hour Chart Analysis

The Brexit process is still in the center of attention in Europe, although volatility took a nosedive on the old continent as well, and it’s unlikely that the Christmas period will be much different, given the predictable drop in volumes and trading activity. The date of the next election in the financially and politically troubled Italy has been set to March 4th next year, and the early date caused some turmoil in the countries assets, which dragged the Euro Stoxx 50 lower today, together with the DAX and the other major indices.

Cryptocurrencies

As the total market cap of the crypto-market crossed the incredible $500 billion mark, Ripple, NEO, and Ethereum made headlines with lofty gains in the face of the severely overbought readings elsewhere in the segment. While XRP and NEO are still not overbought from an investment perspective, Ethereum reached our final target for its break-out and triggered a long-term sell signal.

ETH/USD, 4-Hour Chart Analysis

The previously surging IOTA continued its correction, Litecoin consolidated in a relatively narrow range, while Dash, ETC, and Monero scored marginal new highs before turning lower together with BTC. The most valuable coin that has lost some of its momentum “mojo” in recent days fell back below last week’s highs, and that could mark a failed break-out and a start of the deeper correction that seems more and more likely.

BTC/USD, 4-Hour Chart Analysis

Key Economic Releases on Wednesday

Time, CET Country Release Actual Expected Previous
11:30 UK Average Earnings 2.5% 2.5% 2.3%
11:30 UK Claimant Count Change 5,900 3,300 6,500
11:30 UK Unemployment Rate 4.3% 4.2% 4.35
15:30 US Core CPI 0.1% 0.2% 0.2%
15:30 US Crude Oil Inventories -5.1 mill -3.6 mill -5.6 mill
21:00 US Fed Rate Decision 1.5% 1.5% 1.25%
21:00 US FOMC Statement

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Analysis

Technical Analysis: Volatility on the Rise Again, as Ripple and Ethereum Hit Targets

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Ripple has been the star of today’s session in the cryptocurrency segment, as the only major coin on a long-term buy signal in our trend model continued yesterday’s break-out, and surged to a new all-time high. The currency cleared the $0.425 level that marked the top in May, and after the more than 6-month long consolidation phase, it promptly neared the $0.50 level.

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While the short-term momentum indicators are now stretched, the coin is still in an encouraging long-term setup, although the best period to buy already passed. The coin could be dragged lower in the case of the expected broad correction in the segment, but we expect XRP to outperform in the coming period, with support levels found at the prior high and below that in the range between $0.30-$0.32.

XRP/USDT, 4-Hour Chart Analysis

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Ethereum has been the other top coin on the rise, as the second largest digital currency surged past the final range projection target of the break-out two weeks ago at $685 in the aftermath of the launch of the BTC futures on Monday. The ETH token is now also on a sell signal on all time-frames, and we advise investors and investors to wait for the next major correction to establish new positions. Support levels are now found at $575, $500, $480, and $400.

ETH/USD, 4-Hour Chart Analysis

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Analysis

Technical Analysis: Bitcoin Grinds Higher as Records Tumble in Altcoins

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The historical surge in the segment, which is the second such move this year, continued today, with another round of break-outs in some of the major altcoins and tepid gains for BTC investors. Ethereum, Ripple, Dash, and first and foremost Litecoin was leading the charge, with the recent star LTC topping $300, just after a day of hitting the $200 mark.

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Litecoin defied all odds after reaching extremely overbought readings, and the coin rode the speculative wave, turning exponential, not unlike IOTA and Bitcoin previously. With the coin being stretched in an unprecedented way on all time-frames, investors could even consider selling their core positions at the current levels, as a deep correction is almost granted in the coming period. The first meaningful support level is found at $125, and a re-test of the $100 level is probable during the next major correction.

LTC/USD, 4-Hour Chart Analysis

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Ripple finally ended a long period of relative weakness today, and the only major on a long-term by signal jumped over primary resistance at $0.26 and crossed the $0.30-$0.32 too in the euphoric sentiment. As the coin is not long-term overbought following the 6-month long consolidation, the buy signal in XRP remains intact, with the only major resistance level being found at the all-time high near $0.425.

XRPUSDT/USD, 4-Hour Chart Analysis

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