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5 Things to Watch This Week: The Crypto-Rally, US Inflation, the Russia-Gate, the Shaky Stock Market, and China

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1.            New Highs ahead for Cryptocoins?

Bitcoin’s Fork Day came and gone without a major earthquake, and the largest cryptocurrency surged to new all-time highs over the weekend in the aftermath of the August 1 events. The SegWit activation fueled optimism regarding the future of BTC, while the forked Bitcoin Cash has been losing ground ever since an initial rally. The other major coins also staged an advance last week, but most of them are still well off their prior highs. That said, the moves in the segment can turn from small to huge really quickly, and we wouldn’t be surprised on another strong wave of buying, especially after Ethereum finally left its declining trend. With only Ethereum Classic and Ripple being still in downtrends, it’s possible that we will see several coins trying to break-out to uncharted territory.

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Ethereum, 4-Hour Chart Analysis

2.           US Inflation in Focus after Bullish Jobs Data

With the Jackson Hole symposium just around the corner, this was the event where Ben Bernanke announced Quantitative Easing first, mind you; all eyes are on the “not-too-stellar” US economic numbers, which led to a protracted Dollar decline lately. As the market is pricing in a slower tightening cycle, last Friday’s decent Employment Numbers gave some relief for Dollar bulls, after the lackluster readings in the consumer segment in recent month. The Fed’s favorite inflation measure will be coming out on this Friday to shed some more light on the trends, as the CPI index was running below the central bank’s 2% target lately. The Dollar has become definitely oversold, but a huge negative surprise would likely push the EUR/USD above, or at least near, the key 1.20 resistance, while a higher than expected number could fuel the Dollar’s bounce.

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EUR/USD, Daily Chart Analysis

3.           Trump Feeling the heat: Impeachment in the Works?

Although impeachment is still a far-fetched idea, there have been signs recently of a bipartisan “coalition” against the methods of Donald Trump, and that could have important implications down the road. Special counsel Mueller summoned a grand jury in the case of the Russian involvement in the elections, pointing to a possibly long and damaging investigation for the Trump-campaign and the POTUS himself. Also, the markets are starting to react to domestic political developments in the US differently, as that could mean a source of volatility in the near future after a period of historically low risk during the “Trump Rally”. So any further news on the President’s weakness could lead to a sell –off in stocks and the already suffering Dollar.

4.           How Long will the Two-Faced Rally Last?

As the earnings season is getting close to its conclusion, stock investors still face several questions regarding the market’s health. While the Dow has been hitting all-time highs for a record-breaking 8 days straight, the broader indices are notoriously lagging the mega cap benchmark. That behavior is far from the ideal breadth, but this internal weakness has been persistent for months and months, without breaking the rally. That said, the Dollar’s weakness played a huge part in the latter part of the advance and if Friday’s bounce turns into a significant correction, US stocks might underperform the global indices just like European equities did for several weeks now. With that in mind, we wouldn’t jump on the stock-train right now, as the signs are all there that lower prices are ahead in the coming weeks.

5.           Commodities Focused on the Dollar and China

The Chinese CPI and PPI indices and the always crucial Trade Balance data will come out during the otherwise calm week regarding economic releases, and commodity traders are watching closely. Industrial metals have been rallying together with Chinese stocks lately, while precious metals and oil were mostly lifted by the decline in the Dollar. With the latter trend probably entering a correction, positive Chinese data would be needed to keep the bullish momentum. For gold, the long-term picture still looks promising, but oil has run into strong resistance at $50 per barrel, and although the top of its trading range is still higher, odds favor a decline in the most traded commodity.

WTI Crude Oil, 4-Hour Chart Analysis

Key Economic Releases Next Week

Day Country Release Expected Previous
Monday AUSTRALIA AIG Construction Index 56.0
Monday JAPAN Leading Indicators 106.2% 104.6%
Monday SWITZERLAND CPI Index -0.3% -0.1%
Monday UK Halifax HPI 0.3% -1.0%
Monday EUROZONE Sentix Investor Confidence 27.8 28.3
Tuesday CHINA Trade Balance 60.2 65.7
Tuesday CANADA Housing Starts 206,000 213,000
Wednesday CHINA CPI Index 1.5% 1.5%
Wednesday CHINA PPI Index 5.6% 5.5%
Wednesday CANADA Building Permits 54.4 54.3
Wednesday US Nonfarm Productivity 0.8% 0.0%
Wednesday US Crude Oil Inventories -1.5 mill
Thursday JAPAN PPI Index 2.3% 2.1%
Thursday UK Manufacturing Production 0.0% -0.2%
Thursday UK Goods Trade Balance -11 bill -11.9 bill
Thursday CANADA NHPI 0.5% 0.7%
Thursday US PPI Index 0.1% 0.1%
Thursday US Initial Jobless Claims 244,000 240,000
Friday GERMANY Final CPI 0.4% 0.4%
Friday US CPI Index 0.2% 0.0%
Friday US Core CPI Index 0.2% 0.1%
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: Ethereum Tops $550 as Altcoins Hit New Rally Highs

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The major coins are having another bullish day after a consolidation period with all of the top 10 cryptocurrencies sporting meaningful gains. Altcoins are leading the charge higher, as the switch in relative strength that we pointed out several times seems to be a lasting phenomenon, with the ETH/BTC pair confirming a short-term uptrend.

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BTC/USD, 4-Hour Chart Analysis

Bitcoin is also up today, but while the majority of altcoins are trading on new rally highs, BTC is stuck below the prior swing high at $8400, which is also a previously established resistance level. The dominant declining trendline is also in that area, and that strong zone could hold back the largest coin for a longer period. A breakout would confirm a new rising short-term trend, with the next major resistance zone ahead between $9000 and $9200.

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ETH/USD, 4-Hour Chart Analysis

Ethereum is among the strongest coins short-term, and with smaller cap altcoins also joining the rally, the whole segment could be ready for a move higher. That said, the broader declining trend is still intact with the coin trading in a strong resistance zone between $555 and $575. A new short-term uptrend is now confirmed but with the declining trendline just ahead, the coin could be in for volatile swings in the coming days. The next target zone is at $625, while support is found at $500 and $450.

Broad Altcoin Rally Lifts All Ships

XRP/USD, 4-Hour Chart Analysis

Ripple, which was among the weakest majors for a prolonged period is one of the leaders today, climbing above $0.75, and eyeing the next major level at $0.84, with tbe coin already being above the previously dominant declining trendline.

On a slightly negative note, correlations are still high between the majors, but there are standout performers despite the concerted rally. Among the long-term leaders, Litecoin is trading near $150, while Monero added to yesterday’s gains, and it’s testing the $240 resistance as we speak.

The early leaders of the rally are slightly lagging in the current short-term swing, but that is likely a sign of rotation, as the likes of EOS, NEO, and IOTA are also higher today, while holding up wrll above the correction lows.

With all of the majors on buy signals in our trend model, we expect the rally to continue even as strong resistance zones are ahead and the road will likely be bumpy after the steep and lengthy downswing.

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

Rally Fades in Stocks as Apple Weighs on Nasdaq

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We warned yesterday that stock markets got vulnerable as the major US indices reached short-term overbought readings, and after a choppy Wednesday session, equities turned lower today in early trading. Apple fell by more than 2% in early trading on a supplier report regarding declining orders from the smartphone giant, and the sliding stock dragged the tech segment lower.

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S&P 500 Futures, 4-Hour Chart Analysis

While the short-term technical picture deteriorated, the losses are muted so far, and the rising short-term trendlines are holding up. Volatility ticked higher, with the VIX bouncing off its two-month lows, but the index is well below the levels seen in the beginning of the month, as Syria-related fears continued to ease and the Chinese-US trade spat also took the back seat in the mainstream media.

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DAX, 4-Hour Chart Analysis

Stocks finished broadly lower in Europe, while Asian equities reversed their early gains, with trading volumes still being low across the board. The economic calendar was almost empty today, with only the much worse than expected British retail sales figure adding to the string of negative surprises coming out form the UK this week. In the US, the Philly Fed index came in higher than expected, while weekly jobless claims were in line with expectations.

Dollar Stable as Short Yields Hit New Highs

2-Year Treasury Yields, 4-Hour Chart Analysis

Treasury yields resumed their rise in the quiet environment, and as the short end of the curve continues to outperform the flattening of the yield curve continues in earnest. While forex markets are still mostly flat, the Dollar is drifting higher against most of its peers in US trading.

AUD/USD, 4-Hour Chart Analysis

Commodity-related currencies are little changed, although both the Aussie and the Canadian Dollar are off their recent highs, and should they roll over, the bullish case would receive another hit.  Despite the weakening of the risk rally, crude oil continues to hit multi-year highs, with the WTI contract getting close to the $70 per dollar level today. Gold fell back below $1350, as the choppy consolidation pattern is still intact, and the slight risk-off shift wasn’t enough to trigger meaningful safe-haven flows.

Featured image from 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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Analysis

More Chance to Go Up for Litecoin

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Litecoin short term outlook is quite positive, while in a longer term, it’s somewhat mixed. Shortly, the digital coin may face a very strong resistance at $141, being currently priced at $140. As Dmitriy Gurkovskiy, Chief Analyst at RoboForex, says, Litecoin already tried to test this level earlier this week, but did not succeed.

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In the mid-term Litecoin is trying to break out the current range, and in case it finally manages to break out $141 and stay above, it may go up to $168. Before reaching this target, however, another downtrend may be formed, with Litecoin plunging to the support at $114 again. If the bears succeed in breaking out this level, too, another sell-off target will be at $87.

Current outlook, however, is mostly positive, with the key support being at $114 and the key resistances at $141 and $168. The MACD on D1 is in its negatives, but is going up, issuing a buy signal, while the Stochastic is in the positive area and confirms its buy signal, already issued some time ago.

Fundamentally, Litecoin has got much support this week. The market started buying out the coin once the news on the token being listed at Korbit appeared. As the recent reports say, the crypto started being traded on Korbit yesterday, while withdrawal should be available starting today, Apr 19. This is important for Litecoin: first, Korbit is one of the oldest and most reliable exchanges in Korea; second, as we have already stated a few times, if the crypto becomes widespread across multiple exchanges, its liquidity gets boosted, while the accessibility simplifies the transaction processes.

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Korbit decided to hold a contest, with the top 6 LTC/KRW traders getting prizes in Litecoin (the winner gets LTC 50, the runner-up will walk away with LTC 25). Meanwhile, Litecoin being available on Korbit also helped the crypto to rise on Bitfinex.

Currently, Litecoin is one of the most volatile currencies, mostly because of it always being in the news, which does good to its promotion. As such, it was announced a few days ago that LTC would be used as a payment method, and TenX already started developing a prepaid card for that purpose.

By: Dmitriy Gurkovskiy, Chief Analyst at RoboForex

Disclaimer
Any predictions contained herein are based on the authors' particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

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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I have two degrees in Social Psychology and Economy. After graduation I worked as the Head of the Laboratory of Technical and Fundamental Analysis of Financial Markets at The International Institute for Applied Systems Analysis. The experience and skills he gained helped me to realize my potential as an analyst-trader and a portfolio manager in an investment company. At the moment I'm a financial expert, writing for various financial media sources and a Chief Analyst at RoboMarkets.




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