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Cherry on Top

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Hi Everybody,

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Very glad to announce that we have a new cryptocurrency that is now available for trading on the eToro social trading network…

Please welcome the newest member of the crew… XRP!

This revolutionary new system aims to completely replace the current SWIFT system used by banks for international transfers. A bank to bank transfer these days usually takes between 2 and 5 business days. Ripple, can do it in seconds flat … and at a much cheaper rate too.

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Ripple has been one of the hottest and fastest moving cryptocurrencies since the beginning of the year with swings from 0.006 cents per token in January, up to 42 cents in mid-May, and now sitting at 17 cents per token.

This is the magic of crypto and we’re very pleased to offer it for both long term investing and short term trading on our network.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

Apple’s Cherry

Markets Stable

Bitcoin Cash

Please note: All data, figures & graphs are valid as of August 2nd. All trading carries risk. Only risk capital you can afford to lose.

Market Overview

Apple shares have placed a cherry on the top of what was already a cream filled day in the financial markets. The Dow Jones industrial average is now just a few points shy of the landmark level of 22,000 points.

Analysts were thinking that the smartphone and tablet giant was in for a terrible quarter ahead of the expected release of their next wave of new tech, which many believe is due in September. Usually, iPhone users tend to hold onto their old and broken devices just a little longer if it means upgrading to a new version.

Not only did they smash those expectations, their share price skyrocketed in after-hours trading and when the markets open today the largest company in the world will be worth an approximate $782 Billion.

Other markets, currencies, and commodities remained relatively stable yesterday as the VIX volatility index once again took a dive.

Crypto World

Everybody is buzzing about Bitcoin Cash and the hard fork that just took place. The smoke is just clearing now but the transition is far from over, or even guaranteed at this point.

So for now, let’s look at what we know. The old Bitcoin network seems to be stable. SegWit is locked in and volumes are looking quite normal. In the past 24 hours approximately $1.3 Billion worth of BTC has exchanged hands, a number which is quite average for the past few months and the market cap of bitcoin is about the same as it’s been since May at about $44.6 Billion.

The new coin, Bitcoin Cash, which some exchanges label as BCC and some as BCH, is now the third largest crypto with a market cap of $7.2 Billion as the coins currently trade at $439 a pop.

Ladies and gentlemen, this is not anything like your average stock split. When the shares in a company split, each investor gets 2 shares for every 1 he holds and the price per share is reduced by 50%.

With this split, the value of the original asset was never reduced. We simply have a new asset with a completely new market cap that seemingly came from nowhere. Meaning, that the combined value of bitcoin and bitcoin cash is now $51.8 Billion, which is well above what bitcoin ever achieved by itself.

Given the growth of this explosive market, it would not be surprising to see either one or both of these assets growing exponentially in value from here. Or to see either one surrender to the other.

We’re in the thick of it now. Have an amazing day ahead!

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.

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 68 rated postsSenior Market Analyst at Etoro.com.




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2 Comments

2 Comments

  1. Matt_a

    August 2, 2017 at 9:51 am

    Trading on CFDs on Etoro without having the chance to use leverage makes no sense at all. You better buy the real coin directly and at least you remove the counterparty risk. Beside that..if anyone would be trading these coins using CFDs the price won’t go anywhere given that it is not affecting it in any sort…Etoro removed all the possibility to leverage so don’t waste your time with it and buy the real coin

  2. Mati Greenspan

    August 2, 2017 at 11:04 am

    Hi Matt,

    Thanks for the honest feedback. It’s highly appreciated. To address the issue of CFDs. eToro is indeed backing our positions by placing an order on the underlying asset, such that the volumes in eToro do indeed impact the market just as they would on any of the exchange sites.

    In addition, trading as a CFD provides you as the customer with an additional layer of liquidity as we guarantee the same price for large orders as we do for small ones as well as instant execution at the price you see on your screen. Such that you don’t need to look for a counterparty to the trade.

    The last point is that eToro unlike many other places to buy cryptos direct is a regulated financial institution. A CFD (contract for difference) is a contract which is legally binding and has ramifications much greater than an irreversible transfer from one digital wallet to another.

    Feel free to reach me on the world’s best social investment network any time with any further questions, comments, or concerns.

    -Mati Greenspan

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Analysis

Silver Prices Poised for a Breakout – Overview of Key Trigger Levels

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Long-Term View

  • Since 2003, silver has exhibited spectacular volatility, increasing by more than ten-fold by the 2011 peak, before declining by more than 72% by end of 2015. Despite the volatility over this 15-year period, the commodity has found support on several occasions at a key long-term trendline (green trendline; retests – green arrows in Figure 1). More specifically, silver bounced off the support in 2008, 2015, and most recently in 2017 (green trendline currently at $15.50).
  • For 2 years (2011- early 2013), silver found support just around the $26 level, before finally breaking below and plummeting in April 2012 (blue horizontal trendline; sell signal – last blue arrow).
  • While, it can be said that silver, similar to gold, has been forming a large inverse H&S pattern since 2013 (neckline – yellow trendline), silver is further away from giving a buy signal based on this potential development. It is really the short-term view that reveals a well-defined pattern, whose completion may give a timelier signal.

Figure 1. Silver (XSLV.X) 8-Day Chart 

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Short-Term View

  • Zooming in, the daily chart reveals a strong support in the $15.50 – $15.80 area (violet line at $15.70). Notice how when the commodity broke below $15.50 for the first time, it moved sharply lower, before finding support at the long-term support discussed in the long-term view (green arrow). Within a couple of trading sessions, silver was back above $15.50.
  • A much more well-defined inverse H&S pattern is observed on the daily chart (lows – orange ellipses, neckline – orange downward sloping trendline, target – orange vertical line).

Figure 2. Silver (XSLV.X) Daily Chart  

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Implications

  • A break above the neckline of the small inverse H&S will activate an upward target of $21.75. Furthermore, such a breakout would trigger a buy on the larger inverse H&S.
  • While, a potential buy signal on the longer-term view may generate a target close to $28, the $26 level is expected to serve as a major resistance (i.e. resistance at $26 should take precedence over most other technical developments).

Outlook

  • Neutral with a bullish bias.
  • If silver breaks the orange trendline (a close above $17.80 should be used as a trigger) outlook will shift to bullish.
  • If the commodity breaks below $15.50, outlook will shift to bearish, as that would imply that both the $15.50 – $ 15.80 support area (violet trendline) and the long-term support (green trendline) have been breached.

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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Commodities

Is Oil About to Spike Again?

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The recent attack on Syria by U.S. and ally forces has raised the prospect of another major spike in oil prices, according to JPMorgan Chase & Co. Oil, already at more than three-year highs, could be poised for another 10% gain in the short term.

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JPMorgan’s New Outlook

The U.S. multinational investment bank recently issued a forecast calling for $80 a barrel oil, citing an expanding presence of Western forces inside Syria as well as the threat of new sanctions on Iran, a major oil-producing nation. Brent crude, the international futures contract , closed at $72.58 a barrel on Friday for a weekly gain of 8.2%. A price point of $80 a barrel would put Brent at roughly 70% of mid-2014 levels.

U.S. counterpart West Texas Intermediate (WTI) rose 8.6% during the course of the week to settle at $67.39 a barrel.

“Risks we thought might materialize this summer through Iran sanctions are emerging somewhat more quickly due to events in Syria,” JPMorgan strategists led by John Normand wrote on Friday.

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U.S., British and French missiles pounded Syrian targets early Saturday in response to an alleged chemical weapons attack carried out last weekend. U.S. President Donald Trump declared “Mission accomplished” shortly after the blitz, which included 105 missile strikes fired on three targets.

While it is unclear what the response will be once markets reopen on Monday, the Trump administration has indicated the missile strikes were not a recurring event. That said, Washington’s ambassador to the United Nations Nikki Haley said the U.S. forces are “locked and loaded” to carry future attacks if the Syrian government uses chemical weapons again.

Syria and Russia have both denied that a regime-led chemical weapons attack took place and no conclusive evidence has been brought forward on the matter.

The Case for Commodities

JPMorgan analysts aren’t the first to declare commodities a good investment at this stage of the business cycle. Strategists at Morgan Stanley have noted that energy stocks have historically been a “very consistent late-cycle outperformer,” which puts them on firm footing to beat the weakening bull market.

The energy sector has rebounded sharply from the multi-year downtrend in oil prices, but has severely underperformed the S&P 500 Index this past year. The $3.8 trillion worth of energy stocks represented on the S&P 500 have gained a mere 1.7% over the past 12 months, compared with a 13.3% return for the broader index.

Commodities like crude oil and gold are also benefiting from a weak U.S. dollar. The closely-watched dollar index (DXY), which tracks the greenback’s performance against a basket of six currencies, is down 2.5% this year. The dollar posted negative returns in 2017 and in January was off to the worst start to a year in over three decades.

In addition to energy stocks, the following oil-related portfolio recommendations were put forward by JPMorgan:

  • Long WTI call spread
  • Long Brent calendar spread
  • Overweight the S&P 500 Energy Index
  • High-yield energy credit
  • U.S. versus euro five-year inflation-linked bonds
  • Long Canadian dollar versus Japanese yen

However, gold may be the more attractive bet over the long term as geopolitical risks and rising U.S. shale production squeeze oil prices. Even the strategist at JPMorgan said the $80 a barrel price point would likely only be good for three-to-six months before U.S. producers flood the market again. As we’ve mentioned before, U.S. crude producers can make profits with prices as low as $40.

The current risk-off environment could also boost the appeal of cryptocurrencies, which are said to offer store-of-value characteristics. It has been argued that volatility and ‘FUD’ (fear, uncertainty and doubt) have masked the intrinsic value of crypto assets during the latest downtrend. Given that the underlying fundamentals have only changed for the better, a more sustained rally in crypto assets could strengthen portfolios struggling with the late-cycle blues.

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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4.5 stars on average, based on 343 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Analysis

Analysis: Gold Continues Oscillating, on the Verge of a Major Signal

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Long-Term View

  • In 2015, gold found support at its 2008 peak (resistance-turned-support in Figure 1 – white trendline; GLD chart shown).
  • In August 2017, the commodity broke above a key resistance (violet trendline), which subsequently served as support on two occasions in October and December of 2017 (violet arrows).
  • Gold has formed a large, multi-year inverse H&S pattern (lows – yellow ellipses, neckline – yellow downward sloping trendline). 2017’s failed attempt to break the neckline (yellow arrow) confirmed the importance of the trendline, even if the observed pattern does not prove to be an inverse H&S. In 2018, the commodity has oscillated sideways, going above and below the trendline several times (see Short-Term View).

Figure 1. GLD 6-Day Chart  

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Short-Term View

  • The commodity has been trading in a horizontal channel since January 2018 (blue horizontal trendlines), with an upper boundary roughly 1% away from 2016’s high.

Figure 2. GLD Daily Chart  

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Implications

  • While it could be argued that the neckline of the H&S has already been broken to the upside, given the commodity’s price action in 2018, one should wait for the short-term to align with the long-term view for a confirmation.
  • A break above the upper boundary of the channel will activate 2 targets. A conservative one (with a 4% upside) if the channel is considered to be a “trading range”. A more aggressive target (with a 9% upside) is obtained if the channel is considered to be a “flag”. A move above 2016’s high should be used as a confirmation of the breakout.

Outlook

  • Neutral with a bullish bias.
  • If the commodity breaks above its 2016 high (1,380 used as a trigger, just above the 2016’s high), outlook will shift to bullish.
  • If the commodity breaks below the lower boundary of the horizontal trading channel (using 1,300 as a trigger, just below the support of the channel), outlook will shift to bearish, at least in the very short-term

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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