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Daily Analysis: Markets Rebound after Crazy Thursday as Cryptocurrencies Hold Gains

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Friday Market Recap

Asset Current Value Daily Change
S&P 500 2433 0.07%
DAX 12732 0.33%
WTI Crude Oil 44.80 0.72%
GOLD 1258.00 0.25%
Bitcoin 2450 5.83%
EUR/USD 1.1202 0.07%

Stock markets are slightly higher globally today, as the US Dollar is correcting its strong post-Fed move in quiet trading. The Bank of Japan was in focus today, as it left its monetary policy and outlook unchanged despite the rate hike by the US central bank. The Yen continued lower after the decision, helping Asian markets in early trading, although the Chinese index was a tad lower once again. European and US stocks are fractionally higher, with the NASDAQ still in a weak position following the flash-decline in the tech giants exactly one week ago.

USD/JPY, 4-Hour Chart Analysis

Commodities are also trading higher, led by the rebound in the battered crude oil, while gold is also trying to rally after its post fed correction while industrial metals are little changed, with the Chinese weakness weighing on the segment. European currencies are broadly higher as the Eurozone inflation reading was in line with expectations after a series of misses. That said, the Euro is still well below its recent highs against the Dollar, and the Pound is also shy of the 1.30 level it reached before the snap election.

Cryptocurrencies

Ethereum led the way higher yesterday, but today the rebound stalled in the crypto market, as the majors are still stuck in a short-term downtrend. Today’s session could be crucial in deciding whether or not the coins will test their lows of yesterday or turn higher after the sharp correction.  Ethereum, Litecoin, Dash, Zcash, Bitshares, and Stratis are in more promising technical positions, while Bitcoin, Monero, Ripple, and ETC are among the weaker looking coins.

Bitcoin, 4-Hour Chart Analysis

Technical Picture

The seemingly never-ending trend in the German DAX index looks to be faltering, with a rather strong momentum divergence forming on the 4-hour chart and a broadening short-term top formation also being formed on the same time-frame. The 12,650 level is in focus right now, while the recent all-time high near 12,900 is providing primary resistance. The rising long-term trendline is found just above 12,600, while further support levels at 12,500 and 12,375 could serve as targets for a move lower.

DAX Index, 4-Hour Chart Analysis

Key Economic Releases on Friday

Time, CET Country Release Actual Expected Previous
Tent. JAPAN Monetary Statement
11:00 EUROZONE Final CPI 1.4% 1.4% 1.4%
14:30 US Building Permits 1.17 mill 1.25 mill 1.23 mill
14:30 US Housing Starts 1.09 mill 1.23 mill 1.17 mill
16:00 US Prelim Consumer Sentiment 97.2 97.1

Key Economic Releases on Monday

Time, CET Country Release Expected Previous
1:00 JAPAN Trade Balance 0.1 trill
1:00 UK Rightmove HPI 1.2%

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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4.7 stars on average, based on 412 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

Ethereum Price Analysis: ETH/USD is a Sitting Duck Under $100; with Jitters Heading into Constantinople Upgrade

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  • ETH/USD is subject to further downside, as the price produces another range-block.
  • There is some nervous anticipation across the community heading into the Constantinople upgrade.

ETH/USD is a sitting duck underneath the big psychological $100 mark. Just like every other cryptocurrency, Ethereum (ETH) remains firmly on the back foot. Over the past five weeks, the price is down a chunky 63%, from the pick up in downside pressure on the 7th November. Despite a minor form of stabilization over this past few days now, ETH is still very much vulnerable. It has been moving within consolidation mode, as seen across the board, a range-block formation can be observed. This behavior suggests that is susceptible to a breakout south.

Constantinople Upgrade Jitters

Following the Ethereum developers confirming the Constantinople upgrade, there has been some concerns. It was last week noted after a developers call that this will take place in mid Jan 2019, as covered via Hacked . Across the community things appear to be somewhat jittery heading into the upgrade. One thing that has raised eyebrows is the reward for miners. This is anticipated to be brought down to 2 ETH from 3 ETH. Given the fact also the plummet in the Ethereum price this year, this in addition does not help things. There is also speculation that, should there be much disagreement, the network could even split, as an extreme case.

Technical Review – ETH/USD

ETH/USD 4-hour chart

Looking via the 4-hour chart view, price action has narrowed over the past four days. This coming after further intensity hit ETH/USD to the downside. As we have seen time and time again, such price behaviors following excessive movements. It tends to be exhaustion from the sellers, allowing time for consolidation of the price, before going in for the kill.

Price action is moving within a range-block, which is subject to another explosive move lower, as it currently appears. The psychological damage of ETH sitting below the big $100 mark does not help sentiment either.  Support to the downside within the current range, should be noted at $84. Near-term resistance is seen at the $100 mark.

ETH/USD weekly chart

As described, the major near-term support is seen at $84. A break to the downside could open the door to another wave of sellers. The weekly chart view looks worrying, as should a breach occur at the mentioned support, the price could plummet. Eyes would next be on the $65 territory; ETH/USD last traded her at the start of May 2017.

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 78 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

Waiting for the Costco Earnings Report

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By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets

Retail companies are among the best investment choices right before the New Year. Let’s see whether it is really true by analyzing Costco, a retail company whose Q4 earnings report is due on Dec 13.

Costco Wholesale Corporation (NASDAQ: COST) is the largest self-service warehouse chain across the globe and the fifth retail company in the US with the most sales. The company sells domestic appliances, foods, chemicals and cleaning agents, clothes, consumer electronics, etc. There is a loyalty program, and members get discounts. Among the members, around 90% are active customers. Costco is conquering the e-commerce world, too, but online sales contribute just 4% to the entire revenue, so the potential here is great.

The company buys products right from the manufacturers and sends them to warehouses, where they are sold to consumers. This saves time and money on multi-level distribution while maximizing the turnover and sales. Currently, there are 768 Costco warehouses in the world, including 533 in the US, 10 in Canada, 39 in Mexico, 28 in the UK, 26 in Japan, 15 in South Korea, 13 in Taiwan, 10 in Australia, two in Spain, and one in France and Iceland. With Costco stock being quite choppy, it has still been a safe haven for most investors, as both the stock price and the dividends have been growing steadily. Over the last 24 months, Costco was better than such competition as Target Corporation (NYSE: TGT), Kroger (NYSE: KR), and Walmart (NYSE: WMT), performing even better than S&P 500.

Costco earnings are season-based, yet its overall trend is ascending.

The debt to equity ratio is under 1.00, while the shorts are just 1.20%. Costco is interesting for investors mostly because of its dividends it’s been paying for over 15 years. In 2004, one share paid $0.10, while in 2018 it is $0.57. The share price also rose considerably, from $40 to $240, which was a great profit for long-term investors (6x+).

In November, retail sales amounted to $12.77B, which is 9.80% more than 12 months ago. The Q4 earnings report may be positive as well. Kroger (NYSE: KR), which had already reported its earnings, exceeded analysts’ expectations, which proves Costco’s report may trigger the same effect.

Fundamentally, there are no negative factors across the board, while, technically, one may want to wait for a better chance that will surely come. The report due this week is 90% likely to exceed expectations, that will push the stock upwards in the short term. However, in W1, one can see the stock has been growing abnormally since June and is well above the 200-day SMA. This is usually followed with an appropriate correction. Besides, when the stock hit $250, its volatility increased.

In terms of candlestick analysis, there are two engulfing patterns, which means the price may start falling soon. It may well test $200 and then go up again, in case there’s enough volume coming from the investors’ interest.

On D1, the stock may rise in the short term because of the good earnings report, as mentioned earlier. This is confirmed by both the support at $218 and the increase in volume. This increase, however, is becoming more and more humble over time. Thus, in case $218 gets broken out, the price may go down, which is confirmed with W1 chart. Buying COST right now expecting a good earnings report on Dec 13 is risky.

The price may rise only in case the report beats expectations, though; otherwise, the stock may fall down quickly to reach $200.

Overall, trading Costco straight away is not the best idea and will suit only those who are hunting for adrenaline. The company looks well attractive for a long-term investment next year, but waiting for a better price is the best thing you can do.

Costco is popular with hedge fund managers, too. As of late Q3, 39 hedge funds had it, including Warren Buffett’s Berkshire Hathaway, with Costco shares worth over $1B.

The P/E is 31.50, which means you will need quite a lot of time for your investment to prove profitable (Apple’s P/E, for instance, is 13.87). Thus, it’s better to wait until the hype comes down, and only then take a long position on Costco Wholesale Corporation.

Disclaimer

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboMarkets shall not be held Company 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

Crypto Update: Weekend Bounce Fails to Turn Bearish Tide

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The major cryptocurrencies continue to be stuck in declining trends, despite the bounce that followed the latest technical breakdown in the segment. The top coins failed to recover above the prior bear market lows sustainably, and today, the market turned lower again, with the weakest currencies already threatening with new lows.

The long-term picture remains overwhelmingly bearish, and out trend model is negative across the board, with only Bitcoin showing relative stability, still holding up near its prior low. There is no sign of bullish momentum among the majors and traders and investors should remain defensive here, until at least a short-term trend change, as despite the negative sentiment and the deeply oversold broader picture, odds still favor new bear market lows in the coming period.

BTC/USD, 4-Hour Chart Analysis

Bitcoin bounced back after last week’s breakdown and tested the $3600 level before turning lower again. Since the coin failed at the key level, the short-term sell signal in our trend model remains in place, together with the clear long-term sell signal.

A move towards the long-term support zone near $3000 remains likely, and traders still shouldn’t enter new positions here. The coin is well below the key $4000-$4050 zone, and the short-term downtrend is still intact, despite the recent rally attempts.

ETH/USD, 4-Hour Chart Analysis

Ethereum is also stuck below the prior bear market low and the key 95-$100 support zone, similarly to Bitcoin, and although the coin is not showing clear relative weakness anymore, it is still bearish on both time-frames in our trend model, with the steep downtrend being intact.

New lows are still likely in the coming weeks, and traders and investors should stay away from the coin Strong resistance above the primary zone is ahead near $120, $130, and $150, while long-term support is found in the $73-$75 zone.

Bearish Leaders Remain Weak

XRP/USDT, 4-Hour Chart Analysis

Ripple continues to be relatively weak from a short-term perspective and the coin is hovering near the $0.30 following the failed rally attempts, which were capped by the $0.32 resistance level. The coin is on sell signals on both time-frames due to the recent weakness and technical breakdown, and a test of the bear market low near $0.26 now seems likely. Primary support is now found at $0.28, with further resistance levels ahead at $0.3550 and $0.3750.

Litecoin/USD, 4-Hour Chart Analysis

Litecoin is also showing relative weakness, despite its brief period of strength in November and the coin is trading just above the next major support zone which is found near the $23 price level. The steep long-term downtrend is clearly intact and our trend model bearish both time-frames, and new lows are likely in the coming days, with strong resistance ahead near $26 and between $30 and $30.50.

Monero/USDT, 4-Hour Chart Analysis

On another negative note, the bearish leaders are still not showing signs of stability, barely bouncing off their lows during the broad rally attempt. Monero is still among the weakest majors, and the coin looks ready for another leg lower, with last week’s breakdown clearly being intact.

We expect the downtrend to continue in XMR and the other relatively weak coin, and traders shouldn’t enter even new positions here, despite the oversold long-term momentum readings in the segment.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

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 412 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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