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Analysis

Crypto Update: Ripple Breaks Support as Market Ticks Lower

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Choppy trading continues in the cryptocurrency segment, with most of the major still stuck in narrow trading ranges, with little changes in the technical setup. Ripple is back in the center of attention after a period of lower trading activity in the third largest coin. XRP moved below short-term support, triggering a short-term sell signal in our trend model while staying in a broader consolidation pattern that developed after the coins recent surge.

XRP/USDT, 4-Hour Chart Analysis

Ripple is clearly below the $0.51 support after today’s dip, and now the coin only has support near in key long-term zone near $0.42-$0.46, while several strong resistance levels are towering in the $0.51-$0.57 area. That said, the long-term buy signal remains in place, but given the still hostile segment-wide trends, traders and investors should be cautious with new positions.

The other majors also turned lower today in early trading, but after yesterday’s late-day rally, the major support levels are holding up in the likes of Ethereum, Bitcoin, and Litecoin. That said, some of the smaller altcoins are in weaker positions, and all-in-all the broader negative trends are clearly intact, and sellers are in control of the market.

BTC/USD, 4-Hour Chart Analysis

Bitcoin spiked above $6600 in late trading yesterday, but now it is back near the $6500 support that has been in the center of attention for a month now. The most valuable coin is still trading in a larger-scale triangle pattern, and that is clearly affecting the whole segment, causing choppy conditions and low volumes across the board.

We still expect a strong momentum move in the near future in the coin and the whole segment, and given the bearish broader trend, a negative outcome is more likely. Support levels are still found at $6275, $6000, and near $5850, while resistance is ahead near $6750 and $7000.

Ethereum Little Changed as Altcoin Weakness Persists

ETH/USD, 4-Hour Chart Analysis

Ethereum is still trading in a very narrow range, and although it got close to testing the $235 resistance again, the coin remains on a neutral short-term signal, while being relatively weak from a long-term perspective.

ETH is below the declining short-term trendline, but clearly above the primary support zone near $200. Further support is still found near $180 and $160, while resistance is ahead at $260 and in the $275-$280 zone, with the broader declining trendlines converging near $270 too.

LTC/USD, 4-Hour Chart Analysis

Litecoin also ticked lower today and after trading as high as $59 yesterday, the coin dipped below the $57 level, with the test of the $56 support now being very likely again. The coin is on short-, and long-term sell signals in our trend model, despite the recent period of relative strength, with the declining long-term trend clearly being intact.

Traders and investors shouldn’t enter positions here, with strong support levels found at $51 and near $44, while resistance levels are ahead near $59 and $64.

Featured image from Shutterstock

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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4.6 stars on average, based on 374 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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3 Comments

3 Comments

  1. homelanD

    October 6, 2018 at 10:44 pm

    i’ve been a subscriber for nearly a year and im sorry to say that loads of your (Hacked as a whole) market predictions are inaccurate and I feel now the publications market understanding is pretty limited. Trade recommendations throughout this bear market have been wrong alot and I strongly recommend traders think twice before acting on them. Do not base investment decisions on this publication.

    • davidstewartkim

      October 8, 2018 at 2:48 pm

      You should use his advice as a cross reference for your own analysis of indicators, support/resistance levels and overall trends. Be your own trader.

    • davidstewartkim

      October 8, 2018 at 2:50 pm

      I have also been a subscriber for a similar amount of time as you.

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Analysis

Crypto Update: Coins Fall After a Quiet Weekend

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The cryptocurrency segment stabilized this weekend after a technically important breakdown that shifted the short-term outlook to clearly bearish. While the stability was a small plus for bulls, the lack of bullish momentum and the fact that the majors remained below key resistance levels meant that most of the coins remained on sell signals in our trend model. As for the long-term signals, Monero, Ripple, and Bitcoin are the only majors on neutral signals in the still overwhelmingly bearish market.

XMR/USDT, 4-Hour Chart Analysis

Bitcoin continued to fare better than the largest altcoins, but although the most valuable coin made the most technical progress, briefly reclaiming the $6275 level, it also remained in a bearish short-term setup. The total value of the market is stuck near the $200 billion mark, and with Ethereum still being in a steep long-term downtrend and with Ripple giving back a large chunk of its recent gains, sellers are still clearly in control of the market.

BTC/USD, 4-Hour Chart Analysis

Bitcoin’s relative stability continues to be the most encouraging sign in the segment, but the coin is clearly below the previously dominant broad triangle pattern following last week’s breakdown. The technical deterioration means that a test of the key long-term zone near $5850 is increasingly likely, especially as the weak bounce ran out of steam near the $6275 level.

While a weaker support zone is found near $6000, the short-term sell signal is in place in our trend model, and traders shouldn’t enter new positions here. Further resistance is ahead at $6500, $6750, and $7000, while the next major support zone is found between $5100 and $5100.

Ripple Tests $0.42, Ethereum Capped by the $200 Level

XRP/USDT, 4-Hour Chart Analysis

Ripple got back up to the key $0.42 level after plunging below $0.38, but the resistance level halted the bounce and, and the coin is still close to falling back to the previously dominant broad declining trend. XRP is trading right at the declining trendline of the triangle consolidation pattern that developed after the September rally, and bulls would need a sustained break-out above the pattern for a renewed buy signal.

Support levels are found at $0.375 and $0.35, while resistance is ahead in the $0.42-$0.46 and near $0.51 and $0.54, and traders shouldn’t enter new positions here.

ETH/USD, 4-Hour Chart Analysis

Ethereum is still among the weakest majors, and it couldn’t get back above the $200 level during the weekend. ETH remains on sell signals on both time-frames, since the declining trendlines are clearly intact, despite the recent lengthy consolidation period.

Primary support is found at $180, with further zones near $170 and $160, while resistance above $200 is ahead at $235 and $260, and traders and investors should still stay away from the coin.

LTC/USD, 4-Hour Chart Analysis

Litecoin also only managed a weal bounce after the key breakdown below the $56 support, and although it initially respected the $51 level, another test is very likely, and odds favor a break below support given the strong bearish pressures.

A break below the primary support level would warn of the test of the $47 low from August, with the next level of interest being the $44 support, while further resistance above $56 is found at $59 and $64. The coin is on sell signals on both time-frames and traders and investors shouldn’t enter new positions here.

Featured image from Shutterstock

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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4.6 stars on average, based on 374 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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Altcoins

A Few Lessons From Last Week

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There is an adage on Wall Street.  It is quite old. It was passed down to me from my grandfather last Wednesday.  It goes something like this. When the cops raid the brothel, they take everybody including the piano player.  

No matter when the notion originated, it applies directly, and painfully, to last week’s experience with stocks, bonds and crypto assets. Between early Wednesday and Thursdays New York closing, most major US indices dropped a fast five percent.  Friday showed a tepid rebound with the tech heavy NASDAQ posting a 2.3% one day recovery followed by the S&P 500 with a meager 1.2% upward move. Otherwise there wasn’t much good happening.

The story in crypto land wasn’t any better.  In truth it was worse. Taking just the two big guys during the same Wednesday/Thursday time period, things were dismal.  Bitcoin lost 6% in price before staging a weak 1.1% recovery on Friday. Ether dropped 15.6% on Wednesday, then managed a 3.2% Friday bounce.

Nobody escaped untouched unless you were a short seller in which case, congrats! Having lots of company is hardly any consolation for having to deal with investment losses, even if there are only accounting losses.  Nevertheless, everyone who had the ability to read understood the stock market was on a record breaking binge and thus vulnerable.

The only binge connected to crypto prices was a 10 month long hangover from the record levels of late last year.  So should the Wall Street adage be applied here making crypto take on the role of piano player? Or to present the question in a different way, is the piano player merely an innocent victim of being in the wrong place at the wrong time?

The Stock Market Correction Is Not Over

Stock market corrections are never pleasant but many veteran strategist consider them to be a necessary and even healthy part of the investment process.  Last week’s 5% drop was not even pronounced enough to qualify as a bona fide correction. That requires something even more than the 8%+ drop that took place back in February.  

In the very short term, there is little in economic news that is likely to upset the market this coming week but that doesn’t change the fact that interest rates are putting pressure in bond prices and $80 oil prices aren’t helping the inflation picture either.  Finally, there is the uncertainty created by the midterm elections. Making short run market predictions is a fools game, but this one is an exception.

What Does This Say About Crypto Values?

After events of the last week where already depressed crypto values get beaten down even further than stocks and bonds, that is not a good sign.  One of the reasons for this had to be last weeks report from Diar Ltd. showing how Coinbase’s active customers have dropped 80% from record levels of $24 billion in the fourth quarter of last year to $3 billion in the third quarter of 2018.  News of this study was reported by Bloomberg on Wednesday. So this could well have been the fundamental culprit. If so, the timing could not have been better for the short sellers.

No Longer Trending?

The folks at Diar Ltd. are spot on in their analysis but does this mean the end for crypto? Don’t count on it.  In fact there is a positive side to their findings. The most important point is the crypto prices (except for Wednesday) have become increasingly stable.  This stability will serve long term investors well as it will calm the nerves of regulators and merchants inclined to use crypto as a medium of exchange.

The drop off in activity at Coinbase is not surprising.  Speculators have lost interest. Recently we wrote an article about the competition for investor attention between crypto and cannabis.  There is loads of anecdotal evidence suggesting that this is contributing to crypto interest declining.

Here is just two points to remember.  This week on October 17, cannabis becomes legal for the first time throughout Canada. Investors are acutely aware of this bonanza.  During one of the worst weeks in the stock market, US listed cannabis stocks like Medmen Enterprises (MMNFF: $5.84) gained 35% while APHRIA (APHQF: $14.65) added over 13%.  Both stocks experienced greatly accelerated volume. This is an example of just two of many cannabis opportunities that are challenging crypto for investment capital. So the piano player may not be so innocent: he could just be smoking a little ganja.

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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4.4 stars on average, based on 112 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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Analysis

5 Things To Watch Next Week + Chartbook

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2800 Level in Focus in the S&P 500

S&P 500 Futures, 4-Hour Chart Analysis

The trendline breaks that we pointed out last week, which were triggered by the jump in Treasury yields led to an unexpectedly volatile selloff in US markets, while dragging lower stocks globally too. Now, as the technicals shifted bearish in almost all major markets, at least from a short-term standpoint, a more defensive approach is advised even for short-term traders, while we were already defensive with regards to the long-term outlook for US stocks, given the valuation extremes.

Next week, Friday’s oversold bounce could continue in the US, but stiff resistance is ahead not far from the current price levels, in the 2800-2810 area in the S&P 500 the most-watched index. An advance to 2850 would provide a great short-term selling opportunity, but as small-caps, which led the market lower recently remain weak, a reversal off the 2800 level is also in the cards. In any case, a new swing low is likely in the coming weeks, with a test of the 2675-2700 area.

Another Week of Heavy Trading Expected in Treasuries

US 10-Year Treasury Yield, 4-Hour Chart Analysis

The week will start with a crucial economic release in the US, and the Retail Sales report will likely cause further volatile trading in Treasuries and stocks alike. After pulling towards the end of the week, Treasury yields could head higher again, especially if a strong report revives inflation and rate hike fears.

The meeting minutes of the recent Fed meeting will also be released on Wednesday, and although we don’t expect huge surprises, the Treasury market will likely have another volatile session. The Dollar, which has been drifting lower against its major peers last week, will also be in the center of attention, since despite the correction, the broader trend is bullish, and the reserve currency could be ready for another leg higher.

Keep an Eye on the VIX!

VIX (US Volatility Index), 4-Hour Chart Analysis

We have been following the break-out in the Volatility Index (VIX) in the past couple of weeks and despite the bounce in stocks, the measure remains above the line-in-the-sand 20 level. While the February collapse of the short-VIX trade is unlikely to happen again, there is a good chance that in the coming weeks we will see outsized moves in stocks.

A persistently high VIX would be consistent with the deterioration in market internals that we observed lately, and we don’t expect a quick decline towards the 10 level, as it was the case after every correction in 2017 before the February crash.

Emerging Markets and Europe Trading at Multi-Year Lows

DAX 30 Index CFD, 4-Hour Chart Analysis

There were clear positive catalysts in the second half of the week for emerging markets, with the much wider than expected Chinese Trade Balance and Turkey’s surprising step to release Pastor Brunson helping to ease trade war fears and the pressure on the Turkish Lira respectively. That said, the fresh standoff between Donald Trump and Saudi Arabia could trigger another wave of selling in the assets of the most vulnerable countries, erasing the Friday bounce.

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

As we expected emerging market equities underperformed currencies during this selloff, and as measured by the EEM ETF, the segment hit new lows together with the main European benchmarks. This widespread weakness is an alarming sign for bulls, and although a larger bounce could follow from these oversold levels, there is nothing bullish in the recent price action of the lagging assets.

Earnings Season Heating Up

After the record-breaking second quarter the 3Q earnings are starting to come in, and although analysts have been steadily reducing their estimates across the board, we don’t expect huge negative surprises in the US, as economic momentum remained strong despite slowing global growth. With that in mind, earnings could help in stabilizing the market after last week’s rout, even if a broader trend change is likely underway.

Among the most-awaited reports, we find Johnson & Johnson (JNJ), Bank of America (BAC), Goldman Sachs (GS), Morgan Stanley (MS), Netflix (NFLX), IBM (IBM), and Procter & Gamble (PG), with Tuesday being the busiest reporting day.

ChartBook

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Nasdaq 100 Futures, 4-Hour Chart Analysis

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Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

Forex

EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

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.

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4.6 stars on average, based on 374 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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