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Analysis

Cryptocurrency Analysis: Bitcoin Tops $4000 as Rebound Continues

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As the effects of last week’s crash are waning, the recovery continues in the segment, although Bitcoin’s relative strength is prominent. The other majors are still well below their prior highs, while BTC reached the $4150 level today in early trading, surging past the key $4000 level. While the correction will likely take the coin way lower from here after the initial rally, the rebound’s strength is encouraging for bulls, and the long-term picture is now favorable for a durable bottom to form. The coin has support at $3800, $3500, and between $300 and $3150.

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BTC/USD, 4-Hour Chart Analysis

Ethereum touched $300 during today’s rally, while Dash has been the strongest altcoin, technically speaking, since the crash low, as the coin surges back above $300 and breached the 4330 level as well. Among the other previous market leaders, Monero also rallied back to $100, while Litecoin remains beaten down, just trading north of the $51 support. IOTA built on its relative strength and rallied strongly of the lows as well, while Ethereum Classic remains the weakest looking major coin. There might be a choppy period ahead for traders, as the market will likely settle down after the huge bounce.  Let’s see the details of the short-term picture.

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Ethereum

ETH/USD, 4-Hour Chart Analysis

ETH is trading right at the crucial support/resistance level at $285 after reaching $300 for a 50% rally off the crash low. The coin is near the declining short-term trendline, and it’s still well below its all-time high that it hit back in June. The short-term MACD is now in neutral territory and a re-test of the $250 support is still likely before a decisive trend change. Support is found near $285, $250, and $235, while resistance is ahead at $330.

Litecoin

LTC/USD, 4-Hour Chart Analysis

Litecoin has been halted by the $56 resistance level during the rebound, but the coin is back to its rising long-term trendline after the spike lower. We expect more volatile consolidation from the coin, with a focus on the $50-$51 support/resistance zone. The declining short-term trend is clearly intact, with resistance ahead at $64, and further support near $44.

Dash

DASH/USD, 4-Hour Chart Analysis

Dash is trading slightly above the declining short-term trendline, being the only one among the majors to breach trendline resistance during the rebound. The coin is still expected to re-test the $300 level in the coming week, but the relative strength is encouraging, and short-term dips should be bought by long-term investors. Strong support is still found near $300 and $265, with resistance ahead at $360.

Ripple

XRP/USD, 4-Hour Chart Analysis

XRP is back above the long-term base formation after the bounce, and the coin held up above the prior declining trendline during the crash. The resistance zone between $0.1950 and $0.20 stopped the advance for now, but we still expect the currency to be relatively strong after the correction ends. Support is now found at $0.18 and $0.16 while further resistance is ahead near $0.22.

Ethereum Classic

ETC/USD, 4-Hour Chart Analysis

Ethereum Classic tried to rally above the declining trendline and the crucial $13.50 resistance, but the level held, and the coin remains relatively weak from a technical perspective. The current price levels still look attractive for long-term investors, but short-term traders should wait until a break above primary resistance before entering new positions. Above the resistance zone around $14, further strong levels are at $16 and $18, while support is found near $9.

Monero

XMR/USD, 4-Hour Chart Analysis

Monero is still gravitating towards the $100 level, as the coin remains among the less volatile majors since the crash. The currency is clearly in a declining short-term trend, but we expect it to remain relatively strong in the coming weeks, and hold above $80 even if the broad correction continues. Further support is found near $68, while resistance is ahead at $125.

NEO

NEO/USDT, 4-Hour Chart Analysis

NEO settled down after the crazy period for the coin, as the market digested the effects of the Chinese legislative changes. The coin recovered above the $16.50 level, and although the declining trend is still dominant, the worst should be behind for bulls. Support is found near $16.40 and $13 while strong resistance is ahead at $22, $25, and $30. We expect no new lows for the coin in the coming period, and investors could now buy the short-term dips.

IOTA

IOTA/USD, 4-Hour Chart Analysis

IOTA is showing considerable short-term relative strength after holding up well during the crash as well. The declining long-term trendline is now broken and although the $0.64 level is still ahead as primary resistance, we expect the $0.45-$0.48 level to limit the coming dips, and a new uptrend to develop in the coming weeks.

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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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3 Comments

  1. tieuthanhliem

    September 18, 2017 at 7:28 pm

    As china widens bitcoin crackdown, we can see $2000 again, that said we are in bear market

  2. FalconX

    September 18, 2017 at 8:10 pm

    you meant “between 3000 and 3150” in the first paragraph correct?

  3. embersburnbrightly

    September 19, 2017 at 2:02 am

    “The coin has support at $3800, $3500, and between $300 and $3150.” Between $300 and $3,150 that’s some range! (Sure you meant between $3,000 and $3,150.)

    🙂

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Analysis

Daily Analysis: The Usual Post-Fed Pump and Dump…

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Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2700 -0.51%
DAX 12,470 -0.14%
WTI Crude Oil 61.28 -0.83%
GOLD 1325.00 -0.43%
Bitcoin 10480 -8.71%
EUR/USD 1.2336 0.61%

The script that we laid out for the FOMC meeting minutes has worked almost perfectly, with the major US indices completing a roundtrip that triggered most of the “weak” stop-losses, before a powerful move lower into the close.

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The predictable late-session intraday volatility aside, markets were quiet and choppy for most of the day, and the Dow, the Nasdaq, and the S&P 500, all closed just slightly lower, while covering 2% during the session, with the tech-index’s relative strength evaporating in late trading.

S&P 500 Futures, 4-Hour Chart Analysis

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Forex Markets and Commodities

What drove the decline in equities was the renewed rise in US Treasury Yields, and to answer the most important question of the day; yes, in fact, the yield-Dollar correlation of the past few months broke down, and today the Greenback rallied together with bond yields.

10-Year Treasury Yield, 4-Hour Chart Analysis

While that is how it should work according to common sense and economic theory, the recent inverse correlation helped a lot of trends in reaching extremes, and those extremes now might reverse.

The outperformance of US markets, the Euro strength, and the weakness in European equities were among those trends, and it’s interesting to see that the bullish technical setup in the EUR/USD is crumbling and the US indices are in the deepest correction since the Brexit.

EUR/USD, 4-Hour Chart Analysis

While there is no assurance that these changes are permanent, for now, we remain short-term bearish on US equities, and continue to look for upside in the battered Dollar.

At the end of the day, the Dollar finished higher against all of the major fiat currencies, although the Yen showed notable relative strength amid the stock rampage near the closing bell. Interestingly the USD vs. risk-on pairs trend continues to lead the other asset classes, as we have noted several times, and that could be something to monitor in the coming days and weeks.

Commodities had a mixed but ultimately bearish session, with oil and gold suffering both suffering losses amid the risk-off shift, although crude already traded lower before the FOMC release, while gold traded in close correlation with the Euro throughout the day.

Cryptocurrencies

The segment had a decisively bearish session, with only a few coins showing considerable relative strength amid the sell-off. Bitcoin, Litecoin, Dash, and Monero are still the leaders of this cycle, while Ethereum is the most notable laggard, pulling most altcoins lower as well.

ETH/USD, 4-Hour Chart Analysis

On a positive note, the majors held up relatively well amid the stock turmoil, but the next few days will be crucial, as important support levels could be tested. That said, most of the coins are well clear of the crash lows, and there is more than enough support below that, combined with the still present bullish signs should keep investors confident that a new uptrend is underway and new rally highs are ahead.

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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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Analysis

Technical Analysis: Altcoins Lead Markets Lower as Bitcoin Still Looks Strong

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All of the largest digital currencies are in the red today, following heavy overnight selling, a bounce in European trading, and another round of losses around the US market open. Ethereum is still in the worst short-term shape among the giants of the segment, and that’s in line with the slightly delayed cycle of the coin that we have been monitoring.

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The technical divergence between the leaders of the market and the laggards yesterday is still dominant with the 6 coins that spearhead the rally, BTC, LTC, NEO, Dash, Monero, and ETC, are still in much more bullish setups than the rest of the majors.

Bitcoin is also well below its recent rally highs after breaking down under the key $11,300 level, and a test of the $10,000 support now looks likely, while a move to the $9000-$9200 zone would still keep the rising trend intact.


BTC/USD, 4-Hour Chart Analysis

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The overbought short-term momentum readings are being cleared, and despite the slightly bearish volume patterns, we expect the coin to continue its new bullish cycle after the correction, with targets above $11,300 ahead at $13,000 and $14,250.

ETH/USD, 4-Hour Chart Analysis

Ethereum is now trading below the key $845 level as the correction continues, as we expected, and the coin remains stuck in the dominant declining trend, for now. We still expect a breakout in the coming weeks, but a test of the $740 level is possible before another rally. Further support below that is at $625 and $575 and we don’t expect a new low in the coin, so investors could still accumulate the coin near the main levels.

(more…)

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: All Eyes on the FED and the Dollar (Again)

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FED-Days usually bring very special sessions with a choppy illiquid environment before the “big announcement”, an almost usual stop hunting spike in both directions right after the release, and a rather random, but strong trend in the close that usually defines trading for the next days.

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For this reason, a lot of traders like to take the day off until the FED-decision, and only trade after the event. Why are we talking about this today? Because although there is no interest rate decision this month, the meeting minutes of last month will be published this evening, and what moves the market in this period is rate expectations, not actual decisions.

And by the market, we mean basically all traditional asset classes, and through the rising trend in yields and the consequences of that, rate expectations arguably affect the cryptocurrency segment as well. So what do we expect from the FED? Nothing. We will leave that to the rest of the players, and trade upon the reaction of the market; after all that is what counts. At the end of the day, central banks will try to prop up the market, we can take that for granted.

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S&P 500, 4-Hour Chart Analysis

The overnight session in stock futures was in line with the above-mentioned expectations for a quasi-Fed day, with no clear trend in Asia or Europe, and very choppy price action across the board. Yesterday’s late-session decline is still weighing on investors sentiment, but there are clearly positive signs as well, even as we remain bearish for the coming weeks.

The key levels to watch are still the same, the 2735 and 2700 levels in the S&P 500 (25350 and 24800 in the Dow), and the Nasdaq could remain crucial to keep the hopes of bulls up, should it retain its relative strength.

Dollar-Yield Correlation Switch?

EUR/USD, 4-Hour Chart Analysis

Currency traders might have noticed a subtle shift between US Treasury Yields and the Dollar since the Volatility-Armageddon (actually a bit later than that). In the “old regime” the rise in yields was through the changes in rate-expectations was actually hurting the value of the Dollar, while lately, that negative correlation disappeared and even reversed briefly.

Why is that so important? Because the previous correlation helped the rally in US equities as yields rose, while the new regime could mean that European and Asian stocks will finally gather relative strength, should yields continue to rise. Tonight we might get closer to the solution of this puzzle, as the reaction to the FED-minutes will show how correlations are shaping up now.

Currencies and commodities are also little changed today, although the Dollar continued to edge higher overnight, while enduring a small sell-off as we approached the US open, despite the largely negative European PMI indices.

So watch the Dollar, the Nasdaq, and most of all Treasury Yields today in late trading, and expect choppy conditions until the very end of the US session.

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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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