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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.

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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.

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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.

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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

Daily Analysis: No Questions Answered

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Thursday Market Recap

Asset Current Value Daily Change
S&P 500 2718 0.97%
DAX 12,468 0.31%
WTI Crude Oil 62.61 2.02%
GOLD 1332.00 0.52%
Bitcoin 9780 -8.00%
EUR/USD 1.2324 0.26%

It was a strange day indeed in equity markets, with mixed signals popping up across the board after yesterday’s crazy quasi-FED day. An ugly overnight session, followed by a strong pre-market rally, an early-day pump, and a late-day dump. That is the summary of the day, but under the surface, there is a real struggle between market forces, with still an edge for bears in the battle for control.

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NASDAQ 100 Futures, 4-Hour Chart Analysis

It seems that the Nasdaq is still the key, as the relative strength of the tech benchmark is the most reliable gauge of the market direction, at least regarding the intraday trends. That said, at the end of the day, the Nasdaq closed in the red 4 times in a row, at least as far as the normal trading day is concerned, and still, the major indices are trading not far off last Friday’s top, despite the downward drift.

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Forex Markets and Commodities

Adding to the confusion, the Dollar corrected lower after a positive period, and with Treasury yields trading all over the place, investors were left scratching their heads yet again. The Japanese Yen was the clear winner of the day among currencies, as the primary safe-haven got bid heavily during the Asian session, and it remained throughout the up-and-downs of the day, despite the strong bounce in stocks and risk-on currencies.

USD/JPY, 4-Hour Chart Analysis

The EUR/USD pair had a very active and volatile session, but the common currency remained above the lows from two weeks ago, while also halting below yesterday’s highs, so all-in-all, no technical conclusion to draw. As in stocks, the next clear directional day will be crucial, as the tug of war is getting tenser and tenser.

EUR/USD, 4-Hour Chart Analysis

The Canadian Dollar plummeted during the day, thanks to the dismal Retail Sales figures, but it finished well off its lows, boosted by the stock recovery and the jump in the price of crude oil. The Black Gold was pushed higher by the surprisingly bullish US inventory data, and the WTI contract closed back above $62.50 per barrel.

USD/CAD, 4-Hour Chart Analysis

Gold continued to follow the Euro, finishing the day slightly higher, but the precious metal showed notable relative strength during the Asian session, and that could be the precursor of a move to new rally highs, should the bearish scenario play out in equities.

Cryptocurrencies

The segment had another bearish session, and the bleeding continued after the US session, with BTC leading the way lower this time around after a long period of relative strength. A crucial test might be ahead of the most valuable coin, as the $9000-$9200 support zone would be a perfect target for the current correction, to keep the uptrend going. That said, that zone is still almost 50% above the prior low, leaving plenty of room for the coin to bottom out.

BTC/USDT, 4-Hour Chart Analysis

With all of the major altcoins also sporting significant losses, bulls would like to see more of the early relative strength that some coins have been showing, to establish a leadership that can guide the segment out of the plunge. For now, the crash lows are way below the current levels, and the bullish long-term scenario remains intact.

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Analysis

Technical Analysis: Correction Continues but Coins Remain Stable

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It’s been another mixed session for cryptocurrency investors as judging by only the price action, the segment suffered losses across the board, but comparing the current sell-off to the January plunge reveals that the majors are much more resilient this time around.

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The largest digital currencies are holding on to most of the gains of the recent weeks, and the price action near the crucial support zones is also encouraging. With all that said, the correction is not over yet, and further losses are still in the cards, but barring a substantial change in price action, the coins will likely continue the rally.

BTC/USD, 4-Hour Chart Analysis

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Bitcoin has been trading around the key $10,000 level all day long, and, so far, a clear break-down has been averted. The short-term momentum indicators are now in neutral territory regarding the most valuable coin, and that could mean that a bottom is close, and investors should already add to their holdings here. Further strong support is found between $9000 and $9200, while targets are ahead at $11,300, $13,000, and $14,250.

XMR/USDT, 4-Hour Chart Analysis

Correlation between the majors has increased during the sell-off, but there are still clear outperformers and laggards, adding to the bullish case. Monero remains among the strongest coins from a technical perspective, trading right at the lower boundary of the bullish consolidation pattern, with the $280 price level holding up for now. The coin faces strong resistance near $300 and $335, but we expect the uptrend to continue with the next target being ahead at $400, while further support is found at $240.

(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: Bulls Try to Fight Back after Ugly Overnight Session

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Following the steep late-day downturn on Wednesday, which followed the not-to-hawkish FED meeting minutes, Asian markets and US equity futures continued lower with a vengeance. The very active overnight trading is another sign of the regime change in traditional financial markets that we have been monitoring for the last two weeks, ever since the “Black Monday of 2018”.

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Dow Futures, 4-Hour Chart Analysis

EUR/USD Changing Behavior

The European session brought about an oversold bounce that stabilized markets from stocks to currencies. The EUR/USD pair that has started acting “normally” considering its relationship with US Treasury yields lately, is headed south once again, trading only 0.5% above its recent correction lows after clearly breaking below the rising trendline.

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EUR/USD, 4-Hour Chart Analysis

The bull-trap that we identified a few days ago was the start of the current leg lower, and if the regime change will be persistent, the most traded forex pair could be back to the role of the “risk-on/risk-off” indicator that has been the privilege of commodity currencies in the last couple of weeks.

USD/JPY, 4-Hour Chart Analysis

The Japanese Yen is showing notable strength after its overbought dip, and the primary safe-haven currency could be in for more gains, should the risk-selloff continue. The Yen also gained ground on the common European currency, following the dovish ECB meeting accounts and the misses in the German IFO business climate indicator and the British GDP, which all question the European growth-monetary tightening narrative.

Canadian Dollar in for a Wild Ride

USD/CAD, 4-Hour Chart Analysis

With the Canadian retail sales report and the US crude oil inventory data coming out soon, forex traders should expect sizeable moves in the recently weak currency, while the USD should also be very active during the US stock market session.

All eyes are on Treasury yields again, with the slight correction today helping the bounce in stocks and other risk assets. The Nasdaq could be the motor of a stronger rally on Wall Street, but we wouldn’t bet the house on that, as the short-term technical setup remains bearish, and a re-test of the correction lows is still the most likely scenario for 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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