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Daily Analysis: Central Bank Show Continues as Euro Surges to New Highs

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Thursday Market Recap

Asset Current Value Daily Change
S&P 500 2440 0.08%
DAX 12577 -0.58%
WTI Crude Oil 45.26 1.12%
GOLD 1245.00 -0.45%
Bitcoin 2779 -4.23%
EUR/USD 1.1395 0.17%

The common European currency is the star of the week so far, as the markets are digesting the hawkish turn in the European Central Bank’s rhetoric, while today being also supported by the higher than expected German CPI Index. Currencies and global stock markets are volatile thanks to the series of contradicting speeches, although the general message is that the major central banks are on a tightening schedule, despite the recent downturn in economic indicators. US stocks had a very good session yesterday, and the S&P 500 and the Dow got close their all-time highs, while the NASDAQ also recovered Tuesday’s steep losses.

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EUR/USD 4-Hour Chart Analysis

The Dollar also lost ground against the Canadian Dollar, the Great British Pound, and the Aussie, while rallying compared to the very weak Japanese Yen. The Bank of Japan seems to be the only central bank that is reluctant to tighten monetary conditions, as the country’s economy remains sluggish. Apart from the central banks, the release of the US GDP print was the most awaited event of the day, but growth was in line with expectations, leaving markets unchanged. Gold is under pressure amid the tightening speculation, while oil is gathering strength as geopolitical tensions in the Middle East took a backseat in recent days.

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Cryptocurrencies

Bitcoin and Ethereum ran into resistance after the strong bounce of the past two days, and the broad cryptocurrency rally stalled somewhat near the major resistance levels. Most of the major and smaller coins are also slightly lower today, with only Antshares continuing its healthy advance. Ethereum is still bouncing around the key $300 level, while Litecoin retreated off our previous target near $44 once again, following BTC and ETH lower this morning. The market might turn choppy in the coming period following the strong moves in both directions.

Bitcoin, 4-Hour Chart Analysis

Technical Picture

The Technology benchmark has been very volatile in recent days, as it re-tested last week’s lows before surging back to the key resistance level near 5780. The rising long-term and declining short-term trends might be setting up a price compression pattern, and that could mean a choppy end of the week for the index, with the coming end of the second quarter tomorrow also pointing to a slightly chaotic period ahead, as the big institutional players re-balance their portfolios.

NASDAQ 100 Futures 4-Hour Chart Analysis

Key Economic Releases on Thursday

Time, CET Country Release Actual Expected Previous
10:00 GERMANY Prelim CPI 0.2% -0.2% 4.9%
14:30 US Final GDP 1.4% 1.2% -67.1 bill
14:30 US Initial Jobless Claims 244,000 241,000 -1.3%

 

Key Economic Releases on Friday

Time, CET Country Release Expected Previous
3:00 CHINA Manufacturing PMI 51.0 51.2
3:00 CHINA Services PMI 54.5
8:00 GERMANY Retail Sales 0.3% -0.2%
10:30 UK Current Account -16.5 bill -12.1 bill
10:30 UK Final GDP 0.2% 0.2%
11:00 EUROZONE Flash CPI 1.3% 1.4%
14:30 CANADA GDP 0.2% 0.5%
14:30 US Personal Spending 0.1% 0.4%

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Analysis

Technical Analysis: Litecoin and Ethereum on the Move as Rotation Continues

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The altcoin bull run continued today despite the US Thanksgiving holiday, as trading remained active in the majors, and another important break-out occurred, this time in Ethereum. Litecoin is also strong today, and the coin is testing the key $75 resistance level, as it follows in the track of ETH again. The currency still looks set to hit the next target at $82.50, with the all-time highs below just below the $100 level also in sight. While the long-term momentum is edging towards overbought territory, the coin remains bullish on both time-frames, with strong support still found at $64 and $56.

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LTC/USD, 4-Hour Chart Analysis

Ethereum scored a new record high after moving past $400 for the first time in five months, and considering the lengthy consolidation before the move, more upside is likely for the second largest coin. With the long-term momentum still not being overbought, the token’s price might test the $500 mark in this leg higher, with Fibonacci targets ahead at $475 and $512. Support levels are found below $400 at 4380 and $350.

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ETH/USD, 4-Hour Chart Analysis

Ripple is also attempting another bullish move, while Monero and Dash are consolidating just below their recent highs, while IOTA is in a short-term correction pattern as well. More and more altcoins are now in the latter phases of their rallies, just like Bitcoin, but traders still have opportunities with favorable risk-rewards ratios. Let’ see the short-term charts.

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Analysis

Break-Out: Another Crazy Rally in Ethereum?

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What crazy rally you might ask? Bitcoin is the star, right? Everything was about BTC (and BCH) in the last few months, and lots of traders forget the gains that ETH posted amid the take-off of the ICO Rocket during the spring.

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Comparing ETH and BTC in 2017

By the numbers, out of the two largest coins, 2017 is still the year of Ethereum as the 3600% rise in the token’s price dwarfs Bitcoin’s impressive 630% gain. Could Ethereum be on the verge of another epic surge? Before answering that question, first let’s see what happened with the coin in recent months.

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How Did We Get Here?

ETH/USD, Daily Chart Analysis

Ethereum finally broke above the magical $400 barrier that has kept a lid on the token’s price for five months after the crazy run-up in May. What first followed after that stellar move, was a 70% decline top-to-bottom, with a flush-out panic low in July.

Our trend model turned long-term positive even before the spike lower, but since then, the coin only managed to get close to the all-time highs, while Bitcoin eclipsed the previous star with its dominant performance. Now the tide might be turning, as ETH is finally gathering bullish momentum and today it breached the $400 mark, flirting with a break-out from the giant triangle consolidation pattern.

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Altcoins

Zcash Dip Offers Chance to Buy

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The ZEC/USD pair went into a downtrend for several days after hitting the 435 level in June. It shed more than half of its value before establishing strong support at 140. The market tried to reclaim resistance at 310 twice, but was sent back on both occasions. As a result, we have a massive reversal structure that might skyrocket the pair into a new all-time high.

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The market closed above 310 a couple of days ago on weak volume which is why it’s struggling to stay above that level. Technical indicators show that momentum is weakening, increasing the likelihood of a dip. A slight correction not only gives the market legs for its next move up, but it also offers you a chance to place orders.

They key indicator to watch for is volume. As long as volume remains sluggish, the market will most likely slide down to 280 first and then 262 next. That’s a good zone to accumulate positions. If volume suddenly spikes, at least 230k at Bitfinex, then we have a legitimate breakout that will take the market to 465.

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 Summary of Strategy

Buy: between 280 and 262 OR confirmed breakout with volume of at least 230k at Bitfinex

Support: 280, 262, and 243

Resistance: 310, 352, 400, and 412

Target: 465

Stop: If the market breaches 243

 

Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

 

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