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Daily Analysis: Dollar Jumps on Strong Payroll and Wage Numbers

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Friday Market Recap

Asset Current Value Daily Change
S&P 500 2472 0.01%
DAX 12307 1.25%
WTI Crude Oil 48.77 -0.52%
GOLD 1260.00 0.75%
Bitcoin 2840 2.99%
EUR/USD 1.1736 -1.17%

Jobs Friday is here, and market statistics say that the US Employment Report is the most important monthly release, causing the strongest volatility in currencies and the most durable moves in the case of a huge surprise. With that in mind the better than expected numbers might be enough to cause a meaningful correction in the most important trend of the recent weeks, the Dollar’s demise. Sure enough, the Greenback surged higher against its major peers, but the currency is still just slightly off its 2-yesr lows against the Euro, so there is ample room for a correction without endangering the underlying trend.

Non-Farm Payroll Growth in the US

Eurozone assets bounced back off their multi-week lows as the common currency got weaker, while US equities barely budged, with low summer volumes still being the dominant force. Stock volatility is near its historic lows, and even the intensifying bipartisan moves against Donald Trump aren’t enough to break the back of the Trump-Rally. That said, there is still apparent weakness under the hood, with only the mega-cap DOW index being able to march to new highs lately.  All the major currencies are losing ground to the USD, with gold also drifting lower, while oil being stable around the $49 per barrel level.

EUR/USD, 4-Hour Chart Analysis

Cryptocurrencies

The major coins have settled down after the Bitcoin Fork and bull market like price action continues, as investor confidence is back after the uncertainty. That said, some of the largest coins are still inside the correction patterns that developed following the historic spring rally, and a clear trend change is yet to be confirmed. Ethereum, Ripple, Dash, Monero, and Litecoin are all trading near important resistance levels, while NEM is already on the move. As Bitcoin Cash is losing market cap, we expect BTC to at least test the prior highs near $3000, with the long-term picture still being constructive for the most valuable coin.

BTC, 4-Hour Chart Analysis

Technical Picture

The DAX found support near 12,100 as the advance of the Euro stalled for a couple of days at 1.19 against the Dollar. The index remains stuck in a downtrend, but the short-term MACD is in oversold territory, signaling a likely correction towards the dominant trendline. Strong resistance levels are ahead near 12,375 and 12,500 but a durable bounce is possible if the Euro enters a meaningful correction.

DAX, 4-Hour Chart Analysis

Key Economic Releases on Friday

Time, CET Country Release Actual Expected Previous
3:30 AUSTRALIA RBA Monetary Policy Statement
3:30 AUSTRALIA Retail Sales 0.3% 0.2% 0.6%
14:30 CANADA Employment Change 10,900 14,600 45,300
14:30 CANADA Unemployment Rate 6.3% 6.5% 6.5%
14:30 CANADA Trade Balance -3.6 bill -1.4 bill -1.1 bill
14:30 US Non-Farm Payrolls 209,000 183,000 222,000
14:30 US Unemployment Rate 4.3% 4.3% 4.4%
14:30 US Hourly Earnings 0.3% 0.3% 0.2%
14:30 US Trade Balance -43.6 bill -45.6 bill -46.5 bill
16:00 CANADA Ivey PMI 60.3 59.2 61.6

Key Economic Releases on Monday

Time, CET Country Release Expected Previous
1:30 AUSTRALIA AIG Construction Index 56.0
7:00 JAPAN Leading Indicators 104.6%
9:15 SWITZERLAND CPI Index -0.1%
9:30 UK Halifax HPI -1.0%
10:30 EUROZONE Sentix Investor Confidence 28.3

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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 411 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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Altcoins

Litecoin Price Analysis: LTC/USD If Current Demand Zone Fails to Hold Then Next Stop $3

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  • LTC/USD is at serious danger of another hard fall should the range-block seen be breached.
  • Back in December 2013, the price was at current levels and fell down to $1 over a two-year period.

Litecoin has been heavily weighted to the downside of late. The selling pressure intensified through the month of November. This month, December, has seen the pace of that bearish trend intensify. As a result, LTC/USD is trading at its lowest levels seen since May 2017. These moves of course are very much in-line with the rest of the market that has been in decline since the back-end of 2017 – start of 2018. Litecoin is down well over 90% from the start of this decline.

Deadly Range-Block

LTC/USD 4-hour chart

LTC/USD was allowed some time to breath after the chunky pressure south, through November. The price stabilized from 25th November, to then move into range-trading. This was the case right up until 6th December. Confined within a range-block, which technically trend to occur after such excessive movement, to then be resumed in that original aggressive trend of direction. The most recent, moving between a low of $29 to a high of $36, ahead of the firm breach lower on 6th December. This resulted in the price moving down to another fresh low of $22.55, on 7th December.

Once again, a similar observation can be seen via the 4-hour chart view. Since the 7th December, some stabilization has materialized. Currently it is shaping up another range-block, which is subject to a further extensive move to the downside. The low within this new formation, can be seen around the $23 mark; to the upside, this is capped at $28. A breakout south from this block could catastrophic and much more damaging than the prior. There isn’t much in the way of support for quite some way lower, should the price not be able to defy the odds and break higher from the block.

Downside Targets

LTC/USD weekly chart

Should the bears maintain the current course of downside, then the lower support of the current range will be broken. As an extreme target south, eyes could be on a complete reversal of the 2017 bull run. This could see another 500% drop, this of course being a worse case scenario for LTC/USD. Given how fast the bulls ran up to the north, it can come back down just as hard. Back in December 2013, the price was around current levels within the $20 territory. The bears pushed for a hard fall of over 200%, down to $1 territory, over a two year period.

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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4.5 stars on average, based on 77 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

USD Has Found Itself Among Outsiders

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By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets

There are a lot of factors weighing on the US dollar as of late. EURUSD skyrocketed towards the highs it reached on November 20th, as the currency market was overwhelmed by another wave of “escaping-from-the American-currency” investors.

It wouldn’t be right to say that there was one particular factor that made USD fall. The major dollar-based currency pairs is being currently driven by several catalysts, which are forcing it to move towards local highs. Apart from other things, we’re talking about the numbers on the US Labor market published last Friday. As usual, investors were focused on some of them, for example, the Non-Farm Employment Change, which was 155K in November. However, in the previous month, the indicator was 237K, while market expectations for this one were 198K.

Still, the Unemployment Rate in the US remained unchanged at 3.7%. The Average Hourly Earnings added just 0.2% m/m, which is less than expected. However, on YoY, the indicator expanded by 3.1% and that’s a pretty solid number.

The truce in the American-Chinese “trade war”, even considering the arrest of Huawei Technologies’ top manager, makes investors’ demand for USD as a “safe haven” decrease.

There won’t be a lot of numbers from the US this week. The ones worth paying attention to are the Consumer Price Index and Retail Sales to be published on Wednesday and Friday, respectively. On Thursday, December 13th, the European Central Bank is scheduled to have another meeting, the last one in 2018, where the regulator will decide on its interest rate and further monetary policy.

In case of EURUSD, the uptrend is still dominating; this ascending movement may be considered as a correction of the previous long-term downtrend. As we can see in the H1 chart, the pair is getting closer to the upside border of the internal mid-term rising channel, which is the resistance level at 1.1455. If the price breaks it, the instrument may continue growing to reach the key mid-term correctional target at 1.1545. However, one shouldn’t disregard another scenario implying a new decline, which may start if the pair rebounds from the above-mentioned resistance level. To confirm this decline, the price has to break the local support at 1.1405. In this case, the downside target will be close to the support line at 1.1340.

Disclaimer

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

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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4.5 stars on average, based on 20 rated postsHaving majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.




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Analysis

This Week’s Winners

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This week was mostly full of more news about Bitcoin’s price collapsing even further, eventually reaching a low in the $3,200’s. Naturally, this has created an environment where many are bearish on the cryptocurrency sector, but there are still investors who are betting on companies that might move counter (or uncorrelated) to Bitcoin.

Veros

The top performer of the week was Veros, which had an almost 500% increase in price over the last 7 days. The volume in the last 24 hours was $490,523, which is lower than the coins we would normally report on, but this was too large a gain to ignore. Veros is an environmental project that is focused on improving our current ecological conditions, and is currently ranked 405 in terms of market capitalization. Over the last 2 weeks, several exchanges have announced their willingness to list Veros, which is likely the cause of the price increase. It was originally started several years ago and linked to COSS, but due to the price run in Ethereum, it became infeasible to grow. Now it seems to be have been rebooted, and is provided no transaction fee funding to ecologically aware companies in need.

Republic Protocol

Ranked 148 in terms of market capitalization, Republic Protocol yielded a very solid 41.84% gain this week. This large gain in price can be attributed to Binance approving the listing of REN on December 6th. The Republic Protocol is an exchange that occupies as a dark pool, which allows for transactions to occur within a hidden order book. In an industry where privacy is a regular topic of concern, dark pools are yet another way to obscure the amount of a coin you are buying or selling.

Ether Zero

On December 8th, Ether Zero experienced a massive gain of approximately 42% that accounts for its price increase over the last week. This is considered much more of an altcoin, with a market cap ranked at 1758. There was no notable news released on that day, on the 6th, another Dapp was released on the smart contract platform. Likely this was a catalyst for investors who were looking for some more proof of concept before putting money in.

Octoin Coin

Octoin Coin’s 39% increase over the week moved it up to a market capitalization of $256K, which is still very much in the altcoin territory. There was no notable news over the week, and it seems like the coin had significant swings up and down, but this could make it a good coin to watch in the future if you want to make a volatility bet.

DigiFinexToken

DigiFinexToken had a healthy 26% increase in price, ending with a price around $0.145. This altcoin is benefitting from adding another listing to their exchange. MFG was added in the last few days, and it is likely that the run up in price was in anticipation of another coin being added to the exchange.

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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