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Asian Market Update – Monday: Asian stocks hits all-time high; cryptocurrencies decline

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Slow morning for cryptocurrencies

The top cryptocurrencies, including bitcoin, ethereum, bitcoin cash, and ripple, all traded slightly lower on the first day of the week, with no significant news coming out to guide the markets.

Bitcoin was nearly flat at midday in Asian trading; remaining below the $14,000 line that it has been hovering around in recent days.

On the positive side for bitcoin, US-based Kraken Exchange is back up after a system upgrade that was supposed to take only two hours instead lasted for two days.

Ethereum was also down as of midday in Asian trading on Monday, though much of the losses from yesterday were quickly recovered. In terms of technicals, the strong surge in ethereum that started on New Year’s Eve is still intact, as the price continues to form higher lows and higher highs, which is the typical wave-pattern we are looking for in good trends.

As of midday in Asia, the price of ethereum is still below the $1,400 level. A break above the previous high of $1,420 would indicate a signal a new immediate surge in price.

Ripple XRP, the number three cryptocurrency in terms of market cap, continued to consolidate Monday morning, remaining below the $2 line for the second day. Since reaching its all-time high on January 4, ripple has now corrected by more than 40 percent to its current level.

Main Market Movers – Midday Asian Trading Session

Indexes Value at Midday Daily Change
Japan- Nikkei 225 23,715 0.26%
China-Shanghai Composite Index 3,419 -0.28%
Hong Kong – Hang Seng 31,582 0.54%
South Korea-KOSPI 2,505 0.33%
Australia-ASX 200 6,077 0.12%
S&P 500 E-Mini Futures 2,794 0.17%

Asian stocks reached for new all-time highs on Monday, as the US dollar continued to weaken, boosting both commodity prices and US export-driven industries. The MSCI index tracking shares in the Asia-Pacific region (excluding Japan) finally reached a new all-time high on Monday, as it caught up with its previous high from 2007.

The US stock market has also continued to make fresh gains with the S&P E-mini future rising once again. The uptrend in the S&P 500 has accelerated in a strong way since the beginning of the New Year, proving many bears wrong.

Currencies

The Japanese yen gained 0.14 percent against the US dollar as Tokyo trading ended on Thursday, changing hands at 110.88 per dollar.

The Chinese yuan gained 0.39 percent against the US dollar, trading at 6.438 per dollar.

The Australian dollar added 0.4 percent on the US dollar, changing hands at 1.2585 per US dollar as the Australian trading day was ending.

Commodities

WTI Oil consolidated slightly Monday morning despite the weakening dollar, trading down by 0.08 percent to $64.32.

Brent Crude Oil was flat for the day, trading at $69.80

Gold continued to rise as the dollar declined, adding 0.26 percent to $1,342.

Featured image from Pixabay.

Disclaimer: The author owns bitcoin, ethereum and litecoin. He holds investment positions in the coins, but does not engage in short-term trading.

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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4.3 stars on average, based on 37 rated postsFredrik Vold is an entrepreneur, financial writer, and technical analysis enthusiast. He has been working and traveling in Asia for several years, and is currently based out of Beijing, China. He closely follows stocks, forex and cryptocurrencies, and is always looking for the next great alternative investment opportunity.




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Market Overview

Brand New Crypto Economy

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Hi Everybody,

It’s not the first time that Venezuelan President Nicolas Maduro is restructuring the Venezuelan economy but it might be the most significant update so far.

With the economic crisis in Venezuela reaching levels that some are calling a humanitarian disaster, and inflation projected to reach 1,000,000% by the end of the year, President Nicolas Maduro is now turning to crypto to try and stabilize the situation.

This announcement might not be getting enough attention in the mainstream media but it certainly is turning a few heads in the crypto space.

Because the Venezuelan national cryptocurrency known as the Petro is pegged to the price of oil, the government’s hope is that it will provide a backstop to the new version of their currency, the Sovereign Bolivar.

The old Bolivar was a bit of a mess because it carried an official exchange rate of 10 Bolivar’s to the Dollar, whereas the actual rate on the street was more like six to eight million Bolivars to the Dollar.

Several reports have indicated that the new structure represents a massive devaluation of the Bolivar. However, those headlines might be misleading.

As each Petro is supposed to be pegged to a barrel of oil, one Petro should be worth about $60, so the new minimum wage of half a Petro a month is about 3000 times the current minimum wage, which is about $1 per month.

The main problem with this plan is that we still have no way of verifying that each Petro represents one barrel of oil. Should the Venezuelan Government wish to provide this level of transparency, it would be rather simple using the Ethereum blockchain. But alas, Maduro chose to use the less transparent NEM network for the Petro and therefore we have no choice but to hang on his two words that were prevalent in his Friday night announcement…

“Trust Me”

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Don’t Skip This Part
  • Fed Meeting Incoming
  • Brand new Crypto

Please note: All data, figures & graphs are valid as of August 20th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets (Don’t Skip this Part)

Sure, most of you are probably reading these daily market updates strictly for the crypto part. However, it is my strict belief that it is impossible to understand the economics of cryptocurrencies without understanding the traditional markets that provide the backdrop.

For example, last week we saw some rather unusual drama surrounding Turkey, which did seem to spill over into other markets, including cryptocurrencies.

In this graph below we can see the Turkish Lira (red) starting to slide on August 9th. If was soon followed by the Dow Jones (Green), which opened with a gap down on Friday the 10th. Then you can see Ethereum (purple) plunging on Saturday and gold (yellow) marking new lows by Wednesday the 15th.

Now, normally a crisis in Turkey shouldn’t have much of an effect on any of these other markets. However, due to the severity of the slide and the sudden nature, it seems that it did catch many traders off-guard.

However, we can see that on Friday the 17th, the Lira took another sudden dive, this time the other markets were more prepared and therefore unaffected.

This morning, the stocks seem to be doing well and yet crypto-assets are struggling, and emerging market currencies still haven’t taken much of a direction. This as the US Dollar has begun the week on a stronger foot ahead of an important Fed meeting that will take place on Thursday and Friday.

Brand New Crypto

eToro is pleased to announce that we’ve added our 12th digital asset to the number one social investment app.

You can now find IOTA among the 2000+ markets that you can easily add to your eToro investment account. (This is not investment advice)

As always, let me know if you have any questions, feedback, or further insight. I’m always happy to hear it.

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Best regards,

Best regards,
Mati Greenspan
Senior Market Analyst

Connect with me on….

eToro: @MatiGreenspan | Twitter: @MatiGreenspan | LinkedIn: MatiGreenspan | Facebook:MatiGreenspan

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 122 rated postsSenior Market Analyst at Etoro.com.




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Analysis

Pre-Market: Turkey Back in the Crosshairs Amid Sanction Threats

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The “red-bar-green-bar-madness” continues in global stock markets, as after yesterday’s rally, today the major markets are all in the red once again. Emerging market woes are still feeding the bearish narrative, with the Turkish Lira being back in the center of attention. The currency which enjoyed a three-day relief rally slid lower following threats regarding further retaliatory US sanctions, should turkey keep Pastor Brunson in custody.

USD/TRY, 4-Hour Chart Analysis

The diplomatic troubles only add to the problems of the country, while also helping the rhetoric of the Turkish leadership that focuses on a western “attack” on the nation. With the vague budget plans in mind, the endgame for the Lira still seems ugly, even as at the current levels, strong Turkish companies can offer great bargains for a long-term investment portfolio.

DAX Index, 4-Hour Chart Analysis

The divergence between the US and the rest of the world seems to be getting wider by the day, as the Shanghai Composite closed on a fresh bear market low, while most of Asia is also stuck in short-term downtrends, while Europe is looking wounded too from a technical perspective. The main US indices, on the other hand, are still near their all-time highs, and today’s selloff is also just a small blip in the ongoing uptrend.

S&P 500, 4-Hour Chart Analysis

On a slightly negative note, the Nasdaq has been underperforming the broader market ever since Tencent’s earnings miss on Wednesday, and today, it’s also the worst performing benchmark on Wall Street in the wake of Nvidia’s (NVDA) lackluster guidance that came out yesterday after the closing bell.

Today’ session could still go either way in the US, as the overnight losses are moderate, and yesterday’s trade war optimism could still fuel a recovery in the worlds strongest stock market, even amid the deepening emerging market crisis.

Forex Markets Stable As Dollar Consolidates

Dollar Index (DXY), 4-Hour Chart Analysis

The Dollar is consolidating just below its recent 13-month highs, with the EUR/USD pair rebounding to 1.14, and the broader Dollar index settling down near 96.5. The reserve currency is still clearly in a rising trend, and as the short-term overbought momentum readings are almost cleared, the rally could soon continue, especially if risk-off sentiment remains dominant outside of the US.

Copper Futures, 4-Hour Chart Analysis

Commodities are virtually unchanged before the US open, with gold still hovering just above its 17-month low near the $1185 level, crude oil being stuck near $65 per barrel regarding the WTI contract, while copper trying to hold its ground after the recent key breakdown.

Dr. Copper is still signaling troubles ahead for China and the global economy, as although the commodity outperformed today, it’s clearly below the break-down level near $2.7, and the downtrend will likely continue in the coming weeks.

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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4.6 stars on average, based on 321 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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Market Overview

Say No to Currency Contagion

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Hi Everyone,

Once again the deteriorating relationship between the United States and Turkey is leading the news. The Lira is sliding again and it does seem to be bringing some of the other emerging market currencies with it.

As we’ve been saying throughout the week, it’s very possible that the declines in the crypto market earlier this week are due to a stronger US Dollar more than anything else.

As I’ve said before, in order to understand what’s happening in crypto, we must look at what’s happening in the rest of the economy as well. In this case, the US Dollar strength isn’t coming from Turkey, that’s just the catalyst.

The Greenback has been gaining ground since early April on the promise of higher interest rates in a strong economy. So far today, it doesn’t seem that the Lira’s slide is affecting the other major currencies though, nor has it touched crypto for the time being.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Currency Contagion
  • Looking at Metals
  • ETC Backwards

Please note: All data, figures & graphs are valid as of August 17th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Now that we’ve established the underlying theme and why the Dollar’s been surging, it seems that the situation has largely been contained. At the beginning of the week, the strong Dollar was taking out everything in its path. Today, the declines seem to be limited to the emerging markets.

In fact, of the major currencies, the USD is the worst performer today.

So even though the Dollar is rising against the Lira, Peso, and Rand…

… it doesn’t seem to be spilling over into other markets today.

Looking at Metals

Now that we’ve seen one of the biggest declines in the metals markets in recent history, it’s time to examine the long-term charts again.

Frankly, the weakness in metals still doesn’t make much sense to me. As we saw the Dollar strength earlier in the week, it did decline further but the declines seem disproportionate to the gains of the Buck.

Actually, what we’re seeing since 2011 is a precious metals market that’s been trending down.

The question is, has that dynamic come to a head?

The fun thing about the way down is that eventually, you run into a lower barrier at the production cost. Meaning, if the price to mine a metal is higher than the price to sell it, miners will stop mining, which generally tends to drive up the price.

A quick look at the mining costs of all three of the above does seem to indicate that those prices are quite close or even already passed.

A Crypto of its own

It’s good to see the rebound taking hold in the crypto markets despite the emerging currencies continuing to sell-off today. This is a positive indication that crypto is less sensitive to the moves of the Dollar but under extreme circumstances still is susceptible.

One thing that seems to be sticking out like a sore thumb is Ethereum Classic. In this graph, we can see that ETC (white line) has been acting out since mid-June and simply hasn’t been following the rest of the market.

This type of go-it-alone price action is typical when prices are moving up, but we almost never see it when prices are declining.

One of the reasons might be due to the listing of ETC on Coinbase. A new door to this crypto could mean new money flowing in. This could be worth keeping an eye on in the next few days. I’m eager to see how long it will take to fall back in line with the other cryptos or if it increases in market share following the listing.

Wishing you a fantastic weekend!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Best regards,
Mati Greenspan
Senior Market Analyst

Connect with me on….

eToro: @MatiGreenspan | Twitter: @MatiGreenspan | LinkedIn: MatiGreenspan | Facebook:MatiGreenspan

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 122 rated postsSenior Market Analyst at Etoro.com.




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