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Asian Market Update – Monday: Euro down on Spain unrest while cryptocurrencies remain flat

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Cryptocurrency bull market

The Big Question: What will trigger the next bull run in cryptocurrencies?

The euro took a hit on Monday morning as unrest and violence erupted in Spain’s Catalonia region. The regional government in Catalonia organized a referendum on Sunday to vote over independence from Spain.

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However, the referendum was never approved by the central government in Madrid, resulting in voters being dragged out of polling stations by Spanish national police forces.

Nobody knows what the final outcome of this weekend’s events will be, but the euro traded down as as a result, although it was by no means a sharp sell-off.

In the world of cryptocurrencies, things remained mostly calm during the Asian trading session on Monday. The Spain situation did not create any significant run to safe havens, which cryptocurrencies might be regarded as. The question now is what event is going to trigger the next bull run in cryptocurrencies, after they have been hit hard in China.

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At midday in Asia, the price of bitcoin was nearly unchanged, trading down by 0.16 percent to $4,370. The virtual currency posted some strong gains over the weekend, rising from $4,162 to a high of $4,418.

Etherum also lost some ground Monday morning, trading down 2.12 percent to $296.50 as of midday in Asia. Etherum has been on a downtrend since last Wednesday, when the prices started to fall from $310.86 and dropped below the $300 market on Friday.

Litecoin also slipped, but only by 0.29 percent to $54.12 at midday.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan-Nikkei 225 20,386 0.15%
China-Shanghai Composite Index closed N/A
Hong Kong –Hang Seng closed N/A
South Korea-KOSPI closed N/A
Australia-ASX 200 5,729 0.84%

Markets in Greater China and South Korea are closed for local holidays today, but stocks in Japan and Australia posted strong gains, after a business sentiment survey with better-than-expected results was published in Japan.

In Japan, the Nikkei 225 tacked on 0.15 percent to 20,386 at midday.

Markets in Greater China were closed for a weeklong national holiday and the traditional Mid-Autumn Festival.

In South Korea, the market was also closed for a local holiday.

Down under, the ASX 200 gained 0.84% percent to 5,729 at midday.

Japan’s central bank released a closely watched quarterly business sentiment survey on Monday, which showed that Japan’s business sentiment improved for four straight quarters and is at the highest level in a decade.

Currencies

The Japanese yen lost 0.34 percent against the US dollar at midday Monday to 112.84 per dollar.

The Chinese yuan remained steady against the US dollar, trading at 6.6532 per dollar.

The Australian dollar lost 0.27 percent on the US dollar, changing hands at 1.2788 per dollar at midday.

The euro on Monday morning was down 0.42 percent against the US dollar following the situation in Spain.

Commodities

WTI Oil was down 0.17 percent to $51.52 per barrel.

Brent Crude was down 0.21 percent to $57.57 per barrel.

Gold lost 0.34 percent to $1,274 an ounce.

Business News across Asia

In China, new data showed that China’s manufacturing sector expanded at a fast pace in September. The official purchasing managers index was at 52.4 in the month, up from 51.7 in August, indicating the fastest growth pace since April 2012.

Take away: The world’s second-largest economy showed sings of slowing down in the second half, as investments in real estate, retail and other areas posted weak gains. However, the official gauge of manufacturing activity showed positive sings ahead of a big Communist Party meeting set for later this month.

In Japan, Prime Minister Shinzo Abe’s proposed plan to increase the sales tax in order to pay off the country’s debt, which is one of the world’s largest, is set to clash course with Bank of Japan’s efforts to rev up the economy and keep inflation at target range.

Take Away: Politics is high in Japan as the country is preparing for an election later this month. Abe has moved to consolidate his position to get a third term, but opposition has been rising. Markets will keep a close eye on the developments in the world’s third-largest economy.

Featured image from Flickr.

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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4.2 stars on average, based on 21 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 mainly follows the stock and forex markets, and is always looking for the next great alternative investment opportunity.




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Market Overview

Bitcoin is Clear

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It’s not often that drama from reality television influences the stock markets but I suppose it’s one of the hallmarks of the new world we live in.

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For those of you who haven’t heard yet. Kylie Jenner sent out this tweet…

…and SNAP stocks did this…

The follow-up apology didn’t seem to help much though.


Love or no love, it’s pretty clear that investors are following these personalities fairly closely and taking notes.

@MatiGreenspan
eToro, Senior Market Analyst

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Today’s Highlights

  • More Market Funk
  • Bitcoin is Clear
  • CME Bitcoin Expiration

Please note: All data, figures & graphs are valid as of February 23rd. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

The market funk continues. All the indicators are totally sensational and correlations are way-out.

The Dow Jones went up and the Nasdaq was down. This morning the Asians did great but Europe is starting out weird.

Things are just kind of all over the place. There weren’t really any progressions in Volatility or the 10 Year Yield. Both kind of just coasted through Thursday.

But hey, today is Friday. So we could get some action going into the weekend. Especially with some heavy fed activity planned for this evening.

Of course, the only FOMC member traders really want to hear from at the moment is the newly appointed Jerome Powell, who will be giving his first interest rate announcement on March 21st.

Bitcoin in the Clear

The community celebrated yesterday as the bitcoin mempool was cleared for the first time in months.

Here we can see that during the peak of the FOMO from December 8th util January 21st, the bitcoin network was backlogged with more than 100,000 unconfirmed transactions at any time.

This comes as the adoption of both Segwit and the Bitcoin Lightening Network have been dramatically increased.

In short, the scaling issue that we’ve spoken about often in the last few months may finally have a solution. Of course, we’ll only know for sure once we give it a real test.

For now, transactions rates are at the lowest point since at least May of 2016, with an average of only 2.14 transactions per second (TPS) over the last 7 days.

It should be noted however that adoption of the Lightning Network will actually reduce the TPS rates since Lightening transactions happen off of Bitcoin’s main chain.

Rather than adding each transaction to the main blockchain, trusted parties are able to transact freely with each other. They then send an aggregate summary of their transactions onto the main blockchain so that the rest of the network can update the final results.

Either way, it’s clear for now that there’s simply less activity on Bitcoin since the pullback. This can be confirmed by Google Trends which shows that interest in the world’s largest digital currency is now as low as it was in early November, which at the time was an all-time high.

Futures

Another thing to bear in mind is that the CME February Bitcoin futures contracts will expire today. Any positions that are not rolled over to the March contracts will need to be settled in cash on the Gemini exchange.

It should be noted that Wall Street is still taking it very slowly with bitcoin, and so far only 5,840 BTC have been traded on the February CME contracts.

Some people have pointed out that the price of bitcoin tends to dip around the time of the contract expirations, but I still haven’t seen enough evidence to support this theory.

For now, my tinfoil hat is still in the closet. Will let you know once I take it out. 😉

Have an amazing 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.

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 34 rated postsSenior Market Analyst at Etoro.com.




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Analysis

Pre-Market: Stocks Refuse to Fall Even as China Takes Over Key Insurer

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Although it should have been a very quiet week in China, thanks to the New Year celebrations, the recent surge in volatility and the plunge in equities didn’t pass without consequences in the key market. Just shortly after effectively shutting down the Chinese version of the Volatility Index (VIX) (presumably to calm the markets…), one of the main actors of the monstrous financial web, Anbang, of the country had to be taken over to avoid a systemic event and stop the “creative” financial engineering that involved criminal activity (the shadow of 2008).

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China will likely need many more duck-tapes like this one if it wants to stop the largest credit bubble in human history to collapse, but for now, the solution could work. Equity futures edged higher since yesterday’s volatile close, and as the major US indices are holding up well, not far off last Friday’s highs, our bearish short-term view might have to be revised.

Nasdaq 100 Futures, 4-Hour Chart Analysis

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As we discussed before, the long-term uptrend is intact, and we expect at least a re-test of the highs even if we are in a large-scale top formation, but we thought that the technical damage caused by the crash three weeks ago would require more healing.

We are not turning bullish just yet, but today’s session could finally decide if we the BTFD-crowd is strong enough to turn the tide after the choppy drift lower this week. We are still focusing on the Nasdaq, as the broader market seems to be following the lead of the tech benchmark, and a move 6850 (in the Nasdaq 100 futures, and still the 2735 level in the S&P) would be a very positive sign for bulls.

DAX Index, 4-Hour Chart Analysis

The German DAX index is also showing some tentative short-term relative strength although it remains almost 10% below its all-time high, and it remains a strong negative divergence to be monitored.

Forex Markets Quiet

EUR/USD, 4-Hour Chart Analysis

The main pairs are trading in a choppy narrow range today after the strong move in the Yen and the drop in the USD yesterday. US Treasury Yields are edging lower today, helping the calm in equities and currencies, but on a bearish note, commodity currencies failed to rebound so far, and they were providing good signals since the crash. Day-traders should note that the Canadian Dollar will likely be very active again, with the Canadian CPI report coming out pre-market.

To sum the outlook up, we are still leaning on the risk-off side here regarding the short-term outlook, but we wouldn’t bet the farm on that, as there are mixed signals before the weekend.

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

Daily Analysis: No Questions Answered

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Thursday Market Recap

Asset Current Value Daily Change
S&P 500 2718 0.97%
DAX 12,468 0.31%
WTI Crude Oil 62.61 2.02%
GOLD 1332.00 0.52%
Bitcoin 9780 -8.00%
EUR/USD 1.2324 0.26%

It was a strange day indeed in equity markets, with mixed signals popping up across the board after yesterday’s crazy quasi-FED day. An ugly overnight session, followed by a strong pre-market rally, an early-day pump, and a late-day dump. That is the summary of the day, but under the surface, there is a real struggle between market forces, with still an edge for bears in the battle for control.

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NASDAQ 100 Futures, 4-Hour Chart Analysis

It seems that the Nasdaq is still the key, as the relative strength of the tech benchmark is the most reliable gauge of the market direction, at least regarding the intraday trends. That said, at the end of the day, the Nasdaq closed in the red 4 times in a row, at least as far as the normal trading day is concerned, and still, the major indices are trading not far off last Friday’s top, despite the downward drift.

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Forex Markets and Commodities

Adding to the confusion, the Dollar corrected lower after a positive period, and with Treasury yields trading all over the place, investors were left scratching their heads yet again. The Japanese Yen was the clear winner of the day among currencies, as the primary safe-haven got bid heavily during the Asian session, and it remained throughout the up-and-downs of the day, despite the strong bounce in stocks and risk-on currencies.

USD/JPY, 4-Hour Chart Analysis

The EUR/USD pair had a very active and volatile session, but the common currency remained above the lows from two weeks ago, while also halting below yesterday’s highs, so all-in-all, no technical conclusion to draw. As in stocks, the next clear directional day will be crucial, as the tug of war is getting tenser and tenser.

EUR/USD, 4-Hour Chart Analysis

The Canadian Dollar plummeted during the day, thanks to the dismal Retail Sales figures, but it finished well off its lows, boosted by the stock recovery and the jump in the price of crude oil. The Black Gold was pushed higher by the surprisingly bullish US inventory data, and the WTI contract closed back above $62.50 per barrel.

USD/CAD, 4-Hour Chart Analysis

Gold continued to follow the Euro, finishing the day slightly higher, but the precious metal showed notable relative strength during the Asian session, and that could be the precursor of a move to new rally highs, should the bearish scenario play out in equities.

Cryptocurrencies

The segment had another bearish session, and the bleeding continued after the US session, with BTC leading the way lower this time around after a long period of relative strength. A crucial test might be ahead of the most valuable coin, as the $9000-$9200 support zone would be a perfect target for the current correction, to keep the uptrend going. That said, that zone is still almost 50% above the prior low, leaving plenty of room for the coin to bottom out.

BTC/USDT, 4-Hour Chart Analysis

With all of the major altcoins also sporting significant losses, bulls would like to see more of the early relative strength that some coins have been showing, to establish a leadership that can guide the segment out of the plunge. For now, the crash lows are way below the current levels, and the bullish long-term scenario remains intact.

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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