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Analysis

Daily Analysis: Euro Back Above 1.20 as Draghi Drives Traders Crazy

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Thursday Market Recap

Asset Current Value Daily Change
S&P 500 2461 -0.19%
DAX 12301 0.71%
WTI Crude Oil 49.36 0.23%
GOLD 1352.00 0.95%
Bitcoin 4258 -0.89%
EUR/USD 1.2005 0.75%

“Mario Draghi sent conflicting signals”; that’s the polite way of saying that the President of the European Central Bank tried everything to keep his cards as hidden as possible regarding the future of the bank’s monetary policies. Financial markets, especially forex markets turned insanely volatile during his press conference as algos and traders tried to figure out what the central bank is planning. While the recent economic numbers still look more favorable in the Eurozone than the US, the exuberant buying in the common currency could already lead to weakness in the area, and the current strength might very well be cyclical in nature  to begin with. That said, for now at least, central bank policies are still dominating markets, and the ongoing long-term trends could (US stock long, EUR long, USD short) might still have legs before the next major shift.

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EUR/USD, 5 minute Chart Analysis

Stock markets barely budged after the mixed speech by Draghi, and with no change in the monetary statement and the actual ECB policies, all eyes are now on the Fed’s meeting later on this month. The DAX continued to rally today, as we expected, and the Euro strength looks to have lost its dominance over European equities, as the two asset classes are strongly diverging. Gold shrugged off the central bank jitters and marched as high as $1350, as North Korea and Hurricane Irma still rule the headlines, while Donald Trump is planning on getting rid of the – already quite ridiculous – US debt ceiling. The geopolitical risks and the negative USD trend drive the price of oil higher as well, as the commodity is inching ever closer to the $50 per barrel level in the WTI contract.

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WTI Crude Oil, 4-Hour Chart Analysis

Cryptocurrencies

The volatility in the price of the major coins declined significantly in the last couple of days, although NEO still provides extreme moves. Bitcoin and Litecoin are leading the way higher, with the latter being very close to a new all-time high from a technical perspective. Most of the currencies are still well below the prior record levels, though, and with the still overbought long-term setups in mind, the current lull could be the calm before the next storm. That said, some of the majors are still at attractive levels, such as ETC and XRP, and investors cold look for dips to buy those coins in the coming period.

LTC/USD, 4-Hour Chart Analysis

Technical Picture

The S&P 500 is trading in a narrow range since the strong Tuesday bounce, and we still expect the short-term momentum to carry the benchmark to at least its prior high, with a likely breach of the 2500 level. The long-term picture is still far from promising given the internal weakness of the market, and the coming two months sport the most negative seasonality in the year, so the chances of a deeper correction will are high. The rising long-term trendline is just above the strong support zone near 2520 while the 2450 level is the first line of defense for bulls here.

S&P 500, 4-Hour Chart Analysis

Key Economic Releases on Thursday

Time, CET Country Release Actual Expected Previous
3:30 AUSTRALIA Retail Sales 0.0% 0.2% 0.3%
3:30 AUSTRALIA Trade Balance 0.46 bill 0.95 bill 0.86 bill
9:30 UK Halifax HPI 1.1% 0.2% 0.4%
13:45 EUROZONE ECB Rate Decision 0.00% 0.00% 0.00%
14:30 CANADA Building Permits -3.5% 2.2% 2.5%
14:30 EUROZONE ECB Press Conference
14:30 US Unemployment Claims 298,000 245,000 236,000
16:00 US Crude Oil Inventories 4.6 mill 4.1 mill -5.4 mill

Key Economic Releases on Friday

Time, CET Country Release Expected Previous
1:50 JAPAN Final GDP 0.7% 1.0%
3:30 CHINA Trade Balance 321 bill
10:30 UK Manufacturing Production 0.3% 0.0%
14:30 CANADA Employment Change 15,000 10,900
14:30 CANADA Unemployment Rate 6.3% 6.3%

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Analysis

Cryptocurrency Analysis: Ripple Continues Rampage as Litecoin and Ethereum Enter Correction

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Ripple remained in the center of attention in the segment after breaking out to a new all-time high yesterday, and the coin almost doubled in value, climbing above the $0.80 level. The currency concluded a 6-month long consolidation pattern with the move after being the only major on a long-term buy signal in our trend model.

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XRP gave a short-term sell signal today, while turning neutral regarding the long-term setup. Investors now shouldn’t add to their positions, although further gains are still possible, and reducing holdings somewhat is a good idea here. Major support is still found at the prior high near $0.4250 and in the $0.30-$0.32 range.

XRP/USDT, 4-Hour Chart Analysis

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While Bitcoin stagnated, and Bitcoin Cash jumped, Ethereum, Litecoin, Dash, and IOTA has been drifting slightly lower, although the recent gains are still mostly intact, and the basic setup in the segment is unchanged.

Litecoin fell below the $300 level after yesterday’s consolidation, and the coin faced strong selling pressure in the latter half of the session. The currency remains extremely stretched regarding the long-term momentum indicators, and although the short-term uptrend is still intact, a deeper correction is likely in the coming weeks, with key support levels found at $125 and $100, and weaker levels at $260 and $170.

LTC/USD, 4-Hour Chart Analysis

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Analysis

Daily Analysis: Dollar Falls, Gold Jumps after Yellen’s Final Move

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Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2668 -0.02%
DAX 13125 -0.45%
WTI Crude Oil 56.65 -0.68%
GOLD 1258.00 1.35%
Bitcoin 16,100 -6.32%
EUR/USD 1.1842 0.73%

The Federal Reserve hiked interest rates as expected today, and although the central bank’s monetary statement was slightly more hawkish than expected, the market’s reaction didn’t reflect the much-anticipated move. The worse than expected Core CPI reading that underlined the low-inflation narrative weighed on the recently strong Greenback, while stocks were unchanged after decision and bonds gained ground as yields retreated.

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EUR/USD, 4-Hour Chart Analysis

The major indices are hovering near their all-time highs with the DOW leading the way higher, hitting a new record for the second day in a row. While volatility Is expected to remain low as we approach the end of the year, market internals and valuation levels are still concerning from a long-term perspective, and stocks outside the US are also negatively diverging. The action in crude oil could be slightly more interesting as the commodity is starting to act in a slightly bearish manner after a grinding multi-month rally.

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WTI Crude Oil, 4-Hour Chart Analysis

The Brexit process is still in the center of attention in Europe, although volatility took a nosedive on the old continent as well, and it’s unlikely that the Christmas period will be much different, given the predictable drop in volumes and trading activity. The date of the next election in the financially and politically troubled Italy has been set to March 4th next year, and the early date caused some turmoil in the countries assets, which dragged the Euro Stoxx 50 lower today, together with the DAX and the other major indices.

Cryptocurrencies

As the total market cap of the crypto-market crossed the incredible $500 billion mark, Ripple, NEO, and Ethereum made headlines with lofty gains in the face of the severely overbought readings elsewhere in the segment. While XRP and NEO are still not overbought from an investment perspective, Ethereum reached our final target for its break-out and triggered a long-term sell signal.

ETH/USD, 4-Hour Chart Analysis

The previously surging IOTA continued its correction, Litecoin consolidated in a relatively narrow range, while Dash, ETC, and Monero scored marginal new highs before turning lower together with BTC. The most valuable coin that has lost some of its momentum “mojo” in recent days fell back below last week’s highs, and that could mark a failed break-out and a start of the deeper correction that seems more and more likely.

BTC/USD, 4-Hour Chart Analysis

Key Economic Releases on Wednesday

Time, CET Country Release Actual Expected Previous
11:30 UK Average Earnings 2.5% 2.5% 2.3%
11:30 UK Claimant Count Change 5,900 3,300 6,500
11:30 UK Unemployment Rate 4.3% 4.2% 4.35
15:30 US Core CPI 0.1% 0.2% 0.2%
15:30 US Crude Oil Inventories -5.1 mill -3.6 mill -5.6 mill
21:00 US Fed Rate Decision 1.5% 1.5% 1.25%
21:00 US FOMC Statement

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Analysis

Technical Analysis: Volatility on the Rise Again, as Ripple and Ethereum Hit Targets

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Ripple has been the star of today’s session in the cryptocurrency segment, as the only major coin on a long-term buy signal in our trend model continued yesterday’s break-out, and surged to a new all-time high. The currency cleared the $0.425 level that marked the top in May, and after the more than 6-month long consolidation phase, it promptly neared the $0.50 level.

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While the short-term momentum indicators are now stretched, the coin is still in an encouraging long-term setup, although the best period to buy already passed. The coin could be dragged lower in the case of the expected broad correction in the segment, but we expect XRP to outperform in the coming period, with support levels found at the prior high and below that in the range between $0.30-$0.32.

XRP/USDT, 4-Hour Chart Analysis

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Ethereum has been the other top coin on the rise, as the second largest digital currency surged past the final range projection target of the break-out two weeks ago at $685 in the aftermath of the launch of the BTC futures on Monday. The ETH token is now also on a sell signal on all time-frames, and we advise investors and investors to wait for the next major correction to establish new positions. Support levels are now found at $575, $500, $480, and $400.

ETH/USD, 4-Hour Chart Analysis

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