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Market Overview: 5 Things to Watch Next Week

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Asset Current Value Weekly Change
S&P 500 2380 -0.45%
DAX 12638 -1.22%
WTI Crude Oil 50.48 4.77%
GOLD 1255.00 2.11%
Bitcoin 1985 13.43%
EUR/USD 1.1205 2.74%

 

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1. All eyes on the VIX as volatility is creeping back

The low volatility period that lasted for several weeks, ended abruptly on Wednesday, as we anticipated as the internal weakness of the market caused vulnerability in the broad indices. The US volatility index jumped by a whopping 50% in one session, as stocks experienced their worst one-day selloff in almost 10 months. The VIX then dipped lower as stocks recovered, but some damage has been done, and another long lower wouldn’t be a surprise at this point. With volatility-short strategies dominating the market, a sell-off could quickly accelerate as the said strategies trigger a domino-effect.

2. $50 billion, $60 billion, $70 billion…. $100 billion??

It seems that more and more investors are piling into the cryptocurrency market, as the global low yield environment encourages buyers to look for alternative investments, and the accelerating adoption of the coins provides a solid background for the boom. As Bitcoin is losing market share, despite its climb to new highs, the segment looks more stable with total capitalization steadily climbing amid the “rotation” between the currencies. It seems plausible that the market will soon reach the $100 billion mark, as ICOs are abundant, and more and more minor coins pop up on the radar with stellar gains.

3. The Dollar on the ground, as the Trump-scandal lifts treasuries

The US Dollar fell sharply all week long, as US treasuries jumped higher in the risk-off environment, while US stocks declined from their all-time highs. The USD hit multi-month lows against the Swiss Franc, the Euro, and the British Pound, while the Yen also gained ground thanks to safe-haven buying. As the Fed’s rate hikes are far from being carved into stone, and the French election still has a positive effect, the European majors were the biggest winners of the Dollar weakness.

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4. Will oil hold above $50 per barrel after the OPEC meeting?

WTI Crude Oil, 4-Hour Chart Analysis

Oil showed strength throughout the week, as the bullish US inventory data, the OPEC deal-extension talks, and the Chinese correction all helped the commodity in regaining its steep losses once again. The stock market bounce gave another boost to oil on Friday and it finished the week near its highs, back above the key $50 per barrel level. The scheduled meeting of the oil cartel will take place on Wednesday, and the commodity might be vulnerable after the strong rally, in the case of a weak consensus among the OPEC-countries.

5. The Fed minutes in focus as US growth slows

The Federal Reserve dismissed the recent economic weakness in the US as transitional, but the numbers remained subdued since the previous meeting as well. Bond markets still suggest a rate hike in June, although the yields took a hit after Wednesday’s turmoil. The political fears could also make the central bank more cautious, so the minutes of the monetary meeting will be closely watched by traders. Friday’s key economic releases, Durable Goods, and the prelim GDP reading could also be important for stocks.

In Focus: Cryptocurrencies

 

Weekly performance comparison of the major cryptocurrencies, Hourly Chart

The cryptocurrency market continued to expand throughout the week, and the broad rally continued during the weekend, with some of the previous laggards joining the party, like Monero and Dash. Ripple also bounced higher after a correction phase, as Litecoin remained the weakest major coin concerning the week. Bitcoin left the direct vicinity of the $2000 today, while Ethereum also added to its recent lofty gains, as it is almost in par with Ripple regarding market cap once again. NEM is in a narrow consolidation range after its epic rally, while Stellar is drifting higher, probably preparing for its next major move.

Currency Weekly Volume Monthly Volume Market Cap
Bitcoin 5,861 20,450 34,400
Ripple 1,829 4,302 13,577
Ethereum 1,715 5,840 13,000
NEM 218 470 2,160
Litecoin 637 3,733 1,360
Dash 109 544 731
Ethereum Classic 223 1,179 702
Stellar Lumens 300 1437 533
Monero 80 361 524

 

Key Economic Releases of the Week

Day Country Release Expected Previous
Monday EUROZONE Eurogroup Meeting
Tuesday EUROZONE Manufacturing PMI 56.7
Tuesday EUROZONE Services PMI 56.4
Tuesday CANADA Wholesale Sales -0.20%
Tuesday US New Home Sales 621,000
Wednesday EUROZONE ECB President Draghi Speaks
Wednesday CANADA BOC Rate Decision 0.50% 0.50%
Wednesday CANADA BOC Statement
Wednesday US Existing Home Sales 1.26 mill 1.22 mill
Wednesday US Crude Oil Inventories 1.22 mill
Wednesday US FOMC Meeting Minutes
Thursday UK Revised GDP 0.30%
Thursday US Initial Jobless Claims 236,002
Friday JAPAN National Core CPI 0.40% 0.20%
Friday US Core Durable Orders 0.00%
Friday US Prelim GDP 0.70%
Friday US UOM Consumer Sentiment 97.7
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Analysis

Technical Analysis: Ripple Breaks Out Amid Ethereum Upgrade

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The major cryptocurrencies are on the rise once again today, with Ethereum’s major Byzantium update being in the center of attention. The second largest blockchain network has been updated through a hard fork, as usual, and the successful lock-in led to an initial surge in the price of the ETH token. The digital currency recovered above the $330 level after Sunday’s pull-back, but so far it failed to durably break-out above the prior swing high just above $340.

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With the long-term momentum readings still being neutral, the coin could be on the verge of testing the $380 resistance soon, with the all-time high near $400 being the last major technical obstacle. Below $330 further support is found at $300 and $285.

ETH/USD, Daily Chart Analysis

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Bitcoin is also on the rise after dipping below $5500 during the weekend, and the most valuable coin is joined in the rally by Ripple, which most likely finished its short-term correction and could be ready for another leg higher. The other majors are also generally higher, with NEO and IOTA being ahead of the pack, while the rest of the market trading near unchanged. As the broad rally seems to be well and alive, let’s see how the short-term charts are shaping up.

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Analysis

Long-Term Cryptocurrency Analysis: Bitcoin Leads the Charge as Ethereum Breaks-Out

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The most valuable digital currency shrugged off all the bubble talk and regulatory concerns of the recent period and surged to a new all-time high above $5000, as we expected. The coin almost doubled from the China lows, with a short-term top near the $5900 level but now it is short-term overbought and the long-term picture also looks stretched.

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That said, more gains are possible (with the final range-projection target at $7000) as the late-coming bulls pile in, but both investors and traders should reduce their holdings as the price advances as correction risk is rising progressively. Short-term support is near $5450 and the 23.6% Fibonacci extension, with further levels at $5000, $4650, and $4400.

BTC/USD, Daily Chart Analysis

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Most of the other majors are also showing bullish signs, and the strength of Ethereum is especially encouraging, while Ripple is working its way through the correction that we have been expecting after its surge. Litecoin and Monero are on the rise too, while Dash is still in correction mode, but it’s edging towards a likely break-out as well. As the divergent nature of the bullish trend is still apparent, let’s see where the daily charts stand this weekend.

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Analysis

Technical Analysis: Ethereum, Monero, and Litecoin Jump as Bitcoin Goes Parabolic

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The stellar performance of Bitcoin continued today in early trading, as the most valuable coin got close to hitting $100 billion in market capitalization after breaching the $5900 price level. The coin turned volatile after the early surge, as it got extremely overbought short-term and briefly tumbled by as much as 10% before settling down slightly near $5700. The $6000 level is still ahead as a likely target, but the currency is now prone to a short-term correction, and the long-term picture is also looking more and more stretched. Key support levels are now found near $5000, $4650 and $4400.

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BTC/USD, 4-Hour Chart Analysis

Ethereum, Litecoin, and Monero joined the party today, with the second largest coin’s value passing the $30 billion mark again, while Litecoin finally leaving behind the $56 resistance. Monero is still stuck below the key $100 level, but it’s now above the previously dominant correction pattern.

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NEO and IOTA continue to lag the broader market, while Ripple is gathering momentum inside its short-term correction pattern, and Ethereum Classic is showing some strength amid the BTC-led rally. Let’s see the short-term setups before the weekend.

(more…)

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