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5 Things to Watch This Week: North Korea, Bitcoin, Retail Sales, Gold, and the VIX

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1.            Further Escalation between the US and North Korea?

Last week delivered a huge surprise for those who thought that the North Korean situation will stay dormant after the saber-rattling earlier on this year. While the progress that the communist country made in its missile program is, in fact, huge, Donald Trump’s reaction and the “verbal escalation” that followed, took the attention away from the Russia-investigation that entered a new phase just a few days before. While we still think that the military option is a very unlikely, with no real incentive on either side whatsoever, one diplomatic mistake could trigger a real nuclear standoff that would send shockwaves through the financial system. With that in mind, the next steps of the involved powers will be closely watched, and further escalation could push risk assets even lower once again.

S&P 500, 4-Hour Chart Analysis

2.           Bitcoin above the $4000 Level

The tensions concerning North Korea, the SegWit lock in and the waning fork-fears created a perfect environment for the most valuable cryptocurrency, and BTC took the opportunity. The coin surged as much as 70% since in August and it more than doubled off the late-July correction lows. Bitcoin left the other major coin behind since breaking out to a new all-time high at $3000 only one week ago, as safe haven flows favored the safety of the largest decentralized currency. While the long-term picture is definitely overbought now, the short-term momentum could still carry the currency higher maybe even to the $5000. That said, long-term investors should be selling into the rally, as better buying opportunities will emerge in the coming weeks.

Bitcoin, Daily Chart Analysis

3.           US Retail Sales and the Dollar

The Consumer Price Index missed the consensus estimate for the fifth month in a row on Friday, and Retail Sales are usually following in suit, so we wouldn’t be surprised by another bearish release that would be an interesting development before the Jackson Hole symposium. The Fed will be under pressure to dial back on the hawkish rhetoric even more, especially if the correction that started this week deepens. The Dollar will be on the center of attention for sure, and given the recent volatility, more fireworks are baked in the cake. The Euro could spike above 1.20 if Retail Sales miss big time, with the FOMC meeting minutes also being released during the week.

4.           Gold or Stocks?

Gold crept higher in its long-standing trading range between $1200 and $1300 in the past weeks, and the Shiny Metal is just shy of the upper boundary after Friday’s crazy session. The long-term picture definitely favors precious metals against the overvalued stock market, and a move above the range could indicate that long-term technicals are finally turning fully bullish. Stocks, in the meantime, rolled over on the war mongering, and given the historically high valuations and the internal weakness of the market, the Fed remains the only real safeguard against a significant correction.

5.           The VIX and the “Short-Volatility” Trade

Some of the most experienced observers have been advocating that the recent low volatility environment is as dangerous as the housing and the tech bubbles have been. Together with the distorted global bond market (Italian junk bonds yield less than US Treasuries…) there is a huge time bomb ticking under the calm surface. A lot of the positions that have been built up in the past few years are directly or indirectly (passive index funds) short-volatility trades which would quickly turn negative even with a (historically) small bear market, turning the sell-off into an outright massacre, as lot of the holders of these “safe” positions would run for the exits at once. While Jim Paulsen himself said the bull market could last forever thanks to the central banks, we believe that valuation will actually matter with time, and this time it’s NOT different.

VIX (Volatility Index), Daily Chart Analysis

Key Economic Releases Next Week

Day Country Release Expected Previous
Monday JAPAN Prelim GDP 0.3%
Monday CHINA Industrial Production 7.6%
Monday CHINA Retail Sales 11.0%
Monday EUROZONE Industrial Production 1.3%
Tuesday AUSTRALIA RBA Meeting Minutes
Tuesday GERMANY Prelim GDP 0.6%
Tuesday SWITZERLAND PPI Index -0.1%
Tuesday UK CPI Index 2.6%
Tuesday US Retail Sales -0.2%
Tuesday US Core Retail Sales -0.2%
Tuesday US Empire Manufacturing Index 9.8
Wednesday UK Hourly Earnings 1.8%
Wednesday UK Unemployment Rate 4.5%
Wednesday UK Claimant Count 6,000
Wednesday EUROZONE Flash GDP 0.7%
Wednesday US Building Permits 1.28 mill
Wednesday US Housing Starts 1.22 mill
Wednesday US Crude Oil Inventories
Wednesday US FOMC Meeting Minutes
Thursday AUSTRALIA Core CPI Index
Thursday AUSTRALIA BOE Statement
Thursday UK Retail Sales
Thursday EUROZONE CPI Index
Thursday EUROZONE ECB Meeting Minutes
Thursday CANADA Manufactruign Sales
Thursday US Unemployment Claims 244,000
Thursday US Philly Fed Index
Thursday US Industrial Production
Friday CANADA CPI Index
Friday CANADA Core Retail Sales
Friday CANADA Retail Sales
Friday US UOM Consumer Sentiment
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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4.7 stars on average, based on 466 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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XRP Price Analysis: Explosive Breakout from Pennant Confirmed; SBI Holdings CEO Bullish on XRP

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  • XRP/USD is enjoying three consecutive sessions of gains, having jumped around 17%.
  • SBI Holdings CEO believes XRP market capitalization will be higher than bitcoin’s.

Ripple’s XRP price has been enjoying a decent move to the north over the past few sessions, as life flows back into the bulls. XRP/USD is currently running at a third consecutive session in the green, having gained around 17% within this period. The explosion of buying pressure came after the price managed to escape a bullish pennant pattern.

XRP/USD: Price Recap

XRP/USD had initially been cooling since the big bull run at the back end of 2018. The price rallied on 24th December up to a high of around $0.4670, before quickly losing upside momentum. It was then forced to trade within the confinements of a descending wedge pattern. XRP lost over 30% in value before it was able to break out from the wedge.

On 8th February a chunky push higher from the bulls was observed, resulting in a breach of the upper acting trend line. XRP/USD jumped around 10% on this day but then eased south to retest the trend line for a few sessions. During the cooling period, price action has formed a pennant structure which saw an eventual big breakout to the upside, as described earlier.

SBI Holdings CEO Bullish on XRP

The SBI Holdings CEO, Yoshitaka Kitao, was recently speaking on XRP and said this year is a significant one for the so-called banker’s cryptocurrency. He believes that the market capitalization of XRP is likely to dwarf bitcoin’s at some point in the future. Kitao has firm belief in the future sucess of XRP and can see it being adopted on a global scale. He was quoted saying:

“Because XRP is already beginning to become international, xRapid will be used for fund transfers in 2019. By increasing the so-called XRP’s plastic use, we anticipate that the XRP market capitalization will easily exceed the market capitalization of bitcoin.”

SBI has many joint ventures set up with Ripple across the blockchain industry; it’s therefore not too surprising to see such comments. The organization will also be launching its very own cryptocurrency exchange called VCTRADE, scheduled for March. Deposits and withdrawals for bitcoin, XRP, and Ethereum (ETH) are already available on the platform.

Technical Review – XRP/USD

XRP/USD daily chart.

Given current upside, eyes must now be on the next likely barriers of resistance for the bulls. A supply area noted from $0.3450 up to $0.3600 is the next target; XRP has not traded comfortably above this region since 10th January. A break above this zone should put the bulls in an excellent position to retest the $0.4000 area. On several occasions, this price territory has caused issues for the bulls in their attempts to push further north. In terms of support, this is seen back down at the psychological $0.3000 mark. If that fails to hold, then there is a demand which runs from $0.3000 down to $0.2500.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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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4.6 stars on average, based on 124 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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Analysis

3 Things You Need to Know About the Market Today: New High in Gold, Dow 26,000?, Euro Weakness

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1, Gold Jumps to 9-Month High, $1360 in Sight

Gold Futures, 4-Hour Chart Analysis

We have been following the resurrection of gold in the past few months, and since fundamentals just got better for the precious metal, the current technical strength is great news for long-term investors. Today, gold quietly reached a new 9-month high, despite the still ongoing risk rally and the relative strength of the US Dollar.

The metal topped the $1330 level, and with the next major resistance level being found near $1360, a quick surge to the vicinity is in the cards in the coming days. We continue to advise holding gold for the long run, and for now, the short-term technicals also remain bullish. Should the risk rally finally roll over, the uptrend could even accelerate, with longer-term targets being found near $1400 and $1550.

2, US Stocks Drift Lower After Long Weekend as Trade Talks Resume

Dow 30 Futures, 4-Hour Chart Analysis

US stocks are having a quiet start for the day, with the major indices drifting slightly lower following the long weekend. The US economic calendar is empty today, and all eyes will be on the trade talks with China which are set to resume today in Washington in the wake of the unexpected extension of last week’s round of negotiations in Beijing.

The Dow, which approached the 26,000 level last week during the Friday surge to new 9-week highs, is lower today, in-line with the market-wide trends. The mega-cap index could get a lift in early trading thanks to the better-than-expected quarterly report by Walmart (WMT). The firm’s holiday-quarter sales topped estimates, despite the reports regarding the widening growth-gap between online and brick-and-mortar stores, and in light of the positive guidance by the company, the pre-market surge in the stock is no surprise.

With the week’s main economic releases coming in the second half of the period, today we could be in for another choppy session on Wall Street. That said, the momentum of the recovery-rally continues to be suspicious, and especially given the weakness in the Nasdaq, investors should pay close attention to the Volatility Index (VIX), market internals and other under-the-hood indicators for signs of negative divergences.

3, Euro Under Pressure Again, Despite Sentiment Beat

EUR/USD, 4-Hour Chart Analysis

While the Dollar’s break-out to new multi-year highs still didn’t happen last week, technicals continue to agree that the long-term uptrend in the reserve currency will continue. The Euro, on the other hand, is still showing signs of broad weaknes, drifing lower against the Dollar and the Pound today, despite the better-than-expected German Zew Economic Sentiment report.

The indicator is still deep in negative territory, and together with the recent weakness in the Eurozone PMIs and industrial production, recessionary fears seem to be legit in Europe.

We will have a new batch of PMIs coming out tomorrow, and together with the Fed minutes a huge day could be ahead for forex markets and especially for the EUR/USD pair. The 1.12 level could be tested in the case of another negative surprise in the PMIs, while the Fed minutes will be under scrutiny even more than usual following the sharp dovish shift by the Central Bank.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Nasdaq 100 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

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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4.7 stars on average, based on 466 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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IOTA Price Analysis: Bulls on the Loose as IOTA Foundation Announces New Collaboration with Nova to Fund Start-ups

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  • The IOTA Foundation has entered into a partnership with Nova to provide funded support for start-ups.
  • IOT/USD is currently enjoying a decent push north, following a breakout of a bullish pennant pattern structure.

IOT/USD: Recent Price Behaviour

IOT/USD has been on a decent run of gains over the five sessions, having jumped around 18% at the time of writing. The price has been on a path to the north since 7th February, after hitting a low for 2019 around $0.2400. A chunky amount of buying pressure was observed down at these depressed levels.

The bulls enjoyed an initial jump between 7-8th February, gaining around 18% on the fast two-day rally. IOT/USD then consolidated trading within a range-bound nature to then have formed a bullish pennant pattern formation. On 17th February, an explosive amount of upside came into play following this technical breakout.

IOTA Announces New Collaboration with Nova

The IOTA Foundation has announced a new partnership with Nova, a start-up incubator, according to an official press release from the organization. As part of the collaboration, its goal is to begin funding start-ups employing the platform of IOTA. The program will be called IOTA Cofoundery on Nova’s website; it will be focusing on early stages of development and seed funding.

Start-ups will be able to leverage through the program a mentoring and tech start-up service to consist of over 20 consultants that specialize in technology. There will be much nurturing and guidance as part of this offering. To-date Nova has already co-founded over 80 technology start-ups, with over half of those still being active after three years. It is further noted within the official release that the three-year start-up survival rate is 10%.

Nova will invest in ideas that can prove user problem-fit. IOTA via their grant program will match the investment. It will provide a comforting amount of support and the foundations for viable businesses to develop within the ecosystem of IOTA.

The program will allow entrepreneurial tech start-ups to build new innovative business models by leveraging IOTA technology. Nova has noted that this new offering is now already open for applications and can apply directly on the Nova website.

Technical Review – IOT/USD

IOT/USD daily chart.

Given the noted move north from a bullish pennant pattern structure, the doors to further upside potential have opened. Near-term supply is observed heading into the $0.3400 territory, IOT/USD last traded here in January and dealt a rejection blow. Should the bulls manage to maintain current upside momentum and break above this zone, eyes will then be on the 2019 high area. At the start of the year, the price managed to hit $0.4088 on 2nd January.

In terms of support, this should be noted back down at the broken pennant pattern. A retest just on top could be seen which currently tracks at around $0.2750-40. Failure of this holding could then see the February gains wholly reversed.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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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4.6 stars on average, based on 124 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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