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Daily Analysis: Gold Smashed Lower Before Central Bank Meeting Again

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Monday Market Recap

Asset Current Value Daily Change
S&P 500 2436 0.05%
DAX 12765 0.26
WTI Crude Oil 42.98 -0.22%
GOLD 1245.00 -0.90%
Bitcoin 2458 -6.23%
EUR/USD 1.1202 0.06%

Another important central bank meeting, now involving all the major ones, and another suspicious flash-crash happened in gold, similarly to the one before the Fed meeting two weeks ago. This could mean that someone woke up this morning and thought “Hmm I should probably sell my $2 billion of gold now, and why not at once?” Joke aside, the precious metal is back to last week’s levels and it will be crucial to see if it can get back above $1250, or another swing lower got triggered. Global stock markets are broadly higher today, despite the much worse than expected US Durable Goods Orders which pushed the Dollar lower again.

Gold’s Flash Crash, 5-Minute Chart Analysis

Oil rebounded slightly today as there is no new development in the Qatar crisis, but it remains on depressed levels and the trend is still clearly lower. Apart from the Dollar weakness currency markets are calm once again, and generally, volatility is low globally. Stocks are still close to their all-time highs, but momentum remains suspicious, and the negative summer seasonality also suggests caution for stock bulls.

Cryptocurrencies

The crypto-market remains in a deep correction, with Ethereum being down by more than 30% of its highs while Bitcoin is also trading 20% lower, near the $2500 level. All the majors are substantially lower this Monday, with Ethereum Classic and Ripple showing the most short-term relative strength, while Dash is also doing fine, holding above the $150 level. Litecoin is testing its prior all-time high after its strong move higher, while the smaller coins are also mostly down by double digits, with Bytecoin holding up well in the face of the broad decline.

Ethereum, 4-Hour Chart Analysis

Technical Picture

The S&P 500 rallied in early trading today, and but fell back to the Friday close after the US open, as stock markets remain in a low volatility, low volume limbo below their all-time highs. The benchmark failed to gain momentum after its beak-out last week, and the crucial support level near 2417 might be back in focus this week. Below that, another key level is found at $2400 while the prior high at $2450 serves as primary resistance here.

S&P 500 Futures 4-Hour Chart Analysis

Key Economic Releases on Monday

Time, CET Country Release Actual Expected Previous
10:00 GERMANY IFO business Climate 115.1 114.7 114.6
14:30 US Core Durable Goods Orders 0.1% 0.4% -0.5%

Key Economic Releases on Tuesday

Tuesday UK BOE Financial Report
Tuesday US CB Consumer Confidence 116.2 117.9

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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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4.6 stars on average, based on 379 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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Analysis

Selloff Resumes as Italian Budget Crisis Deepens

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It was another ugly day for risk assets globally, with equities getting hit particularly hard and although the major US indices managed to hold on above last week’s lows, the charts are now looking wounded even on Wall Street.

There were plenty of negative catalysts dragging lower stocks during the session, with especially the ugly Italy-European Union budget debate causing turmoil in Italian government bonds, equities, and to a lesser extent, the Euro.

Nasdaq 100 Futures, 4-Hour Chart Analysis

The new bear market lows in the main Chinese indices also weighed heavily on sentiment throughout the day, while the post-Fed-minutes rise in US Treasury Yields also added to the worries. Wall Street opened lower, and after a brief rally attempt sellers took control of the market, and the rout didn’t stop until the closing bell with the Nasdaq leading the way lower yet again.

The tech benchmark shed a bit more than 2% on the day, and stocks finished with deep losses across the board, despite the better-than-expected quarterly report of Philip Morris (PM) and the beat in the Philly Fed Index.

Russell 2000, 4-Hour Chart Analysis

The short-term trend in the US is undoubtedly bearish, and although all benchmarks, including the Russell 2000, are holding up above their recent multi-month lows, we would still treat any rally as a selling opportunity in stocks.

Tomorrow we could see fireworks again, and the Asian session could already be very active, since several key Chinese economic releases are coming out, such as the quarterly GDP, Retail Sales, and Industrial Production.

2-Year US Yield, 4-Hour Chart Analysis

Treasuries had a very hectic session, as yields, especially on the short end of the curve got close to their recent highs in early trading before pulling back due to the intensifying Italy-related worries towards the end of the US session.

Given the recent hawkish tilt in the Fed’s rhetoric, strong flattening of the yield curve could be ahead, should the equity selloff deepen, as we don’t see new highs on long-dated yields in that case, but a quick change in the tightening schedule of the US central seems less likely now.

Dollar Confirms Swing Low amid Risk-Off Flows

EUR/USD, 4-Hour Chart Analysis

The EUR/USD pair dipped below the 1.15 level again, and although the momentum of the move is weak, the Dollar Index also confirmed the swing low that we pointed out yesterday. The reserve currency could be ready to test its August highs, even as the most vulnerable emerging market currencies are still relatively strong.

Given the expansive fiscal policy of the Trump administration, it’s no surprise that the Dollar is not surging higher, even as the troubles in the Eurozone are way deeper. Still, the Greenback entered another leg higher in its uptrend, and besides the safe-haven Yen, no major currency is in a bullish technical position compared to the USD even form a short-term perspective.

That said, forex markets could see very hectic conditions in the coming busy months, with the US midterm elections, the possible Chinese crisis, the ongoing quantitative tightening, and of course Donald Trump all capable of causing wild swings in the major pairs.

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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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4.6 stars on average, based on 379 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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Analysis

Pre-Market Analysis And Chartbook: Stocks Turn Lower as Treasury Yields Eye Multi-Year Highs Again

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Thursday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,791 -0.91%
DAX 30 11,664 -0.43%
WTI Crude Oil 69.16 -1.30%
GOLD 1,227 0.16%
Bitcoin 6,438 0.01%
EUR/USD 1.1486 -0.11%

Equities are broadly lower after the opening bell on Wall Street, with the selloff in China and the rise in US Treasury yields setting the tone for the day so far. The risk-off shift that dragged even the mighty US stock market lower last week continues to dominate trading globally, and while volatility is well below its recent peak, bulls are on the defensive with regards to the majority of risk assets.

Shanghai Composite Index CFD, 4-Hour Chart Analysis

The Shanghai Composite hit yet another 4-year low today, amid rumors on forced liquidations following the hawkish surprise of yesterday’s Fed meeting minutes. The Chinese index confirmed its bear market again, and as the trade war rhetoric of the Trump administration will likely heat up before the midterms in November, selling pressure could remain strong.

FTSE 100 Index CFD, 4-Hour Chart Analysis

With the likelihood of a no-deal Brexit increasing, nervous trading continues on the related assets, with especially British equities feeling pain lately. The FTSE 100 has been lagging even the relatively weak European markets, and although the benchmark is trading above its spring lows, thanks mostly to the long-term weakness in the Pound, short-term technicals are very weak, and a breakdown below to a new almost 2-year low looks imminent.

Economic numbers have been mixed today, with British Retail Sales missing the consensus estimate by a mile, while the US Philly Fed Manufacturing Index came in slightly better than expected. The negative surprise added to the pressure on British stocks, although forex markets are little changed and the Pound remained relatively stable.

US Stocks Lower Again amid Choppy Consolidation

S&P 500 Futures, 4-Hour Chart Analysis

The major US indices opened lower and extended their losses in the first hour of trading, with the S&P 500 still trading in a clear short-term downtrend following last week’s plunge. Treasury Yields, particularly on the short-end of the curve are aback near their multi-year highs after yesterday’s Fed surprise, and that weighs heavily on investors sentiment.

Philip Morris (PM) is up by more than 3% following its earnings report, as the company continued the quarter’s trend of positive surprises, but the broader market is still largely ignoring the bullish news, as US investors are focusing more on the mounting funding risks and the strengthening international headwinds.

Copper Futures, 4-Hour Chart Analysis

While currencies are relatively calm today, commodities are having an active session, and crude oil and copper are both headed lower amid the fresh risk-off shift, while old is flat thanks to safe-haven flows. WTI crude hit another one-month low today after yesterday’s breakdown, falling below $69 per barrel and copper is also in a precarious technical position.

The volatility compression pattern looks to be ending in the industrial metal, as we expected, given the weakness in China, it’s no surprise that the commodity moved below its short-term range. A drop below the strong support near $2.70 could mean that copper resumed the broad downtrend, and that would be a bearish sign concerning the global economy.

ChartBook

Major Stock Indices

Nasdaq 100 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Gold Futures, 4-Hour Chart Analysis

Featured image from 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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4.6 stars on average, based on 379 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

Monero Price Analysis: XMR/USD is Stable and Gunning for Potential Gains on “Bulletproofs” Technology Update Day

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  • Monero developers have released an updated version to their protocol, implementing “Bulletproofs”.
  • XRM/USD is within a range block, with price behavior suggesting of a potential imminent breakout higher.

Monero Becoming First Crypto Over Billion-Dollar Market Cap Implementing “Bulletproofs”

Developers at the Monero foundation, have released an updated version to the protocol. This will be live from 18th and 19th October. They are becoming the first network to try out “bulletproofs”. The goal of this technology is to significantly decrease the weight of confidential transactions. From today, 18th October, the privacy-focused cryptocurrency will be testing this.

The move from Monero will make them the first crypto with over a billion-dollar market cap, to try out the “bulletproofs” technology. Over the past year, the foundation has been working on cutting the size of its confidential transactions, by at least 80 percent.  A full overview of the upgrade was posted in a blog post by Monero.

The purpose of bulletproofs are to facilitate confidential transactions. Senders and recipients addresses will remain visible, but the amounts being sent is concealed. The technology also aims to reduce transaction times and fees.

Sarang Noether, a spokesperson for Monero and a key part of the bulletproof integration, was recently speaking on the upgrade. He noted that “Bulletproofs will be replacing the “zero-knowledge range proofs”, of which their confidential transactions are reliant on. The cryptocurrency will activate the technology during its next system-wide upgrade, or hard fork. An upgrade that will require nodes to adopt a new software. Furthermore, Sarang added, “hard forks are sometimes colored as a risky process. However, this upgrade is part of Monero’s bi-annual cycle to introduce new features.”

Technical Review – 4-hour Chart

XMR/USD 4-hour chart

XRM/USD for the past going on three sessions now has been trading within a tight range-block. This trading behavior coming after the aggressive movements seen just some days before. On 11th October the price had spiked over 10% lower. To then enter a tight range, which saw a huge breakout, jumping around 20% high. Over half of this spike to the upside was reversed, moving into the three-session range as mentioned above.

Looking to the upside, eyes will be on another range-breakout. Bulls will be wanting to retest the breached supporting trend line. An attempt was made during the rally seen on 15th October, however strong resistance was observed. In terms of support, this can be eyed at the lower part of the current range, around $107.50. If the bears pile enough pressure, it vcould see a fast move back to $100, then further south below demand area from $86-76.

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 32 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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