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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

Crypto Update: Ethereum Tops $700 as Short-Term Sell Signals Pop Up

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The major cryptocurrencies are having another strong session, with all of the top 10 coins sporting gains, adding more than 5% on average since yesterday. The largest digital currencies are trading in clear short-term uptrends, with the broad declining trendlines also being broken in most cases.

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That said, the short-term momentum indicators are overbought with regards to altcoins, and now several majors triggered short-term sell signals following the first signal by IOTA yesterday. While this doesn’t mean that traders should exit all short-term positions here, taking some profits and/or setting tighter stop losses is advised, as there will likely be opportunities with much better risk/reward profiles to re-enter the market.

BTC/USD, 4-Hour Chart Analysis

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Bitcoin finally topped the $9000-$9200 resistance zone after a period of relative weakness, further boosting the already positive overall picture. The momentum of the move is still not stellar, but the coin is still not severely overbought, and although a deeper pullback is still likely soon and short-term traders shouldn’t open new positions here, a test of the $10,000 level is still possible in the coming days. The long-term setup is clearly bullish, and investors could still add to their holdings during the short-term pullbacks, with further support found at $8400.

ETH/USD, 4-Hour Chart Analysis

Ethereum continued to rally, despite the already overbought reading, and now the coin is severely overbought, and a correction is very likely in the coming days, so short-term traders should exit their positions or use tight stop losses here. We expect the rally to continue after a correction, and long-term investors should hold on to their coins. Resistance zones are ahead near $735 and $780, while primary support is between $625 and $645.

Altcoins Overbought but Uptrend Intact

XMR/USD, 4-Hour Chart Analysis

While correlations are getting lower and lower among the major coins, which is a bullish sign, most of them are already overbought from a short-term perspective. Although further gains are still possible, chasing those coins higher here is not a good strategy, even as the long-term setups remain encouraging.

Litecoin, ETC, and NEO are not severely overbought yet, while Ripple, Stellar, and Cardano are already in short-term corrections clearing the overbought readings, but traders should be cautious with Dash, EOS, Monero, and IOTA as they are ripe for a move lower.

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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Analysis

Long-Term Cryptocurrency Analysis: Bitcoin and Ethereum Break-Out of Declining Trends

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The altcoin-led rally continued since our previous look at the long-term charts, and the major coins all confirmed a new short-term uptrend. Most of the largest digital currencies also broke out from their broad declining trends, as the total value of the segment is now more than 50% above the level around the correction low.

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BTC/USD, Daily Chart Analysis

The overall picture remained positive, with only Bitcoin’s weakness causing headaches for crypto bulls, as the most valuable coin is hovering close to declining trendline that dominated trading throughout the first quarter of the year.

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Despite the short-term weakness, BTC is still among the stronger majors from a long-term perspective, and with the secular uptrend clearly being intact, long-term investors should hold on to their coins and add to their holdings on the short-term pullbacks.

Crucial resistance is still just ahead between $9000-$9200, with further levels at $10,000 and $11,300, while support is found near $8400, $7650, and in the $6150-$6250 zone.

ETH/USD, Daily Chart Analysis

Ethereum built upon its recent relative strength, and the coin broke out convincingly above the declining trendline, and reached the next key resistance zone between $625 and $640 before the momentum of the move stalled.

While there are still several strong zones ahead, with the closest ones near $725 and $845, barring a quick move back below the declining trendline, the coin should continue the advance. With the long-term MACD still just in neutral territory, long-term investors could add to their holdings during short-term corrections, with key support levels at $500, $450, and $400.

(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: Coins Hit 6-Week Highs as Rally Continues

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Bullish price action is still dominant in the cryptocurrency segment today, despite the recent lofty gains, and the overbought short-term picture in the ace of most of the majors. Correlations continue to break down, as more and more coins are in confirmed uptrends, with the total value of the market hitting $400 billion for the first time since early March.

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The top digital currencies are mixed today in the generally positive environment, with Bitcoin Cash, IOTA, Ethereum Classic, Dash, and Monero showing relative strength, in the face of the slightly overbought short-term momentum readings. While this is not the best moment to enter new short-term trades with regards to the majority of the coins, the long-term setup favors further gains in the coming weeks.

BTC/USD, 4-Hour Chart Analysis

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Altcoins have been leading the market higher in the last couple of weeks, and Bitcoin is still stuck below the $9000 level, as it continues to slightly lag behind from a short-term perspective. The coin ran into the strong resistance zone between $9000 and $9200 after breaking out of the broad declining trend.

Now a pullback is likely, given the slight weakness, with a possible test of the prior swing high at $8400. In case of a bullish move, the next target is at $10,000, and long-term investors should still add to their holdings on the short-term dips.

ETH/USD, 4-Hour Chart Analysis

Ethereum kept on creeping higher to marginal no rally highs in the last couple of days, nearing the $650 level despite the overbought short-term picture. Short-term traders should still not enter new positions here until the overbought readings are cleared, while long-term investors could still add to their holdings during the pullbacks.  Resistance zones are ahead near $735 and $780, while primary support is between $555 and $575.

Altcoins Diverging but Bulls Remain in Control

XRP/USDT, 4-Hour Chart Analysis

As we noted, the correlation between the coins is lower than during the downswing, and that confirms the bullish price action in the segment. Ripple is trading in a consolidation pattern near the $0.84 level, and although the overbought momentum readings are not yet fully cleared, the trend is clearly bullish and a new short-term buy signal is likely in the coming days.

Among the other recent leaders, IOTA triggered short-term sell signal, reaching the strong resistance zone near $2.2. EOS, Stellar, Cardano, and NEO are consolidating their gains, while Dash, Monero, and ETC are trading slightly above last week’s highs, but traders shouldn’t chase them higher here, as a short-term correction is likely soon.

Stay tuned for our detailed long-term technical analysis coming out later on today.

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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4.5 stars on average, based on 231 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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