Tuesday Market Recap
|Asset||Current Value||Daily Change|
|WTI Crude Oil||47.45||-0.29%|
Global stocks are virtually unchanged today following yesterday’s strong rally, as volatility remains low, trading volumes are back to their summer normal. Asian equities are relatively strong as the North Korea related fears eased further, while European stocks are weak after a string of negative releases today, including the German GDP and the British CPI and PPI indices. While markets still seem quiet and last week’s storm passed quickly, the internal weakness in the US exchanges and the price action in Europe suggest a bumpy road ahead for bulls.
EUR/USD, 4-Hour Chart Analysis
Currency markets are way more active, as the much awaited US Retail Sales report caused turmoil in the Dollar before next week’s Jackson Hole symposium. The Fed annual meeting usually provides important clues regarding the central bank’s monetary policies. With all the conflicting signals lately, the Dollar is reacting strongly to every new piece of information.
The Great British Pound is the weakest major currency following the weak inflation data, losing ground to all of its peers, and trading back near 1.28 against the Greenback. Gold fell back to $1275 thanks to the North Korea de-escalation and the strength in the Dollar, while oil and industrial metals are also under pressure. Yesterday’s negative Chinese releases are still weighing on the segment, and the recent tensions regarding the US-Chinese trade relations are also negative for global trade.
Gold, 4-Hour Chart Analysis
Bitcoin finally entered a volatile correction today, and although it’s very early to call a top in the coin, the easy part of the rally seems to be over, as the overbought momentum readings reached extremes. BTC fell by more than 10% in a few hours, and the selling wave dragged the other majors lower, although the likes of Dash and Monero have been holding up well in the face of the broad weakness. Ethereum, Litecoin, Ripple, and Ethereum Classic followed BTC lower, with a latter two still being stuck in their downtrends, while ETH and LTC still looking in better shape. More “rotation” between the coins is expected, as BTC is expected to be relatively weak after its stellar run.
BTC/USD, 4-Hour Chart Analysis
The S&P 500 recovered well after last week’s correction and it is back within striking distance of its all-time high. The rising long-term trend remains intact and the short-term picture turned bullish again, despite the clear overvaluation and the internal weakness. Only 55% percent of stocks on the NYSE exchange trade above the 200-day Moving Average, while a healthy bull market would mean around 70-75% in that measure. That said, a rally to new highs is in the cards in August, as summer trading is expected to continue.
S&P 500, 4-Hour Chart Analysis
Key Economic Releases on Tuesday
|3:30||AUSTRALIA||RBA Meeting Minutes||–||–||–|
|14:30||US||Core Retail Sales||0.6%||0.4%||-0.2%|
|14:30||US||Empire Manufacturing Index||25.2||10.2||9.8|
Key Economic Releases on Wednesday
|14:30||US||Building Permits||1.25 mill||1.28 mill|
|14:30||US||Housing Starts||1.23 mill||1.22 mill|
|16:30||US||Crude Oil Inventories||–||-6.5 mill|
|20:00||US||FOMC Meeting Minutes||–||–|
Featured image from Shutterstock
Technical Analysis: Bitcoin Grinds Higher as Records Tumble in Altcoins
The historical surge in the segment, which is the second such move this year, continued today, with another round of break-outs in some of the major altcoins and tepid gains for BTC investors. Ethereum, Ripple, Dash, and first and foremost Litecoin was leading the charge, with the recent star LTC topping $300, just after a day of hitting the $200 mark.
Litecoin defied all odds after reaching extremely overbought readings, and the coin rode the speculative wave, turning exponential, not unlike IOTA and Bitcoin previously. With the coin being stretched in an unprecedented way on all time-frames, investors could even consider selling their core positions at the current levels, as a deep correction is almost granted in the coming period. The first meaningful support level is found at $125, and a re-test of the $100 level is probable during the next major correction.
LTC/USD, 4-Hour Chart Analysis
Ripple finally ended a long period of relative weakness today, and the only major on a long-term by signal jumped over primary resistance at $0.26 and crossed the $0.30-$0.32 too in the euphoric sentiment. As the coin is not long-term overbought following the 6-month long consolidation, the buy signal in XRP remains intact, with the only major resistance level being found at the all-time high near $0.425.
XRPUSDT/USD, 4-Hour Chart Analysis
Technical Analysis: Litecoin Continues Surge as Bitcoin Tests Highs
With the crypto world being focused on the historical futures launch, the major coins all enjoyed buying following a hectic weekend, and a volatile week as a whole. BTC itself got another boost from the widespread publicity and the volatile correction of the recent days ended, with the most valuable coin bouncing back towards its all-time high.
While the long-term picture remains severely overbought, the short-term picture is not stretched and further gains are possible even amid the elevated correction risk. That said, investors should wait for a more favorable entry point to ad dot their holdings, while traders should control position sizes in the light of the long-term setup. Major support levels are now near $13,000, $11,300, and $10,000, with stronger levels still at $8200 and $7700.
BTC/USD, 4-Hour Chart Analysis
The major altcoins are all up today, but only Monero and Litecoin are still within short-term uptrends, and the segment as a whole is still dangerously overextended, and a deeper correction is very likely in the coming weeks. LTC continued its recent break-out, getting close to the $200 level, and joining the extremely overbought group regarding the long-term momentum, and triggering a long-term sell signal in our trend model. Key support levels are found $100 at $75 and $64, with a weaker primary level at $125.
LTC/USD, 4-Hour Chart Analysis
Long-Term Analysis of the Silver Market
The silver market has once again caught investors’ interest as the price is nearing areas not seen since late 2008.
2017 started at a low point for silver, and it seems it will end the year that way as well, meaning investors who bought at the beginning of the year haven’t suffered nor gained much.
This doesn’t mean, however, that the price hasn’t moved during the year. After the low start of the year, silver quickly tacked on about 18% to a top of $17.50 per ounce.
In terms of fundamentals in the silver market, things look a bit complicated for 2018. There are multiple forces pulling in different directions for the price of silver going forward:
- A sharp stock market correction can be expected to occur some time in 2018. Most likely, this will happen sooner rather than later. Stock market crashes always trigger a flight to safety, meaning gold, silver, and quite possibly bitcoin, can benefit.
- We are seeing signs that inflation may be starting to rise again, although this is not confirmed yet. Rising inflation is always good for precious metals.
- If the US federal budget deficit widens as a result of the new tax reform, the US dollar may suffer as a consequence. Goldman Sachs put out a note to investors in November 2017 saying that the US debt is “on track” to reach an “unsustainable” level in coming years. Fed Chair Janet Yellen has also said about the US debt that it is “the type of thing that should keep people awake at night.” Rising debt levels creates uncertainty about the economy, which is generally good for gold and silver.
- Central banks around the world seem committed to raise interest rates in 2018. Rising interest rates are bad for precious metals because it would make it more attractive to put money in the bank.
- The cryptocurrency bull market is on track to continue, diverting attention and capital away from precious metals as a traditional store of value. However, this one is uncertain, as it may also be considered a positive in the way that the rise of cryptocurrencies brings the inflationary and unsustainable nature of fiat currencies into focus.
- The US dollar may have hit a bottom in 2017 and trade higher compared to other major fiat currencies going into 2018. A stronger dollar is always bad for precious metals, which are priced in dollars.
When looking at the chart, we can see that silver is back down to were it started the year, which coincides with a major support area where it has turned several times in the past few years.
From a technical perspective, silver has been trading in a triangle pattern on the longer-term weekly chart, with the price now trading very near the lower end of the triangle, adding confluence to our bias that silver will trade up from here.
Silver failed to live up to our prediction from early 2017, and is now even trading well below the level from that time.
A low price by any measure combined with two major technical support levels adds confidence to our trade and makes silver a low risk and potentially high reward trade for 2018.
Depending on your own strategy and investment style, you may want to wait for the price to break out from the current triangle pattern it has been trading in for the past year and a half. You would then give up some of the potential return for an even safer trade. After that, major resistance is found around $17.50 and $18, with lots of upside potential if we can finally break through those levels.
Featured image from Pixabay.
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