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Daily Analysis: Cryptocurrencies Advance as Brexit Officially Begins

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Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2353 0.21%
DAX 12202 0.41%
WTI Crude Oil 48.62 0.48%
GOLD 1253.50 -0.27%
Bitcoin 1044.30 0.30%
EUR/USD 1.0751 -0.58%

 

The Euro is in the center of attention today so far, as the common currency is losing ground against the majors, while stock markets are relatively stable. US stocks led a surge yesterday afternoon that carried the most important benchmarks almost 1% higher. The global indices are off their weekly highs today, but the DAX and the EuroStoxx 50 both registered all-time highs in early trading, as European equities remain relatively strong compared their US counterparts. The UK formally triggered the exit process from the EU this morning, as it was widely expected, and the Pound is well off its recent highs amid the nervous sentiment.

Oil continues to trade in a choppy consolidation, just above the prior lows, despite the rebound in the US dollar that usually hurts the commodity. The USD is trading around 1.0750 against the Euro, and the reserve currency is also gaining ground against the Pound and the Japanese Yen since the blowout CB consumer confidence reading. Rate hike odds are edging higher, although they are still lower than the pre-Fed levels two weeks ago, as FOMC member Evans reiterated that the central bank should raise interest rates one or two more times this year.

Cryptocurrencies benefited from the weakness in the Euro and the Pound, despite the volatile overnight session of Bitcoin. BTC traded close to the 1000 level earlier on, but it’s now back at 1050 after a steady recovery. Ethereum is hovering around 52 following yesterday’s quiet trading, and traders should expect fireworks if the launches a rally towards the 55 level again. Dash, Ripple, and Monero are also trading higher with Litecoin once again being the most stable of the majors.

Technical Picture

 

S&P 500 Index, Hourly Chart 

The S&P 500 shot higher and breached the upper boundary of the declining short-term channel yesterday afternoon, and it’s now trading close to the crucial resistance zone around 2355-2360. If the index manages to stay above that zone, new all-time highs will once again be in the cards, following in the footsteps of the European benchmarks. That said, the short-term setup is still somewhat bearish, and today’s session could be crucial for the market.

Key Economic Releases on Wednesday

Time, CET Country Release Actual Expected Previous
16:00 US Pending Home Sales (monthly) 5.50% 2.30% -2.80%
16:30 US Crude Oil Inventories 0.9 million 1.2 million 5.0 million

 

Pending home sales posted a strong monthly gain, despite the rising rate environment in the US that has been a huge drag on the US real estate market following the lengthy period of excessively low mortgage rates. The surprisingly good number might help the dollar and US homebuilders this week. Crude oil inventories are still on the rise, as output is steadily growing and demand remains weak.

Key Economic Releases on Thursday

Time, CET Country Release Expected Previous
10:00 GERMANY Prelim CPI 0.40% 0.60%
14:30 US Final GDP 2.00% 1.90%
14:30 US Initial Jobless Claims (weekly) 244,000 261,000
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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Altcoins

Ethereum Price Analysis: ETH/USD Bearish Flag Structure Eyed

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  • Ethereum price has stabilized but is moving within a dangerous range-block formation.
  • ETH/USD via the daily chart view is forming a bearish flag pattern.

ETH/USD price action has stabilized over the past five days, and is moving within a narrowing range. This movement appears to be somewhat expressing potential downside risks after the selling pressure seen in the second week of January. As a recap, the price was supported in its move north from mid-December 2018 up to 7th January. An ascending trend line was proving necessary comfort in this trend higher, however markets bears managed to force a breach. The support gave way, opening the door to a fresh wave of selling from 8th January.

ETH/USD daily chart.

Around 30% of the bull run that was seen in the above-mentioned period has been reversed. Vulnerabilities continue to linger, as ETH/USD trades around key daily support. The level to be aware of is $116.70, which is vital ahead of the big psychological $100 mark. A breach could see a test of daily support at $102, with the price likely to consolidate between here and $116. Given prior behavior around these areas, ETH/USD may be forced to retest the December 2018 low, $83.10. This would likely be the case, should a return of bullish momentum not see a pickup in pace soon.

Constantinople Hard Fork Delay

The stability in price is surprising given the let down for the community with regards to the heavily anticipated Constantinople hard fork. As reported by the CCN team, Ethereum’s core developers called for the Constantinople upgrade to be delayed. This was just some hours before the hard fork was scheduled to go live on the network. ETH/USD fell double-digits on the back of this being postponed. A drop of 10% was observed.

Technical Review – ETH/USD

Looking via the daily chart view, price action is forming a bearish flag pattern structure – the pole which is seen with the fall from 7-10th January. In terms of the actual flag, this is the current range-block viewed. Upside resistance can be seen just ahead at $135, and lower support noted the mentioned $116.70 area. The next major areas of support are the $102 daily pivot point, the December 2018 low of $83.10, and then lastly, the May 2017 low of $65.85.

Disclaimer: The author 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.

 

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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4.6 stars on average, based on 107 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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Analysis

Crypto Update: Sideways Drift Continues but Sellers Still in Control

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While the bounce on Monday gave some hope to crypto bulls that last week’s plunge was just a correction in an ongoing broader counter-trend move, so far, we haven’t seen meaningful follow-through. That means that the bearish short- and long-term trends are still dominant in the segment and sellers are clearly in control of every major top coin.

Also, while volatility is relatively low, correlations are still elevated, and volume patterns are bearish as well, so our trend model remains on sell signals with regards to the overwhelming majority of coin on all time-frames. Traders and investors are still advised to stay away from entering new positions, as we have no evidence the bear market is over, and at least the test of the lows is likely in the coming months.

That said, a quick recovery above the primary resistance levels would be a positive sign here, but until we see signs of technical strength, the defensive approach is warranted as bearish risks remain very high here.

BTC/USD, 4-Hour Chart Analysis

Bitcoin’s relative stability is still the only positive sign among the top coins, but BTC also lacks bullish momentum and it failed to leave the close vicinity of the key $3600 support level. The $3850 resistance is out of reach, for now, and given the clearly bearish long-term setup, traders and investors shouldn’t enter positions here.

A move above that level would be a positive sign for bulls, with further zones between $4000 and $4050, and near $4450, but we still expect a move towards the support levels near $3250 and $3000 in the coming weeks, even if a broader bottoming process might already be underway.

ETH/USD, 4-Hour Chart Analysis

While Ethereum spiked higher again towards the $130 resistance level today, the move failed again and bulls failed to make technical progress, with the recent low still being in danger. A sustained push above $130 could still signal a failed break-down pattern, but the lack of bullish momentum points to a continuation of the decline.  Key support is found near $120 and between $95 and $100, while further resistance is ahead at $145, $160, and near $180.

Altcoins Unchanged and Bearish After Choppy Day

LTC/USD, 4-Hour Chart Analysis

The volatility compression continued in all of the major altcoins as well, but the broad selling pressure is still apparent in the segment. Litecoin failed to get close to the primary resistance zone near $34.50 despite the early-week rally attempt, and it continues to threaten with a move below the key $30-$30.50 support zone.

A breach of support would likely trigger a move towards the $26 level, with the oversold short-term momentum readings now being cleared in the market of LTC. Further strong resistance is ahead near $38 and $44 and with support found near $23, and traders and investors still shouldn’t enter positions here.

XRP/USDT, 4-Hour Chart Analysis

Ripple has been showing signs of relative weakness again today, after the brief period of stability and the technical picture continues to be negative on all time-frames, and our trend model is also on short- and long-term sell signals. The $0.32 price level is still in focus, and we still expect a move below $0.30, with strong support found near the $0.26 level, with resistance ahead near $0.3550 and $0.3750.

DASH/USD, 4-Hour Chart Analysis

Dash remained among the relatively weaker majors as well, and it still hovering around the $70 price level after bottoming out close to $67.50. A test of the bear market low near $56 seems very likely in the coming weeks, and only a move above the strong resistance zone between $76.50 and $80 would change the short-term outlook for the coin.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

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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4.7 stars on average, based on 443 rated postsTrader 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.




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Analysis

Crypto Update: Zilliqa a Good Buy on Dips

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Zilliqa (ZIL/BTC) has been on our radar ever since it revisited a price level of 0.0000039 on November 20, 2018. At that point, we were curious whether the market would respect its previous low or breach the support and print a new 2018 low. We got a little bit of both and that’s the stuff that makes crypto very exciting.

While Zilliqa printed a new 2018 low of 0.00000347 on November 25, bulls managed to lift the market back above 0.0000039 on November 27 with heavy volume. This fakeout gave this coin a new lease in life and the market is not taking the opportunity for granted. In this article, we reveal why Zilliqa presents a good buy on dip opportunity.

Solid Base at Parabolic Support

Zilliqa bottoming out and accumulating around 0.0000039 is no coincidence. This is the level where the market rejected lower prices in March 2018. Zilliqa’s ability to stay above 0.0000039 back then sparked a parabolic run that saw the market climb as high as 0.00002508 on May 10. Thus, it is not surprising for the market to return to its low level and start a new market cycle.

To build its base, Zilliqa spent 154 days range trading between 0.0000039 and 0.000006. That’s over five months dedicated to accumulation. We’ve seen many altcoins with significantly shorter accumulation periods launch massive bull runs.

Daily chart of ZIL/BTC

With a solid base in place, you can be fairly certain that market participants will buy the dips. Like you, they also likely know that the market spent a lot of time base-building. Therefore, they’ll take advantage of any opportunity to get in cheap before the market launches its bull run.

Breakout from Consolidation

After five months of base-building, the market appears ready to break out from a double bottom pattern. It made a strong push yesterday, January 15, 2019, to take out our range high of 0.000006. The move up was supported by above-average volume. So far today, the market has managed to stay above 0.000006.

ZIL/BTC Double bottom breakout

This price action tells us that Zilliqa is raring to launch a bull run. This type of bullish momentum is rare in crypto nowadays. With so many suffering from heavy losses in this bear market, a lot of people are eager to ride on markets that are showing bullish potential. As Zilliqa continues to show strength, participants will likely buy on dips in the hope of either growing their capital or recouping losses.  

Key Levels to Watch

If you’re looking to place a long position in Zilliqa, we believe that one of these two scenarios can play out.

The first scenario shows the market pumping in the next few days. The pump might send the market to as high as 0.00000685 where Zilliqa will likely face heavy resistance from bears. If bulls succumb, Zilliqa might retest 0.000006 before resuming its uptrend.

ZIL/BTC Scenario 1

The other scenario involves an immediate throwback as Zilliqa succumbs to profit taking. We can see it retesting support of 0.00000575. If Zilliqa respects the support, the market would print a bullish higher low setup. This will likely send the market to greater heights.

ZIL/BTC Scenario 2

Bottom Line

With an extensive base and a recent breakout from consolidation, Zilliqa is a good buy on dips. It appears that the market now belongs to a small group of alts that show bullish potential. This makes Zilliqa attractive to investors who are looking to grow their capital or recoup their losses.

Featured image courtesy of Shutterstock.

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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3.8 stars on average, based on 309 rated postsKiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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