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Cryptocurrency Analysis: Sell-Off Accelerates as China Bans ICOs

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The crypto segment lost $30 billion in market cap since last Friday’s all-time high, as the correction that we have been expecting started in earnest. The latest news regarding a Chinese ban on ICOs delivered a huge blow to the already fragile market and the most important coins are all substantially lower, with NEO being especially hard, given its exposure to China. Bitcoin is holding up well amid the sell-off, which is particularly heavy in the Ethereum ecosystem, with double-digit losses across the board. Ethereum is now trading back near the previously important $285 level, after quickly breaking below the $330 and $300 supports. We expect more corrective price action in the coming period, with a likely target zone between $230 and $250.

ETH/USD, 4-Hour Chart Analysis

NEO is down by more than 35% amid the negative news, but the recently surging Litecoin is also down by almost 20% thanks to the broad selling pressure. Monero and Dash are still well above their prior all-time highs, but they are already in a 30+% correction top-to-bottom. Ethereum Classic and Ripple retraced their recent break-outs but they remain promising at the current levels, being in different phases of the market cycle than the rest of the majors. Investors are still advised to wait until the long-term overbought condition is cleared, but given the steep initial decline, the correction might unfold quicker than the previous one which took several weeks to complete. Let’s see how the short-term charts look amid the massacre.

Bitcoin

BTC/USD, 4-Hour Chart Analysis

Bitcoin dipped below primary support today in early trading, confirming the deeper correction that we have been expecting. The coin is still in overbought territory despite the more than 15% decline, and traders and investors should expect more downside movement and elevated volatility in the coming period. Crucial support levels are found near $4000, $3800, $3500 and near $3150.

Litecoin

LTC/USD, 4-Hour Chart Analysis

LTC fell sharply together with the market, and it’s now back near the previous crucial resistance at $64. The coin remains overbought, but the majority of the price decline might be already concluded, and a volatile sideways period could be ahead. That said, the $60, and $56 levels are still below as possible targets, and traders should wait with new positions until an uptrend is established.

Dash

DASH/USD, 4-Hour Chart Analysis

Dash is trading near the $300 price level that has been a crucial support/resistance line in the recent move higher. The coin cleared the short-term overbought readings, but a re-test of the $265 support is still likely, as the long-term momentum still needs time to get back to neutral. The long-term uptrend is not in danger, but traders should be cautious with new positions here.

Ripple

XRP/USDT, 4-Hour Chart Analysis

Ripple retraced almost all of its break-out gains amid the broad correction and it now trades below $0.20 yet again. The long-term picture still looks positive for the coin, but short-term volatility could be very high, and short-term traders could face more downside. Support is found at $0.18 and $0.16 while resistance in the zone around $0.22 and at $0.26.

Ethereum Classic

ETC/USD, 4-Hour Chart Analysis

Ethereum Classic is also back near the crucial $16 level after touching its prior all-time high during the weekend. We still expect a strong move higher after the current correction, and the current levels are attractive for long-term positions, although more short-term losses are also in the cards. Support is found around the $14 level while resistance is ahead near $0.18 and $0.23.

Monero

XMR/USD, 4-Hour Chart Analysis

Monero fell back to the $100 level as we were expecting, but the coin is still well above the prior highs after the monster rally of the previous period. We expect more correction in the coin in the coming weeks, with a possible re-test of the $80 level. Below that strong support is found near $72 and around $58. Resistance is now ahead at $125 and near the prior highs above $150.

NEM

NEM/BTC, 4-Hour Chart Analysis

NEM continues to trade in the same broad range pattern as before the sell-off compared to BTC. We still expect the coin to outperform the most valuable cryptocurrency and test the 0.00009 level in the coming weeks. Support levels are found near 0.0000575, and 0.000048 while resistance is ahead at 0.000065 and at 0.000075.

NEO

NEO/USDT, 4-Hour Chart Analysis

NEO got hit hard by the news on the Chinese ban, and the coin fell well below $30, and outright crashed below the $22 support as well today, almost reaching the next support zone near $16. While the long-term impacts of the ban are not clear yet, we expect high levels of volatility as the market assesses the damage. The long-term picture remains bullish and the current levels look attractive for investors, despite the uncertain short-term outlook.

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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4.7 stars on average, based on 444 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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  1. Chris G

    September 4, 2017 at 9:56 pm

    Watching eth today … once it hit 310, spiked to 325 – which was fairly baffling. I can only assume more correction and volatility. Be interesting to see where ltc goes – I’m just holding back until this perfect storm settles … whew!

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Analysis

3 Things You Need to Know About the Market Today

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1, Chinese GDP Growth Slows to Multi-Decade Low

Shanghai Composite, 4-Hour Chart Analysis

When even the strongly PR-optimized Chinese economic releases are showing severe weakness, it’s not at all surprising that the local stock market is in a deep bear market, and even the explosive oversold rally on Wall Street combined with the trade optimism of last week is not enough to meaningfully change the technical setup.

While economic growth slowed to an almost 30-year low on a yearly basis, retail sales and industrial production beat the consensus estimates by a hair, but that wasn’t enough to cause a material rally in equities, with the global sentiment leaning slightly bearish. This week’s most important question will be how risk assets will hold on to their recent gains, with a special attention on China and Europe, which continue to lag behind the US from a technical perspective.

The Shanghai Composite is more than 30% below its bull market highs, while the main European benchmarks are also around 20% below their respective highs, and that’s following one of the strongest short squeezes in history on Wall Street, mind you. The next few days could be crucial for markets, and we now advise caution even for short-term bulls.

2, Stocks Retreat after Friday Ramp with Wall Street Closed

German DAX 30 Index, 4-Hour Chart Analysis

Looking at Europe, the major indices failed to extend their gains from Friday, while US stock futures are also modestly lower after the European close. With the US markets being closed in observance of the Martin Luther King Jr. Day, trading volumes and activity has been predictably low, and things will likely get heated tomorrow, as the earnings season will also continue.

Johnson & Johnson (JNJ) and IBM (IBM0 will report earnings tomorrow, and all eyes will be on their overseas numbers and guidance amid the global economic slowdown. We had some negative reports regarding the US-Chinese trade talks, concerning the sensitive issue of Intellectual Property, and we still think that even though an agreement is likely in the coming months, implementation and enforcement will be borderline impossible.

3, Oil Tests December High

WTI Crude Oil, 4-Hour Chart Analysis

While risk assets, in general, had a slightly bearish half-session crude oil kept on pushing higher following Friday’s move to new correction highs, with the WTI contract entering the resistance zone that capped the December consolidation. The crucial commodity, which has been slightly lagging US stocks from a technical perspective is still squeezing late shorts, but we expect a short-term top very soon, possibly after a stop hunting rally above the $55 per barrel level.

What’s sure, is that we wouldn’t be buyers at these levels, even in light of the OPEC production cut, since over-supply remains a major issue, and the increase in US output continues. That said, the short-term uptrend is intact and the topping process could take a while, but we will keep a close eye on the day-to-day price action following the 25% rally off the December lows.

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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4.7 stars on average, based on 444 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: 5 Altcoins to Watch This Week

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Four out of five of the altcoins that we included on last week’s list moved within our expectations. Ethereum (ETH/BTC) and NEM (XEM/BTC) have managed to stay above key support areas. In addition, Binance Coin (BNB/BTC) and 0x (ZRX/BTC) have maintained their bullish tone. Only Bitcoin Gold (BTG/BTC) disappointed as the market took out its key support.

For this week’s edition, we look at altcoins that are prime candidates for buying on dips. Here are the five altcoins to watch this week.

TRON (TRX/BTC)

TRON started the year on a high note as it breached 0.0000056 resistance on January 3, 2018. This triggered a strong rally that sent the market to as high as 0.00002047 on January 5, 2018. Although the market has been correcting since, we now have an idea where TRON might be headed. A look at the 12-hour chart shows that it is forming a falling wedge.

TRX/BTC 12-hour chart

If our read is correct, TRON might bounce off 0.0000056. This would allow the market to flip the resistance into support. Otherwise, a move below this level will likely send TRON down to 0.0000045.

Steem (STEEM/BTC)

Steem had a strong week as it rallied from near the range low of 0.0000675 on January 14, 2019 to take out the range high of 0.0001 on January 18. The market then flipped the resistance into support on January 20. This is awesome bullish price action.

However, the market looks overextended as the 12-hour RSI is flashing a bearish divergence. This should give you the chance to buy on dips.

STEEM/BTC 12-hour chart

If the market corrects, you can rely on the 200-MA on the 12-hour chart as a possible bounce area. Should the market move below the indicator, it has a support level at 0.0000888.

WAVES (WAVES/BTC)

To say that Waves ended 2018 strong would be an understatement. It grew by over 400% rallying from the low of 0.0002336 on November 21 to as high as 0.001209 on December 19. The market has been pulling back since. However, we are starting to see signs of a possible bounce.

Currently, Waves appears to be finding support at 0.0006842, which is the 61.8% Fibonacci level of our range. Also, the market has printed a double bottom pattern on the shorter time frames. Plus, we can see a bullish divergence on the 12-hour chart.

WAVES/BTC 12-hour chart

A bounce at the 61.8% Fibonacci level might send Waves all the way up to the range high of 0.0009645. Otherwise, it might fall back to the range midpoint of 0.0005979.

Dash (DASH/BTC)

Dash is one of our two bottom picking targets this week. It is currently creating a falling wedge on the 12-hour chart. It appears to be on its final wave down.

DASH/BTC 12-hour chart

If our read is correct, Waves will establish a bottom around 0.016. Put tight stops if you’re planning to go long on the market because there’s no known support below 0.016.

Wanchain (WAN/BTC)

Our second bottom-picking target is Wanchain. Just like Dash, it is forming a falling wedge on the 12-hour chart. It also appears to be on its last leg down.

WAN/BTC 12-hour chart

We expect Wanchain to bottom out at 0.0000775. Use tight stops as well if you’re considering to bottom pick Wanchain. Similar to Dash, WAN/BTC has no known support below 0.0000775.

Bottom Line

While Bitcoin continues to trade sideways, this gives many altcoins the opportunity to pump. TRON, Steem, and Waves have done so and that’s why we’re looking at them this week. On the other hand, Dash and Wanchain appear ready to bottom out. As always, use tight stops when buying on dips.

 

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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3.8 stars on average, based on 311 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.




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Analysis

Brent Crude Continues Rising

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By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets

Brent recovered to the levels it last reached on December 7. Today, on Monday, January 21, 2019, the instrument is trading at $62.77 USD and tending to keep this positive momentum.

Over the last week, there were a lot of different and sometimes even opposite signals, but investors chose the ones more favorable to the bulls and oil prices started moving upwards. The US Department of Energy reported that Crude Oil Inventories declined slightly, but both distillates and gas increased significantly. While the refinery utilization declined, the oil extraction went up to 11.9M bpd (+200K barrels per week), which means that rather high oil prices (in comparison with December) are pretty comfortable for shale producers.

At the same time, numbers from Baker Hughes published last Friday weren’t really impressive. The Oil Rig Count was 852 units as the indicator lost 21 units. In the case of gas, the corresponding indicator lost 4 units. In total, the number of rigs in the USA decreased by 25 units and right now equals to 1,050 units.

Why does the indicator go down? Most likely, oil producers aren’t really sure that oil price movements over the last 5 weeks indicate a trend reversal instead of a long-term correction. As such, they turn patient and watch market developments unravel.

The USD got stronger a bit last week, but its behavior doesn’t seem to worry oil investors too much so far.

To more clearly see what is happening to Brent, one has to look at the daily chart. It can be seen that the candlestick of December 26th, 2018 formed Engulfing pattern and started a new correction to the upside. In addition to that, there was a convergence on MACD, which indicated a possible pullback. The price is getting closer to the retracement of 38.2% at $64.30. The next target is the retracement of 50.0% at $68.55.

The H4 chart shows a stable uptrend. However, it should be noted that after breaking the previous high the price may start a new pullback towards the support level at $61.50. Later, the instrument is expected to form a new rising impulse with the target at $65.60.

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.

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4.6 stars on average, based on 23 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.




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