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Daily Analysis: Election Shocker Weighs on the Pound but Stocks Remain Strong

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Friday Market Recap

Asset Current Value Daily Change
S&P 500 2435 0.11%
DAX 12761 0.37%
WTI Crude Oil 45.52 -0.22%
GOLD 1284.00 0.45%
Bitcoin 2820 1.44%
EUR/USD 1.1176 -0.30%

Global financial markets are fairly quiet today despite yesterday’s busy schedule, even as the British snap election turned out to be sort of a Brexit 2.0. The Conservative Party that has been leading polls by a mile just two months ago, now has to look for a coalition partner (Theresa May already announced coalition talks with the DUP party) or risk minority governance, as it fell short of the 326 seat needed for the majority. The Pound suffered steep losses in very active trading after the event, and it settled down with losses between 1.5% and 2% compared to its major peers, a huge drop in forex terms.

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The major global stock benchmarks experienced a slight dip overnight, also influenced by the next chapter of the Trump-scandal. That said, the main British index, the FTSE 100, is actually up today, while global equities are still hovering near their bull-market or all-time highs. Yesterday’s dovish ECB statement reassured investors that central banks are still willing to ease-and-print their way out of any trouble, lifting risk assets and pushing equity-volatility lower once again.

GBP/USD, 4-Hour Chart Analysis

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Other asset classes are less affected by the election results, although the uncertainty gave a small boost to gold and cryptocurrencies, while the Dollar is the winner of the day among the major currencies despite the troubles of President Trump. Oil continues to be volatile despite the calm trading environment, as the woes regarding Qatar are still present, although industrial commodities continued their relief rally, as the Chinese market remained stable.

WTI Crude Oil 4-Hour Chart Analysis

Technical Picture

The S&P 500 acted very strong despite the negative news flow this week, consolidating just below its all-time high at 2440. The lack of breadth behind the current rally is still a concern but the price action suggests more short-term upside with a break-out to new highs in the coming days, before the Federal Reserve’s meeting. The MACD indicator is turning bullish, and a swing seems to have formed a tad above 2420. Below that crucial support is found at 2400 and 2355.

S&P 500, 4-Hour Chart Analysis

Key Economic Releases on Friday

Time, CET Country Release Actual Expected Previous
3:30 CHINA CPI Index 1.50% 1.50% 1.20%
3:30 CHINA PPI Index 5.50% 5.70% 6.40%
10:30 UK Manufacturing Production 0.20% 0.80% -0.60%
10:30 UK Goods Trade Balance -10.4 bill -12.0 bill -13.4 bill
14:30 CANADA Unemployment Rate 6.6% 6.6% 6.5%
14:30 CANADA Employment Change 54,800 11,500 3,200

 

Key Economic Releases on Monday

Time, CET Country Release Expected Previous
1:50 JAPAN PPI Index 2.10%
20:00 US Federal Budget Balance 182.4 bill

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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.

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