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Crypto Update: Bitcoin Leads Bounce but Short-Term Trend is Still a Question

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The market looks much better for bulls following the weekend, with all of the major coins trading well above the recent lows, and some of them already being on short-term buy signals. That said, the overall picture is mixed, and despite Bitcoin’s strength, Ethereum and Ripple are in weaker technical setups, and there are plenty of laggards among the smaller coins as well, suggesting a bumpy road ahead.

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The broader leadership that we have been missing during the Saturday bounce is now developing, and although further consolidation is likely, with a possible test of the Friday lows, the correction might have run its course, and the short-term trend could be already changing.

The long-term setup is virtually unchanged in most cases, as the coins are safely above the February lows, and the recovery is still likely to continue, although the broad declining trends are still intact.

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BTC/USD, 4-Hour Chart Analysis

BTC is close to testing the $10,000 level again after posting a higher short-term high, showing clear relative strength compared to the majority of altcoins. As Bitcoin has been solely showing the way recently, the bullish development is encouraging for the coming weeks, but until a break-out from the downtrend, investors should still expect volatile sell-offs.

Above $10,000, resistance is ahead at $10,500, $11,300, and $11,750 while support is between $9000 and $9200 and at the recent low near $8400.

ETH/USD, 4-Hour Chart Analysis

Ethereum is slightly lagging BTC during the current bounce, as it is still stuck below the key resistance zone between $740 and $780. That said aggressive traders could enter positions here, but the short-term trend is just neutral. Long-term investors could still add to their holdings here, even as the broad declining trend is still intact, with support at $640 and $625, and further resistance found at $845.

Altcoins Leaning Bearish

As correlations between the majors are still elevated, although lower than during last week’s selloff, the short-term trend change is not confirmed. With the likes of Litecoin and Dash showing strength besides BTC, the segment is likely forming a bottom, but bulls would need more coins showing robustness.

LTC/USD, 4-Hour Chart Analysis

LTC is trading below $200 after the test of the $170-$180 support zone during the sell-off, and it remains one of the strongest digital currencies from a technical standpoint. That said, a move above the key level and the short-term trendline would be needed to establish a clear bullish trend, with plenty of resistance ahead between $215 and $235.

Ripple, NEO, ETC, Stellar, and IOTA are all relatively weak, with XRP still fighting with the $0.85 level after holding up well during the selloff, while Monero is still yet to post a higher swing high as well after its correction. Cardano and Stellar

Stay tuned for our detailed technical analysis coming out later today.

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Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

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

Pre-Market: Turkish Lira Spooks Markets, as Dollar Still in Focus

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Stock markets are broadly lower today, as yesterday’s risk-off shift continues to dominate trading, with the Turkish currency woes, the Italian political standoff, and the weaker than expected European PMIs providing ample ammunition to bears.

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S&P 500 Futures, 4-Hour Chart Analysis

While the post-crash period since early February had its ups-and-downs, the best way to describe it is still a simple consolidation. In the US, trading has been taking place mostly in the range of only two sessions in early February, and the S&P 500 is still stuck in the middle of that range.

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Forex markets are in turmoil, as Dollar-centered trading continues across the board, and the hunting season for vulnerable emerging market currencies is still on. The recent strength in the reserve currency together with the rising yields sparked an exodus from more risky assets across the globe and with the Euro hitting another 6-month low today, the pressure will likely persist. Investors await tonight’s Fed meeting minutes which could make a huge impact on the Dollar and equities, especially if the central bank cools down rate hike expectations after the strong Dollar rally.

EUR/USD, 4-Hour Chart Analysis

First, it was Argentina, now it’s Turkey that’s in the center of attention, as the country plagued by a huge private Dollar debt load end rampant inflation is highly sensitive to rising rates and a weaker currency.

USD/TRY (Turkish Lira), Daily Chart Analysis

More experienced investors could have a strong feeling of déjà vu, as the Turkish leadership is blaming a concentrated attack against the country, while the market is waiting for the inevitable central bank intervention in the form of an emergency rate hike. For now, there is still hope that the storm will pass, but should an outright currency crisis break-out, rate hikes won’t be enough, and even capital controls will only provide a temporary solution, and a hard landing for the economy will be almost guaranteed.

Europe Also Down as Oil Pulls Back

DAX Index, 4-Hour Chart Analysis

European stocks which have been lifted by the falling Euro in recent weeks fell to two-week lows today, after the bearish PMI releases and the lower than expected British inflation figures. While the string of negative economic surprises continued, emerging market woes were largely ignored by investors so far, and the rising short-term trends are still mostly intact throughout the Old Continent.

Commodities are lower mixed amid the large currency moves, as the Dollar’s strength weighs on the whole asset class. Gold is still stuck below $1300 despite its recent resilience, while Oil is trading just off its highs, even as the OPEC is reportedly contemplating a supply increase following the “normalization” of oil prices. The cartel which, led by Saudi Arabia has openly been seeking higher prices

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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 255 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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Analysis

Crypto Update: Coins Lose Ground as Range Trading Continues

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While the weekend rally got bulls hope up that the consolidation phase might have ended, the technical setup hasn’t changed much in the segment, and today all of the major coins are lower again. The losses, which range from 2-5%, are not significant from a long-term standpoint, and most of the top coins are still clearly above the crucial support levels that mark the lower boundaries of the short-term trading ranges.

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With that in mind, traders still shouldn’t change their neutral stance, as there is no clear momentum present that would justify new positions here. Bitcoin continues to slightly outperform most altcoins today, but the divergence is not significant from a technical standpoint. Trading volumes continue to be well below the levels of the recent weeks, and that reinforces the bullish consolidation scenario.

BTC/USD, 4-Hour Chart Analysis

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BTC drifted back below the key $8400-$8600 zone, and it remains stuck the lower boundary of the range today, despite its slight relative strength. As the short-term MACD indicator is neutral, and our trend model is also on a neutral signal, further choppy trading is likely ahead.  Short-term support is found near the intraday low, at $8150, with a stronger zone between $7650-$7800, with further resistance ahead between $9000 and $9200, $10,000, and $10,500.

ETH/USD, 4-Hour Chart Analysis

Ethereum is trading right at the center of the short-term range, as the coin gave back most of its weekend gains, while losing its relative strength in the process as well. The coin remains on a neutral short-term trend signal similarly to the broader market, with the price action still being consistent with an orderly correction. Resistance is ahead between $735 and $780, at $845 and $900, while support is found between $625 and $645 and between $555 and $575.

Tron Still Outperforms as Correlations Remain High

TRX/USD, 4-Hour Chart Analysis

Tron made the most progress among the op coins since bottoming out after the correction, and the coin remains bullish from a short-term perspective despite the current pullback. The $0.075 support/resistance level is in the center of attention, while the late-April high at $0.010 is the next target for the move. As the broader market remains in a corrective phase, but the coin is one of the prime candidates to hit a new high in the coming weeks.

Dash, Monero, Ripple, and Litecoin are still weaker than segment average, while the recently lagging IOTA held the key $1.7 level. For now, there is still no sign of a developing robust leadership, as EOS failed to regain its bullish momentum, and no major joined Tron in the rally.

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Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

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 255 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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Analysis

Technical Analysis: Dow Jones Moves Toward Intermediate-Term Target, Closes above 25,000

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Technical Overview

  • On May 8, the Dow Jones Industrial Average was on the verge of completing a 2-month bottoming pattern. On May 9, the index gave the buy signal with a minimum price target of 26,200 (1,300 points from the point of the breakout – white vertical trendline in Figure 1).
  • Last week’s advance fell less than 5 points short of the 25,000 level. The 8 EMA served as support during the subsequent correction (yellow line).
  • Today (May 21), the index jumped by nearly 300 points to close above 25,000 for the first time since March 13.
  • The Feb 9 & April 2 lows have created a tentative “double bottom” formation. The pattern will be completed if the index breaks above the pattern’s interim high (red horizontal trendline).

Major support levels:

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  • The 24,600 level (last week’s base).
  • The neckline of the inverse H&S pattern (white downward-sloping trendline, currently at 24,200).

Major resistance levels:

  • Double bottom interim high at 25,800 (red trendline).
  • Origin of February correction & January high – 26,400 to 26,617 range.

Figure 1. Dow Jones Industrial Average Daily Chart

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Implications

  • While the tech-heavy NASDAQ pulled back from its intraday high, DJIA continues to perform strongly, marching towards the upside target obtained from the H&S pattern.
  • In one trading session, the index made up for an entire week of sideways/corrective movement. Such price action is indicative of fast-moving markets, which are leaping towards a specific target. In this case, the completion of the inverse H&S is expected to continue driving the index higher at least until it retests the 25,800 level.
  • If the index moves above 25,800 the double bottom will be completed. A move above January’s high will further strengthen the bullish thesis and shift the long-term outlook to bullish.
  • Long positions in index-tracking ETFs and constituents recommended.

 Outlook

  • Short-term outlook as long as the index remains above its 8 EMA.
  • Intermediate-term bullish as long as the index remains above the neckline of the inverse H&S pattern.

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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4.8 stars on average, based on 12 rated postsPublished author of technical research. In his work on price “gaps”, published in the 2018 International Federation of Technical Analysts’ Annual Journal, he developed a new technical tool for analyzing and trading the “gap” phenomenon – the “K-Divergence” (http://ifta.org/public/files/journal/d_ifta_journal_18). Besides obtaining a Master in Financial Technical Analysis, he has completed a BBA and an MBA from the Schulich School of Business in Toronto and has completed all exams for the CFA, CMT and CFTe designations. Currently, providing research to investment management and financial advisory firms. http://www.linkedin.com/in/konstantindimov




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