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Daily Analysis: Dollar Falls, Gold Jumps on Dismal Data before the FED

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Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2436 -0.15%
DAX 12835 +0.44%
WTI Crude Oil 44.76 -3.72%
GOLD 1279.00 0.81%
Bitcoin 2630 -3.56%
EUR/USD 1.1277 0.60%

The usual pre-Fed trading fell apart today as the much worse than expected US CPI and Retail Sales reports caused turmoil before tonight’s important announcements. While a rate hike is still more than likely today, the continued deterioration of the consumer-related indicators could push the central banks towards a more cautious outlook. The Dollar got hit hard after the releases, while the shooting Virginia also triggered safe-haven buying in early trading. The Japanese Yen and gold were heavily bought, with the Japanese currency rising to a two-month high against the Greenback.

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Gold, 4-Hour Chart Analysis

The Euro also gained ground on the Dollar, while the Great British Pound rallied has been weak after yesterday’s jump. Wage growth was dismal in the UK according to the Employment Report released today, and that weighed on the currency together with the risk-off sentiment. The Canadian Dollar and the Australian Dollar are also strong today, despite the mixed performance of the major commodities, as the Dollar weakness lifted the other majors. Oil and Copper are both lower today, as weakness seems to be returning to the Chinese market. The S&P 500 and the DAX, on the other hand, hit all-time highs overnight, with the NASDAQ still lagging following Friday’s flash correction, underlying the mixed nature of the current market action.

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Cryptocurrencies

The coins are experiencing a sharp decline today in US trading, led by BTC once again, with Ethereum also following in lower this time around. With the long-term picture still showing overbought conditions, more corrective action wouldn’t surprise us. Ripple jumped higher today in early trading topping the $0.30 level before the broad decline began in the crypto-segment. All of the major are trading lower today, with Stratis, NEM, and Litecoin showing relative strength so far.

Bitcoin, 4-Hour Chart Analysis

Technical Picture

The Chinese index failed to follow through following the rebound off the 3000 level in May and it traded in a bearish consolidation since then. The 3150 level acted as resistance lately, with the 3115 level serving as primary support right now.  A move below that level would warn of further weakness ahead, while bulls need a break-out above 3150, for the short-term rally to continue. The MACD indicator is also on the verge of a bearish cross.

                     Shanghai Composite, 4-Hour Chart Analysis

Key Economic Releases on Wednesday

Time, CET Country Release Actual Expected Previous
4:00 CHINA Industrial Production -0.20% -0.20% -0.10%
10:30 UK Average Earnings 2.1% 2.4% 2.4%
10:30 UK Unemployment Rate 6.4% 6.4% 6.5%
14:30 US CPI Index -0.1% 0.3% 0.2%
14:30 US Core Retail Sales -0.3% 0.2% 0.3%
16:30 US Crude Oil Inventories -1.7 mill -2.3 mill 3.3 mill
14:30 US Fed Interest Rate Decision 1.25% 1.25% 1%
20:00 US Fed Monetary Statement

Key Economic Releases on Thursday

Time, CET Country Release Expected Previous
3:30 AUSTRALIA Employment Change 10,300 37,400
3:30 AUSTRALIA Unemployment Rate 5.7% 5.7%
9:30 SWITZERLAND SNB Monetary Statement
13:00 UK BOE Monetary Statement
14:30 US Philly Fed Index 25.5 38.8
14:30 US Initial Jobless Claims 241,000 245,000
15:15 US Industrial Production 0.2% 1.0%
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1 Comment

1 Comment

  1. RF1508

    June 14, 2017 at 8:57 pm

    Hi Mate,
    Do you know what happened to Gold today?
    And in particular if you look to the intraday; early in the day there is a sudden spike up, for reasons completely unknown (to me) for Gold to crater down after the interest news. Do you know, and if you do, can you enlighten me so I can learn from this situation?

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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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