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Daily Analysis: Crypto-Volatility and Stocks on New Highs

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Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2640 0.83%
DAX 13023 -0.25%
WTI Crude Oil 57.37 -0.52%
GOLD 1275.00 -0.61%
Bitcoin 10,223 0.59%
EUR/USD 1.1904 0.32%

Financial markets had another historic today, as the Dow, the Nasdaq, and the S&P 500 hit new record highs while the cryptocurrency market experienced the highest two-day trading activity ever. Equity investors had a lot to thank to Sen. John McCain today, as one of the most important Republicans now seems ready to strike a tax deal, and that boosted the already stretched stock market yet again. Prediction markets now put the odds of an agreement on the crucial plan above 80% until the end of the year.

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The Dow Above 24,000, 4-Hour Chart Analysis

The risk-on rally that was triggered by Yellen’s dovish words on Wednesday continued in earnest in currencies as well, with the Pound adding to its recent lofty gains, while the Yen losing significant ground. The Eurozone is still lagging the US markets, with the DAX and the EuroStoxx 50 index both being well off their recent highs, and the latter not going anywhere ever since the May break-out.

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That said, the “everything bubble” is well and alive, with all the major uptrends still being intact, investors buying ETFs without discretion regarding valuations, and central banks fighting wars with weapons of financial mass destruction. Gold is still quietly gathering strength despite the positive sentiment, and the positive divergence in the safe haven asset is one of the only cautionary signs.

Gold in accumulation despite the spikes lower, 4-Hour Chart Analysis

Cryptocurrencies

Bitcoin continued to make headlines all over the mainstream media amid the strongest focus on the cryptocurrency so far. The most valuable coin fell to new correction lows, for an almost 20% correction top-to-bottom already, before bouncing back hard to trade near the historic $10,000 mark yet again. Altcoins mostly followed BTC’s lead, experiencing double-digit losses and wild swings throughout the session.

BTC/USD, 4-Hour Chart Analysis

Dash has performed exceptionally well, pushing to a new marginal high despite the volatile conditions and the broad correction. Besides Dash, all of the more established coins fell substantially, with Litecoin testing the $75 level, Ethereum almost spiking down to $400, Monero pulling back to $150, and ETC nearing the $20 level in the process.

As the short-term charts got slightly oversold already, a meaningful bounce, or even a test of the prior highs is possible, but we expect the overbought long-term momentum to weigh heavily on the segment, as the euphoric rally should lead to a deep correction to reset the bullish sentiment.

ETC/USD, 4-Hour Chart Analysis

Key Economic Releases on Thursday

Time, CET Country Release Actual Expected Previous
3:00 CHINA Manufactruing PMI 51.8 51.5 51.6
3:00 CHINA Non-Manufactruing PMI 54.8 54.3
9:00 GERMANY Retail Sales -1.2% 0.3% 0.5%
12:00 EUROZONE CPI Estimate 1.5% 1.6% 1.4%
15:30 US Unemployment Claims 238,000 241,000 240,000
15:30 US Personal Spending 0.3% 0.2% 0.9%

Key Economic Releases on Friday

Time, CET Country Release Expected Previous
11:30 UK Manufactruing PMI 56.6 56.3
15:30 CANADA Employment Change 10,200 35,300
15:30 CANADA GDP 0.1% -0.1%
15:30 CANADA Unemployment Rate 6.2% 6.3%
17:00 US ISM Manufacturing PMI 58.4 58.7
14:30 US Personal Spending 0.3% 0.2%

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Analysis

Cryptocurrency Analysis: Ripple Continues Rampage as Litecoin and Ethereum Enter Correction

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Ripple remained in the center of attention in the segment after breaking out to a new all-time high yesterday, and the coin almost doubled in value, climbing above the $0.80 level. The currency concluded a 6-month long consolidation pattern with the move after being the only major on a long-term buy signal in our trend model.

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XRP gave a short-term sell signal today, while turning neutral regarding the long-term setup. Investors now shouldn’t add to their positions, although further gains are still possible, and reducing holdings somewhat is a good idea here. Major support is still found at the prior high near $0.4250 and in the $0.30-$0.32 range.

XRP/USDT, 4-Hour Chart Analysis

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While Bitcoin stagnated, and Bitcoin Cash jumped, Ethereum, Litecoin, Dash, and IOTA has been drifting slightly lower, although the recent gains are still mostly intact, and the basic setup in the segment is unchanged.

Litecoin fell below the $300 level after yesterday’s consolidation, and the coin faced strong selling pressure in the latter half of the session. The currency remains extremely stretched regarding the long-term momentum indicators, and although the short-term uptrend is still intact, a deeper correction is likely in the coming weeks, with key support levels found at $125 and $100, and weaker levels at $260 and $170.

LTC/USD, 4-Hour Chart Analysis

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Analysis

Daily Analysis: Dollar Falls, Gold Jumps after Yellen’s Final Move

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Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2668 -0.02%
DAX 13125 -0.45%
WTI Crude Oil 56.65 -0.68%
GOLD 1258.00 1.35%
Bitcoin 16,100 -6.32%
EUR/USD 1.1842 0.73%

The Federal Reserve hiked interest rates as expected today, and although the central bank’s monetary statement was slightly more hawkish than expected, the market’s reaction didn’t reflect the much-anticipated move. The worse than expected Core CPI reading that underlined the low-inflation narrative weighed on the recently strong Greenback, while stocks were unchanged after decision and bonds gained ground as yields retreated.

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EUR/USD, 4-Hour Chart Analysis

The major indices are hovering near their all-time highs with the DOW leading the way higher, hitting a new record for the second day in a row. While volatility Is expected to remain low as we approach the end of the year, market internals and valuation levels are still concerning from a long-term perspective, and stocks outside the US are also negatively diverging. The action in crude oil could be slightly more interesting as the commodity is starting to act in a slightly bearish manner after a grinding multi-month rally.

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WTI Crude Oil, 4-Hour Chart Analysis

The Brexit process is still in the center of attention in Europe, although volatility took a nosedive on the old continent as well, and it’s unlikely that the Christmas period will be much different, given the predictable drop in volumes and trading activity. The date of the next election in the financially and politically troubled Italy has been set to March 4th next year, and the early date caused some turmoil in the countries assets, which dragged the Euro Stoxx 50 lower today, together with the DAX and the other major indices.

Cryptocurrencies

As the total market cap of the crypto-market crossed the incredible $500 billion mark, Ripple, NEO, and Ethereum made headlines with lofty gains in the face of the severely overbought readings elsewhere in the segment. While XRP and NEO are still not overbought from an investment perspective, Ethereum reached our final target for its break-out and triggered a long-term sell signal.

ETH/USD, 4-Hour Chart Analysis

The previously surging IOTA continued its correction, Litecoin consolidated in a relatively narrow range, while Dash, ETC, and Monero scored marginal new highs before turning lower together with BTC. The most valuable coin that has lost some of its momentum “mojo” in recent days fell back below last week’s highs, and that could mark a failed break-out and a start of the deeper correction that seems more and more likely.

BTC/USD, 4-Hour Chart Analysis

Key Economic Releases on Wednesday

Time, CET Country Release Actual Expected Previous
11:30 UK Average Earnings 2.5% 2.5% 2.3%
11:30 UK Claimant Count Change 5,900 3,300 6,500
11:30 UK Unemployment Rate 4.3% 4.2% 4.35
15:30 US Core CPI 0.1% 0.2% 0.2%
15:30 US Crude Oil Inventories -5.1 mill -3.6 mill -5.6 mill
21:00 US Fed Rate Decision 1.5% 1.5% 1.25%
21:00 US FOMC Statement

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Analysis

Technical Analysis: Volatility on the Rise Again, as Ripple and Ethereum Hit Targets

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Ripple has been the star of today’s session in the cryptocurrency segment, as the only major coin on a long-term buy signal in our trend model continued yesterday’s break-out, and surged to a new all-time high. The currency cleared the $0.425 level that marked the top in May, and after the more than 6-month long consolidation phase, it promptly neared the $0.50 level.

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While the short-term momentum indicators are now stretched, the coin is still in an encouraging long-term setup, although the best period to buy already passed. The coin could be dragged lower in the case of the expected broad correction in the segment, but we expect XRP to outperform in the coming period, with support levels found at the prior high and below that in the range between $0.30-$0.32.

XRP/USDT, 4-Hour Chart Analysis

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Ethereum has been the other top coin on the rise, as the second largest digital currency surged past the final range projection target of the break-out two weeks ago at $685 in the aftermath of the launch of the BTC futures on Monday. The ETH token is now also on a sell signal on all time-frames, and we advise investors and investors to wait for the next major correction to establish new positions. Support levels are now found at $575, $500, $480, and $400.

ETH/USD, 4-Hour Chart Analysis

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