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Daily Analysis: Bitcoin Tops $1800 as Stocks Drift To New Highs

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Tuesday Market Recap

Asset Current Value Daily Change
S&P 500 2398 0.35%
DAX 12758 0.61%
WTI Crude Oil 46.09 0.10%
GOLD 1221.00 -0.84%
Bitcoin 1790 7.45%
EUR/USD 1.0891 -0.36%

 

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Global stock markets are in the green again as European and Japanese stocks are on the rise, with the Yen and the Euro both losing ground to the Dollar. The main US indices are still lagging their international peers, although the slight rebound in Chinese equities helped global sentiment. The mixed performance remains suspicious especially with the major benchmarks still being in overbought territory. Volatility collapsed to a 20-year low on Wall Street following the French election, as traders removed their insurance bets.

The US Dollar is higher against all of its major peers today, although the Great British Pound is also very strong before the Bank of England’s monetary meeting that will be held later on this week. Commodities opened strongly but gave back most of their gains, pushing related currencies lower again. The Australian Dollar is at the lowest level since January while the Canadian Dollar hit a 13-month low this week. The segment is expected to remain under pressure as Chinese fears continue to weigh heavily on commodities.  Gold hit a new short-term low below the $1220 level, as the strong Dollar and the positive sentiment hurts precious metals today.

Bitcoin taking the lead

Cryptocurrencies have been in a broad correction today, apart from Bitcoin, which surged past the $1800 level for yet another record day, as Asian demand continues to boost the currency. Most other majors were down by double digits today, even the previously lagging Dash, Ethereum, and Ethereum Classic. Litecoin fell back to $25 but recovered just below the $30 level, while Ripple is also well shy of its yesterday highs. NEM was down by almost 20%, today while Monero held up well, trading just below the $30 mark.

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Litecoin, 4-Hour Chart Analysis

Technical Picture

The NASDAQ 100 is trading at a new all-time high today, despite the recent underperformance, following the strong rise of the previous weeks, as the European indices are pushing global markets higher. The 5650 level could be in the center of attention in the coming days, with strong support at 5600 and below that near 5475. The next possible resistance level is around 5700, should the rally continue, while the MACD indicator continues to show momentum divergence.

NASDAQ Futures, 4-Hour Chart Analysis

Key Economic Releases on Tuesday

Day Country Release Actual Expected Previous
3:30 AUSTRALIA Retail Sales (monthly) -0.1% 0.3% -0.1%
11:30 AUSTRALIA Annual Budget
14:30 CANADA Building Permits (monthly) -5.8% 0.40% -2.50%
16:00 US JOLTS Job Openings 5.50 mill 5.67 mill 5,74 mill

 

Key Economic Releases on Wednesday

Time, CET Country Release Expected Previous
3:30 CHINA CPI Index 1.10% 0.90%
3:30 CHINA PPI Index 6.8% 7.6%
14:00 EUROZONE ECB President Draghi Speaks
14:30 US Import Prices (monthly) 0.2% -0.2%
16:30 US Crude Oil Inventories -2.0 mill -0.9 mill

 

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Daily Analysis: Volatility Near Record Low 30 Years After Black Monday

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Monday Market Recap

Asset Current Value Daily Change
S&P 500 2555 0.12%
DAX 13003 0.09%
WTI Crude Oil 51.88 0.82%
GOLD 1296.00 -0.61%
Bitcoin 5680 2.95%
EUR/USD 1.1793 -0.25%

Stocks markets in the US are at a standstill near their all-time highs, with the major indices trading in extremely narrow ranges yet again. Volatility, as measured by the VIX, is close to its all-time high, in stark contrast to the average October readings, as this month is the most negative for equities regarding seasonality. In fact, this October is the least volatile ever so far, while this week is the 30th anniversary of the most volatile day ever on Wall Street.

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A Riskless Market?

On Black Monday in 1987, the Dow crashed by more than 23% during one session, as widespread bullishness coupled and novel portfolio techniques lead to a massive wave of selling. Although such one-day moves should be prevented by circuit breaking rules in today’s market, the notion that risk is non-existent in the current environment is as dangerous as it was three decades ago.

VIX, Weekly Chart

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Stocks have been very quiet across the globe today, with only the Nikkei continuing its break-out to two-decade highs yet again. In Europe, British assets were the most active, as the Brexit talks seem to be in quite a big trouble, and that pushed the Pound and the Euro lower compared to the Dollar. The Greenback’s rally put pressure on gold as well, and the Japanese Yen also declined, as safe-haven assets were sold in the calm environment.

Nikkei Index, 4-Hour Chart Analysis

Oil has been very active as the Iraqi army took control of Kirkuk defying the Kurdish resistance, the WTI contract rose as much as 2% before retreating below the $52 per barrel level, and as we speculated during the weekend, the spike is unlikely to cause a structural change in energy markets, and we expect the range trading environment to continue in the crucial commodity.

WTI Crude Oil, 4-Hour Chart Analysis

Cryptocurrencies

Today was a big day for the crypto segment thanks to the Byzantium update of the Ethereum network, and although the hard fork went smoothly, the session ended on a slightly negative note. Ethereum pulled back towards the $330 support/resistance level, while Bitcoin remained stuck near the $5700 level after recovering from Sunday’s dip.

Ripple has been the other major mover of the day as the coin first surged higher and hit the $0.30 resistance just to fall back swiftly below the $0.26 level towards the end of the day. Despite the decline, the currency is still in a clear uptrend, but more volatile moves are expected in its price. Among the smaller coins, Stellar Lumens more than doubled in price after the announcement of a deal with IBM, as blockchain adoption continues in full force, pointing out the sound fundamentals behind the boom in the segment

ETH/USD, 4-Hour Chart Analysis

Key Economic Releases on Monday

Time, CET Country Release Actual Expected Previous
3:30 CHINA CPI 1.6% 1.6% 1.8%
3:30 CHINA PPI 6.9% 6.3% 6.3%
14:30 US Empire Manufacturing Index 30.2 20.3 24.4

Key Economic Releases on Tuesday

Time, CET Country Release Expected Previous
2:30 AUSTRALIA RBA Meeting Minutes
10:30 UK CPI 3.0% 2.9%
11:00 GERMANY ZEW Sentiment 20.3 17.0
12:00 EUROZONE Final CPI 1.5% 1.5%
15:15 US Capacity Utilization Rate 0.4% 0.2%
15:15 US Industrial Production 76.2% 76.1%

Featured image from Shutterstock

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Technical Analysis: Ripple Breaks Out Amid Ethereum Upgrade

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The major cryptocurrencies are on the rise once again today, with Ethereum’s major Byzantium update being in the center of attention. The second largest blockchain network has been updated through a hard fork, as usual, and the successful lock-in led to an initial surge in the price of the ETH token. The digital currency recovered above the $330 level after Sunday’s pull-back, but so far it failed to durably break-out above the prior swing high just above $340.

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With the long-term momentum readings still being neutral, the coin could be on the verge of testing the $380 resistance soon, with the all-time high near $400 being the last major technical obstacle. Below $330 further support is found at $300 and $285.

ETH/USD, Daily Chart Analysis

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Bitcoin is also on the rise after dipping below $5500 during the weekend, and the most valuable coin is joined in the rally by Ripple, which most likely finished its short-term correction and could be ready for another leg higher. The other majors are also generally higher, with NEO and IOTA being ahead of the pack, while the rest of the market trading near unchanged. As the broad rally seems to be well and alive, let’s see how the short-term charts are shaping up.

(more…)

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Analysis

5 Things to Watch Next Week: Byzantium, Bitcoin Stretched, Gold’s Strength, The Next Fed Chair, Kirkuk and Crude Oil

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1.            Ethereum’s Byzantium Upgrade is Here

In only a few hours time the second largest blockchain network will go through one of its biggest upgrades yet, when the block 4,370,000 is hit sometime around 6:00 UTC on Monday. The large Byzantium upgrade, the first part of Metropolis, seems to be in for a smooth start, but the coin is headed into the much-awaited event with mixed price action. The digital currency first hit a 5-week high above $340 on Saturday, thanks to the positive prospects of the fork, but it pulled back today to trade back below the crucial $330 support/resistance line.

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Should the hard-fork upgrade go as planned, the price of the token might follow the path of Bitcoin after the Bitcoin Cash fork, and approach all-time highs in the coming weeks. In any case, volatility should increase significantly tomorrow, so short-term traders should be controlling position sizes even more than usual.

ETH, Daily Chart Analysis

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2.           Bitcoin Overbought but Will that Matter?

The most valuable coin had a great run, gaining almost 100% since the latest deep correction. The digital currency was the definite leader of the segment, storming past the historic $5000 price level and the previous all-time high, while altcoins lagged behind. With Ethererum and Litecoin gathering strength and Monero also showing signs of activity, another round of “rotation” might be happening in crypto world.

Low correlations are the hallmarks of bull markets, and a healthy correction in BTC would be a welcome development for bulls. That said, with the great fundamental background the coin might be in for another mind-blowing surge, so keeping some chips on the table is a good idea, without forgetting the rising correction risk, of course.

BTC, 4-Hour Chart Analysis

3.           Gold Defying Gravity

The precious metal is after an orderly correction that followed the much-awaited beak-out above the long-standing resistance at $1300. Gold spiked below the $1275 level before turning north again, and with the short-term environment for the metal being mixed at best, its performance is encouraging for bulls.

As we expect the headwinds to change in the coming months, gold might be ready to take the next step in the developing bullish trend and even reach the zone between $1375 and $1400 in a matter of weeks.  With equities still looking stretched a risk-off turn in financial markets could supply the fuel for such a move.

Gold, 4-Hour Chart Analysis

4.           Yellen or Somebody New Will Lead the Fed?

The first (?) term of Janet Yellen is ending soon, and the speculation regarding the Fed Chair is getting heated. The stakes are high, and the POTUS, as usual, has been very vague about his nomination plans. For now, Mrs. Yellen’s chances for a second term are slim, but she might turn out to be the safe bet for the sensitive position. Kevin Warsh has been the favorite for quite a while, but the hawkish candidate has lost ground to Jerome Powell lately after Trump met all the major contenders for the post.

We all know that Yellen is uber-dove when it comes to monetary policy, and both of the major candidates (Warsh is a prior while Powell is a current Fed governor) would likely be stricter with regards to interest rates and balance sheet decisions. That said, Warsh is considered to be the more hawkish of the two, and the Dollar and Treasury yields would likely rally on his nomination, with an even stornger reaction to the newly emerged name of John Taylor.

The timing of the decision is a bit shaky, as the President indicated mid-October, but even a few more weeks could pass before the real thing, so investors should be on alert for volatility spikes in bonds and currencies in the coming period.

The prediction market of the next Fed Chair as of October 15, Predictit.org

5.           The Kurdish-Iraqi Standoff Reaching the Next Phase?

Following the somewhat tricky Kurdish independence vote, which was most likely a slight bluff from the Pesmerga leadership, the Iraqi army started to assemble forces near the strategic city of Kirkuk. The territory is known for one of the largest oil reserves of the world, and as such it’s not a surprise that Iraq wants to control it, although they miserably failed against ISIS to do so. With only a few kilometers between the opposing forces, a conflict is not out of the question, although there is still chance for a peaceful solution.

The outcome could be vital for the future of the autonomous region, as Iran and Turkey are also against an independent state, and with the threat of ISIS declining the US might also back away from the Kurds. Oil could pop higher in the case of an escalation, but with the fundamental picture being mixed at best, we wouldn’t bet on a structural change in the energy market.

Key Economic Releases Next Week

Day Country Release Expected Previous
Monday CHINA CPI 1.6% 1.8%
Monday CHINA PPI 6.3% 6.3%
Monday US Empire Manufacturing Index 20.3 24.4
Tuesday AUSTRALIA RBA Meeting Minutes
Tuesday UK CPI 3.0% 2.9%
Tuesday GERMANY ZEW Sentiment 20.3 17.0
Tuesday EUROZONE Final CPI 1.5% 1.5%
Tuesday US Capacity Utilization Rate 0.4% 0.2%
Tuesday US Industrial Production 76.2% 76.1%
Wednesday EUROZONE Mario Draghi Speaks
Wednesday UK Average Earnings 2.1% 2.1%
Wednesday UK Claimant Count 3,200 -2,800
Wednesday UK Unemployment Rate 4.3% 4.3%
Wednesday CANADA Manufacturing Sales -2.6%
Wednesday US Building Permits 1.25 mill 1.27 mill
Wednesday US Housing Starts 1.18 mill 1.18 mill
Wednesday US Crude Oil Inventories -2.7 bill
Thursday AUSTRALIA Employment Change 15,200 54,200
Thursday AUSTRALIA Unemployment Rate 5.6% 5.6%
Thursday CHINA GDP 6.8% 6.9%
Thursday CHINA Industrial Production 6.4% 6.0%
Thursday UK Retail Sales -0.1% 1.0%
Thursday US Unemployment Claims 245,000 243,000
Thursday US Phill Fed Index 22.2 23.8
Friday CANADA CPI 0.1%
Friday CANADA Core Retail Sales 0.2%
Friday US Existing Home Sales 5.32 mill 5.35 mill

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