Daily Analysis: Crypto-Rally Still in Focus as Stock Markets Remain in Limbo

Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2441 -0.45%
DAX 12174 -0.45%
WTI Crude Oil 48.45 1.32%
GOLD 1294.00 0.31%
Bitcoin 4181 3.79%
EUR/USD 1.1812 0.43%

The broad rally in cryptocurrencies stole the show today, as financial markets remained hesitant before the much-awaited Jackson Hole FED-symposium. With trading volumes still being very low across the board, the relatively busy currency markets dominated the session. The much worse than expected US New Home Sales number put some pressure on equities and the Dollar, while the European PMI reports came in mixed. With the Fed’s annual meeting starting tomorrow, we expect volatility and volumes to pick up during the last two days of the week, with a strong focus on the Dollar and US Treasuries.

NASDAQ, 4-Hour Chart Analysis

The major indices are trading slightly lower after the two day rebound, but they remain well off their correction lows, despite the still apparent internal weakness. European stocks are down again, as the Euro gained ground once again on the Greenback, as Dollar was pushed lower by the chatter regarding a possible government shutdown in the US. The Great British Pound also continued its bearish run, as evidence is mounting that the Brexit process is already affecting growth. Oil and gold are both up, as the precious metal continues its bullish consolidation below $1300, looking ready to finally exit its long-standing trading range. Oil is helped by the slightly bullish US inventories data, but it remains inside a declining short-term trend and below the key $48.50 level.

Gold, 4-Hour Chart Analysis

Cryptocurrencies

All the major coins are up today, as the rebound in Bitcoin and the break-out of Ripple pulled the market higher, and he all-time high in total market capitalization also improved sentiment. BTC is back at the $4200 level, although the overbought long-term readings should still be alarming for investors here. The prior movers are holding their ground well, with Dash still hovering around $300, and Monero touching $100 for a new high in early trading before turning south. NEO ended its short-term correction with a bang, as the up-and-coming coin shot up by 20%, exiting its downtrend. As the cryptocurrency segment is worth more than $150 billion now (a staggering 200% jump off the correction lows) it seems that institutional adaption is back on track after the feared BTC fork.

XRP/USDT, 4-Hour Chart Analysis

Technical Picture

The most traded currency pair remains in a clear uptrend after the recent correction. The MACD indicator is back on a short-term buy signal after the bottom that formed just below 1.17. The pair might be ready to test the 1.20 level, but volatility is expected to rise significantly in the back end of the week as the Fed’s symposium starts. A clear break below 1.1675 could trigger a deeper correction, as the rising trendline converges with a strong support/resistance zone in the coming days there. The 1.1850 and 1.19 levels are ahead as short-term resistance.

EUR/USD, 4-Hour Chart Analysis

Key Economic Releases on Wednesday

Time, CET Country Release Actual Expected Previous
9:00 EUROZONE ECB President Draghi Speaks
9:30 GERMANY Manufacturing PMI 57.8 57.8 58.1
9:30 GERMANY Services PMI 53.3 53.3 53.1
10:00 EUROZONE Services PMI 54.9 55.4 55.4
10:00 EUROZONE Manufacturing PMI 57.4 56.3 56.6
16:00 US New Home Sales 571,000 615,000 610,000
16:30 US Crude Oil Inventories -3.3 mill -3.3 mill -8.9 mill

Key Economic Releases on Thursday

Time, CET Country Release Expected Previous
10:30 UK Second Estimate GDP 0.3% 0.3%
10:30 UK Business Investmets 0.2% 0.6%
14:30 US Unemployment Claims 237,000 232,000
14:30 US Existing Home Sales 5.55 mill 5.52 mill
All Day US Jakson Hole Symposium

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Author:
Trader 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.