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5 Things to Watch Next Week: The Fed, Bitcoin, the Euro, Key Earnings, and Gold

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1.            A Fed Meeting Without Expectations

After last month’s rate hike by the Federal Reserve, the markets widely expect the FOMC to leave the benchmark rate unchanged, while signaling caution regarding the economic situation. Janet Yellen already voiced her concerns regarding inflation and growth last week, and that caused a significant sell-off in the Dollar and Treasury yields. Exactly because of this, a hawkish surprise is definitely in the cards, as the Fed has been looking to gain some legroom for easing with further rate hikes, as the current near-zero levels leave virtually no firepower for a possible economic downturn. In that case, a short-covering rally in the Dollar is likely.

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2.           Bitcoin at $3000 again after miner consensus?

The cryptocurrency segment experienced a strong bullish reversal after last weekend’s panic selling in Ethereum that most likely marked the end of the one-month long correction for most of the major and smaller coins. Besides the oversold technical situation, BTC has been also boosted by the slightly surprising consensus on the BIP 91 protocol that looked distant even a few days before the agreement. With those tailwinds still fully behind the most valuable coin, a test of the prior all-time high near $3000 is likely sooner rather than later, and a new high might already happen this week. Ethereum’s relative weakness is a concern here, but the strength in small cap coins is a definite plus.

Bitcoin 4-Hour Chart Analysis

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3.           EUR/USD Still in the Driving Seat

Global stocks, especially European equities have followed the moves in the most traded currency pair very closely. While the major US indices were hitting all-time highs throughout the week, European stocks extended their correction under the pressure of the rising Euro. With the looming Fed meeting and the data heavy economic calendar, we expect volatile trading both in currencies and equities, especially in the second half of the week. Friday will be the strongest in economic releases, with the US, the Canadian, and several European GDP numbers coming out, together with the German CPI reading.

4.           US Earnings Season Heats Up

Alphabet (GOOG), Amazon (AMZN) Facebook (FB), Exxon Mobil (XOM), Chevron CVX), Coca-Cola (KO)… and these are only the biggest names that will report next week, and overall, more than 3 trillion of market capitalization will be assessed by the market. These periods are known for choppiness, and together with the Fed-day and the economic releases, a busy trading week is baked in the cake. The US markets showed resilience following the NASDAQ flash-crash in June, and if the Dollar remains weak, more new highs are expected, despite the historically extreme valuations across the board.

S&P 500, 4-Hour Chart Analysis

5.           Commodities Stuck Between Opposing Forces

Gold has been shining for more than a week now, as the dovish change in the Fed’s rhetoric propelled precious metals higher. Oil and industrial commodities also rallied together with US stocks, but finished on a negative note, as growth concerns remain a huge question mark for the segment. The string of positive Chinese releases helped the sector this week as well, but still they are far off the levels of equity markets regarding the long-term picture. Given the current economic trends, and with investors still mostly focusing on central bank policies, gold could be the biggest beneficiary on the long run, and it still looks attractive at the current levels.

Gold, 4-Hour Chart Analysis

Key Economic Releases of Next Week

Day Country Release Expected Previous
Monday JAPAN Manufacturing PMI 52.3 52.4
Monday GERMANY Manufacturing PMI 59.1 59.6
Monday GERMANY Services PMI 54.4 54.0
Monday EUROZONE Manufacturing PMI 57.3 57.4
Monday EUROZONE Services PMI 55.5 55.4
Monday CANADA Wholesale Sales 0.5% 1.0%
Monday US Existing Home Sales 5.59 mill 5.62 mill
Tuesday GERMANY IFO Business Climate Index 114.9 115.1
Tuesday US CB Consumer Confidence 116.2 118.9
Tuesday US Richmond Manufacturing Index 7 7
Wednesday AUSTRALIA CPI Index 0.4% 0.5%
Wednesday UK Nationwide HPI 2.7%
Wednesday UK GDP 0.3% 0.2%
Wednesday US New Home Sales 615,000 610,000
Wednesday US Crude Oil Inventories -4.7 mill
Wednesday US FOMC Rate Decision 1.25% 1.25%
Wednesday US Fed Monetary Statement
Thursday EUROZONE M3 Money Supply 5.0% 5.0%
Thursday US Core Durable Goods Orders 0.4% 0.3%
Thursday US Initial Jobless Claims 242,000 233,000
Friday JAPAN Core CPI Index 0.4% 0.4%
Friday JAPAN Unemployment Rate 3.0% 3.1%
Friday JAPAN Household Spending 0.6% -0.1%
Friday JAPAN Retail Sales 2.3% 2.15
Friday GERMANY Prelim CPI 0.2% 0.2%
Friday SPAIN GDP 0.9% 0.8%
Friday US Advance GDP 2.5% 1.4%
Friday CANADA Monthly GDP 0.2% 0.2%
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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  1. MissRobot

    July 24, 2017 at 5:00 pm

    Hi Thanks for the article. For AMZON, FB, GOOG, which is the recommendation to fixe the P/L ? Thanks!

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Analysis

Long-Term Cryptocurrency Analysis: Broad Correction Enters Next Phase

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The overbought BTC-led correction that has been the dominating technical process in the cryptocurrency segment in the last month or so continued in earnest today, amid the intensifying regulatory steps concerning the sector. The three-week-long consolidation that followed the initial mini-crash concluded with a sharp sell-off overnight rearranging the long-term charts, while likely kicking off another volatile period.

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While most of the crash lows held up today in early trading in the majors, especially in the case of the late leaders like Ethereum and NEO, some of the relatively weaker coins are already trading below the December minimums. We expect most of the majors to follow Dash and LTC, the weakest of the largest coins, lower and trade below the previous lows, as sentiment will likely swing to a bearish extreme.

The $11,300 level has been in the center of attention throughout the session today and the most valuable coin experienced heavy trading around the level as expected. As the daily MACD is still in neutral territory, the coin could be in for another leg lower, but after the 40% correction and the rather lengthy consolidation, investors could be looking for entry points during the move near the key support levels at $10,000, $9000, and the stronger levels at $8200 and $7700.

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BTC/USD, Daily Chart Analysis

As Ethereum is in a different part of its cycle the long-term momentum readings are still overbought, and that could mean a more protracted correction for the second largest coin. That said, following a multi-month consolidation like the one in Ethereum before, we still expect the token to outperform BTC from a long-term technical standpoint. ETH is now below the short-term trendline, and it’s likely to dip below $1000, and the prior top at $850. Further key levels are found at $740, $625, $575, and near $500.

ETH/USD, Daily Chart Analysis

Let’s see the outlook for the other major altcoins after today’s bloodbath.

(more…)

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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Analysis

Crypto Update: Chinese Crackdown Triggers Next Leg of Correction

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The cryptocurrency segment is crashing again, with double-digit losses across the board, and with several coins shedding around 30% in one day amid the widespread and heavy selling. The sell-off was triggered by reports on a new set of measures by the Chinese authorities limiting crypto trading, which added to the still looming South Korea related regulation worries. Bitcoin tested the mini-crash lows at $11,300 today in early trading, dipping slightly below that level before a strong bounce started.

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The most valuable coin is now between two crucial support/resistance lines, with the other ahead at $13,000, and as the downtrend is entering its more mature phase the $10,000 and $9,200 levels could come in play, with a possible dip to the support zone near $7,650.

BTC/USD, Daily Chart Analysis

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Interestingly, the coin is still hovering within the daily range of the crash of December 22nd, and that points to a very active and volatile period ahead near the low at $11,300, as automatic orders will likely get triggered on both sides of the market.

The short-term setup is bearish, and although it’s possible that the primary support level will hold, odds still favor another leg lower, following the exponential run-up at the end of last year that pushed sentiment into bullish extremes.

BTC/USD, 4-Hour Chart Analysis

Altcoins

(more…)

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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Analysis

Music: One Overlooked Use Case

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So far in this year, Ethereum has been the crypto star appreciating over 80% to a recent record of $1402. All this suggests that more and more applications are being created. We know this by the demand for Ether, the gas that drives the Ethereum network.

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The reason behind the explosion of Ether demand was confirmed by Ethereum co founder Steven Nerayoff in a CNBC interview where he claimed the number of Ethereum projects today is more than 10 times year ago levels.

One of those areas is the music business and there are several names appearing on the ICO list to add to your research agenda.

Why The Music Business Needs Help

Music may live forever but the business side has been in trouble for a long while. Over the last decade there have been only three years when the global value of music sales increased. The combination of digital music and outright pirating through peer-to-peer sharing has much to do with the long-term trend.

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Throughout the world there are 69 copyright and royalty societies given the responsibility of documenting, collecting and distributing music royalties. That means collecting a few pennies whenever a song is played on the radio, Internet or anywhere else. Four of the largest of these is in the US, followed by Japan, Germany and Britain. Their operations are truly byzantine.

Experts in the music-publishing field confirm the time between music usage and royalty payment can run close to 24 months. Even then not all royalties are distributed. According to my sources, there are often millions of dollars collected by royalty authorities everywhere that never make it to the entitled recipients. That sort of practice borders on criminal behavior but copyright and royalty societies operate in a sub-rosa manner making it difficult to understand their policies.

In the past just 4 major record labels controlled over 80% of the industry. These giants could afford a full time legal department to pursue royalty issues dominated the music industry. Today, however, independent labels represent almost one-third of the market. This means less democracy in the business with the young independent artist at a particular disadvantage.

Of course, musicians aren’t the only group of artists loosing out on their pay. There are writers, poets and painters that go largely unprotected.

The music business is just easier to track because it has more data. Yet in spite of all the information, the music industry is widely recognized for its lack of transparency. Blockchain technology has the ability to disrupt long-standing industry practices.

ICOs To The Rescue

The number of Ethereum based white knights is starting to appear on the horizon promising to rattle the industry and hopefully restore some democracy on behalf of the independent artist.

One simple business model comes from a startup SingularDTV who is attempting to build their ecosystem on top of Ethereum. Here is the basic value added proposal.

SingularDTV tokenizes the artist work. In doing so the artist is turning their music into a financial asset. Anyone who buys into an artist’s token owns a share of the creation and its income stream. The more people consume an artist creation, the higher goes the token price.

Only time will show if SingularDTV succeeds with this model. The consequence of this model is how it eliminates many of the middlemen and nefarious influences in the industry. Instead of singing on a street corner for bread, an artist could raise money upfront without relying on an advance from a record label.

According to SingularDTV, distributing content via blockchain would allow artists to skirt streaming platforms like Spotify to earn royalties on their own terms. Now that is true democracy.

SingularDTV may stand out a bit in the news due its recent ICO success in raising $8 million but they aren’t the only player in the music game. Names like Voise recently raised $1 million as well as Soundchain, Blokur and Opus to name a few.

I am no longer a registered investment advisor, which means I don’t go around making investment recommendations. So I will only suggest this group to put on your list of late night reading. Next time, I will take a closer look at more of these names.

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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