Connect with us

Analysis

Bitcoin Update: Bears are Exhausted

Published

on

In October 2018, Bitcoin recorded a new monthly low close price for the year of $6,304.18 on Coinbase. For many traders, this was a cause of concern. The new low may indicate that bears are still in control of the market. This revitalized and renewed calls for a break of $6,000 support. On social media, countless posts show how the market will plummet to $4,000.

While these people promoting fear, uncertainty, and doubt (FUD), we looked at the charts in search for more evidence to support the FUD. What we found was the exact opposite. In this article, we show why bears are exhausted.

The Inverted Weekly Chart

Not many retail investors know this, but you can invert charts on Tradingview to get a fresh perspective. All you have to do is to type “1-ticker”. For Bitcoin, that’s “1-BTCUSD”.

Looking at the inverted weekly chart, we had a very good view of the bear perspective. What we saw was a market that sharply bounced after a steep decline. The market tried to keep the rally going, but it appears to run out of steam. In the process, it created a rising wedge which is a reversal structure.

Rising wedge breakout in inverted BTC chart

Just recently, the market broke down of the rising wedge. It attempted to reclaim the support but it was rejected. The price action tells us that bulls have flipped the support into resistance. We’ll know for sure when the weekly candle closes. Nevertheless, the inverted Bitcoin chart is showing that bears are losing momentum.

BTCUSD Shorts

Another chart that is not popular among retail investors is the BTC Shorts (BTCUSDSHORTS). This chart is a crude indicator of bearish sentiment in the market. It reflects the total number of margined short positions measured in Bitcoin. For example, the BTC Shorts hit its 2018 high of 40,719.1018 on April 12, 2018.

Those traders who leveraged their short positions did so because they thought the market was extremely bearish. The BTC short market reached around 40,000 levels on August 22, September 07, and September 19. In all of these occasions, short sellers got wrecked. Bitcoin held on the support area of $5,800 – $6,000. More importantly, Bitcoin rallied every single time after holding on to the support. This forced many short sellers to close their positions at a loss.

 

BTC price action after record highs on short positions

After numerous attempts to break Bitcoin, BTC shorts collapsed. It recently breached multiple support levels that kept its uptrend alive. More importantly, it reversed its trend after breaking out from a triple top pattern.

BTCUSDSHORTS breakdown

This is an indication that bears are exhausted. It appears that they have given up hope on a break below $6,000 support. This narrative supports our first point that bears tried to keep the downtrend alive but now, they are running out of steam.

The Daily Chart

On the 10th birthday of Bitcoin (October 31, 2018), bears had all the opportunity to exert their dominance. All they had to do was keep the market under $6,200. Doing so would have taken BTC/USD back inside the triangle and invalidated the heavy volume breakout on October 15. Unfortunately, bears showed very little fight. Sensing weakness, bulls took advantage of the situation.

As a result, bulls flipped the triangle resistance into support. Then, Bitcoin bounced.

Daily chart of BTCUSD

Interestingly, volume on that day was significantly lower than the daily average. This tells us that the bounce was not borne out of bullish aggression. On the contrary, it was the consequence of almost non-existent bearish resistance. This plays well with our first two points that bears are almost ready to drop.

Bottom Line

The weekly inverted BTCUSDSHORTS and BTC/USD daily charts reveal that bears are limping. Once bulls recognize this, we can expect Bitcoin to finally end its 2018 bear market.

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.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
4 votes, average: 4.75 out of 54 votes, average: 4.75 out of 54 votes, average: 4.75 out of 54 votes, average: 4.75 out of 54 votes, average: 4.75 out of 5 (4 votes, average: 4.75 out of 5)
You need to be a registered member to rate this.
Loading...

3.7 stars on average, based on 271 rated postsKiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




Feedback or Requests?

1 Comment

1 Comment

  1. fractalogic

    November 2, 2018 at 7:50 pm

    It is too bad that prices in this market make absolutely no sense. Somewhere between demand for
    product that is being used to compete in the economy and the most wild eyed optimism of what that demand will be 10 years from now is where the price lies 80% of the time. FUD on its own would drive most new ideas out of the market. What stops FUD is HODL and practical use. Most of the people who buy Crypto don’t mortgage their future to do so, so when prices drop they follow the rule of buy low sell high and HODL. But what drives prices up is demand created by real world use and optimism that said real world demand is rapidly rising. So when I look at the success rate of people who time the market, and say hi as I walk into Walmart, and all of the charts they make, I say, yep, it would be nice to know the future, but then everyone would know it. Crypto is here, useful, utilized and promises to be more so. However, until E-money is actually more useful and utilized, it is fun to play with.

You must be logged in to post a comment Login

Leave a Reply

Altcoins

Zcash Price Analysis: ZEC/USD Flood Gates Open After Breakout and Retest from Pennant

Published

on

  • ZEC/USD licking its wounds with deep double-digit losses as the market continues to take a beating.
  • Next major areas of support are eyed at currently levels around $89.50 and then $75.

Zcash has been under chunky selling pressure, no thanks to the larger weakness seen across the broader crypto market. The ZEC/USD exchange rate is nursing deep losses, running at two consecutive sessions firmly in the red. At the time of writing, the price has dropped over 25% in the last two sessions. This extended downside comes after a breach and retest from a pennant pattern.

ZEC/USD daily chart

ZEC/USD had moved within the above-mentioned technical set up since 12th September. The formation of this set up took shape following a deep market sell-off from the back-end of July to mid-September. Price behavior was very much consolidation mode, forming this pennant. Playing out to the textbook, a breakout from the set up was seen.

Further on the above, the firm daily breach came on the 14th November. The few daily sessions that followed this were within consolidation mode. Subtle retests underneath the broken pennant were seen. The Monday session saw the extension further south after the brief retest period. The bears smashed through the big psychological $100 mark, leading prices to the downside.

As a result of the above price developments, ZEC/USD selling pressure has forced a move on the current daily candlestick below a vital demand area. While the $105 – 95 range has proven to see buyers sweep in, sellers are proving to be too much to handle. This area previously served as a strong safety net, on 12th September, where decent buying came into play.

Support Levels

ZEC/USD weekly chart

Viewing the weekly chart, the bears are currently testing the lowest levels seen since May 2017 to the downside. This is seen just below the $90 level. Looking further south, the next major downside target is seen at the $75 area. This is a weekly support level, which was last in play back in April 2017, when the price started to pick up bull momentum.

A breach of the above-mentioned areas could be catastrophic. Eyes would then be on ZEC/USD potentially free-falling a further 50%, down within $40. This would be the next major consolidation area that could provide some firmer footing. The price last traded here in March 2017. This would be the very extreme scenario but cannot be ruled out.

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.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
0 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 5 (0 votes, average: 0.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.5 stars on average, based on 60 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.




Feedback or Requests?

Continue Reading

Analysis

Bank Sector Likely to Show Steadiness as 2020 Presidential Election Cycle Looms

Published

on

About a month ago, we analyzed the financial sector where individual banks were considered for investment. This time, we are back to this sector again, since in the current conditions it cannot be ignored. This time, however, we are going to analyze ETFs that include financial sector papers.

When analyzing the S&P 500, there are doubts about its further growth, unless there’s a correction towards 2,400. But in order for such a correction to take place, some significant event must occur that will scare off investors and force them close their positions for a while, locking in profits. The S&P 500 reacts sensitively to the presidential elections and programs adopted by new US leaders.

For example, Barack Obama took over as president during the mortgage crisis, and he had to solve the problems of growing debt, which later exceeded 100% of GDP, and look for new ways to develop the economy after massive bankruptcies of companies. At that time, the S&P 500 lost 67% in 18 months and reached its 2002 lows, which was the result of the dotcom crisis. Later, however, Obama’s administration managed to find a solution by quantitative easing stimulus. The conditions for regulating the financial market, the crisis driver, were tightened, the financial service users protection was strengthened, and measures to reduce taxes, taken under Bush Jr., were prolonged.

As a result, investors calmed down, unemployment began to gradually decline, and the S&P 500 went up to conquer new highs, which continued throughout the 8 years of Barack Obama’s leadership. The only significant correction occurred a year before the start of Obama’s second term, as investors might have decided to hedge and cash off. Nevertheless, once it became clear that Barack Obama would step in for a second term, the S&P 500 rally continued. Thus, during Obama’s administration, the index went up by 314%.

In early 2015, however, the rise ended with a strong resistance at 2,130, which the S&P 500 was able to overcome only after the presidential elections won by Donald Trump. One of Trump’s campaign promises was a substantial tax cut that would allow the US economy to grow more rapidly. Such a strategy means an increase in companies’ profits through tax cuts in order to ensure the release of money for investment in new developments that make the US businesses more efficient and competitive in the global market. At the moment, we can see its positive results: the unemployment rate in the US has fallen to its 10-year low, the S&P 500 is at its historic highs, while the company earnings reports are breaking their own records.

In 2020, the next presidential elections will be held and, as history shows, a year before the market is usually uncertain until it receives confirmation that everything will stay the same. Thus, it will be difficult for the S&P 500 to break out 3,000 at once without a significant correction. There is a very big temptation to take a long position at current prices, as fundamental analysis does not show any negative sentiment in the markets. The companies’ reports, however, have been issued adjusted since Q2 2018, and, besides, as told above, tax cuts are a great contribution to an increase in profits. In this situation, it is important to pay attention to the rise in sales, and not to profits as such, since the earnings do not show how the companies are truly doing. Earnings and profits are worth taking into account only after Q2 2019 when it will be a year after the new accounting system has been implemented.

Take Facebook for example: the stock price has been down since the Q2 report, while the earnings hit the record high. In the Q3 report, the revenue was even higher, but the stock is still down, just because high profits are no longer a positive indicator. The investors want to see many more new users, while the number is actually decreasing.

Thus, over the next 6 months, the S&P is likely to trade rangebound. Then, the presidential elections will be drawing nearer, adding more pressure to the market because of the uncertainty.

Overall, the financial sector looks less risky, as, with good earnings, it will feel great, but even in case the earnings are not so good, companies will still have to pay their debts to the banks. In addition, the Fed is very likely to continue rate hikes, which will lead to an additional profit flow.

An unexpected crisis may be the only negative factor here, but in this case any investment will be in the red.

Among financial ETFs, one may consider a few funds with over $1M managed money.

iShares US Financial Services ETF (IYF), $1.77B managed, 35% in the banking services sector, 12% in the investment banking sector.

If we break down the banking sector, the top three are JPMorgan Chase (7.13%), Bank of America (5.00%), and Wells Fargo (4.47%).

In the investment banking, 8.32% accounts for the Warren Edward Buffett Berkshire Hathaway Fund.

The next one is iShares US Financial Services ETF (IYG), with $1.7B managed. The banking sector accounts for 52.83% of the fund’s portfolio. The top three are JPMorgan Chase (12.36%), Bank of America (8.66%), and Wells Fargo (7.75%).

Yet another fund one may pay attention to is Fidelity MSCI Financials Index ETF (FNCL), with $1.27B managed. The banking sector accounts for 51.71% of the fund’s portfolio. The top three are again JPMorgan Chase (9.84%), Bank of America (7.05%), and Wells Fargo (6.42%). This fund, as well as the iShares US Financial Services ETF (IYF) has a Berkshire Hathaway investment in its portfolio (7.30%).

By Dmitriy Gurkovsky, Chief Analyst at RoboMarkets

Disclaimer
Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboMarkets 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.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
0 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 5 (0 votes, average: 0.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.7 stars on average, based on 18 rated postsHaving majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.




Feedback or Requests?

Continue Reading

Analysis

Pre-Market Analysis And Chartbook: Risk-Off Trade Still On as Stocks Plunge Globally

Published

on

Tuesday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,640 -2.17%
DAX 30 11,054 -1.68%
WTI Crude Oil 54.04 -4.81%
GOLD 1,223 -0.15%
Bitcoin 4,604 -2.75%
EUR/USD 1.1392 -0.52%

The broad risk-off shift that we have been following in recent months continues to be the dominant force in global financial markets, and today, global stock markets and the majority of risk assets are deep in the red again.

With no progress in the main issues, such as the Brexit process, the US-China trade talks, and the Italian budget debate, the major benchmarks are near or at their October lows, while currencies continue to trade in corrective patterns, due mainly to the dip in US Treasury yields.

DAX 30 Index CFD, 4-Hour Chart Analysis

The German DAX index and the Nasdaq are still in the center of attention, being among the weakest major benchmarks, and the prior leaders of the US bull are all under heavy selling pressure. The DAX is testing its October lows as we speak following the release of the strong German Producer Price Index (+0.3% on a monthly basis), with the all-time low in the shares of Deutsche Bank (DB) weighing heavily on the index.

A sustained new low, with a move towards 10,000 would cement the bear market in the key benchmark, and it would be another warning sign for bulls globally, even if a year-end feel good rally materializes in equities.

XHB, 4-Hour Chart Analysis

US stock futures suffered heavy losses overnight, extending yesterday’s intraday trend and in the case of the Nasdaq and the Dow, violating key support levels in the process. The homebuilder sector was once again in the center of attention in pre-market trading, with Building Permits and Housing Starts both coming out before the opening bell, the two measures ticked higher, in line with expectations, and that’s already something to cheer about in the sector following yesterday’s dismal NAHB Index.

The sector’s main ETF fell sharply this year, but thanks to the recent dip in Treasury yields, it started to show early signs of stability, and now, a period of relative strength could be ahead, which could reset the bearish sentiment, even as the long-term outlook is still plagued by the decade-long highs in mortgage yields.

Dollar Attempts Rally of Key Levels as Pound Continues to Struggle

GBP/USD, 4-Hour Chart Analysis

The US Dollar bounced off yesterday’s lows amid the deepening risk selloff, but for now, it remains well below its recent highs against the Euro and especially compared to the safe-haven assets such as the Yen and gold. The Pound, which has seen heightened volatility in recent weeks is hovering above last week’s lows near 1.27 against the Greenback.

The pair looks ready to test that level in the coming days, with the Pound, and British assets in general showing weakness due to the uncertainty surrounding the Brexit process.

WTI Crude Oil, 4-Hour Chart Analysis

The risk-off shift has also been hurting crude oil today, and the weak bounce following last week’s crash is fading away, despite the still deeply oversold momentum readings.

We continue to expect a larger scale bounce in the commodity, even as the WTI contract is already testing the lows from last week due to today’s sharp selloff. With that in mind, opening short positions is not advised here, although until a short-term trend change bulls should also stay on the sidelines.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Nasdaq 100 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 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

EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

Gold Futures, 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.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
0 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 5 (0 votes, average: 0.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.7 stars on average, based on 399 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.




Feedback or Requests?

Continue Reading

Recent Posts

A part of CCN

Hacked.com is Neutral and Unbiased

Hacked.com and its team members have pledged to reject any form of advertisement or sponsorships from 3rd parties. We will always be neutral and we strive towards a fully unbiased view on all topics. Whenever an author has a conflicting interest, that should be clearly stated in the post itself with a disclaimer. If you suspect that one of our team members are biased, please notify me immediately at jonas.borchgrevink(at)hacked.com.

Trending