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Analysis

Daily Analysis: Markets Settle Down After Crazy Ride

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Friday Market Recap

Asset Current Value Daily Change
S&P 500 2425 0.22%
DAX 12403 -0.07%
WTI Crude Oil 45.34 0.92%
GOLD 1243.00 -0.25%
Bitcoin 2520 -1.53%
EUR/USD 1.1414 -0.22%

US and European stocks took a nosedive yesterday, as the one-week long central meeting took its toll, with the Euro emerging to a new 1-year high against the Dollar. The ECB is not quite ready to start monetary tightening, but the bank’s changed rhetoric was enough to trigger a sell-off as the uptrend was already getting “tired”. The NASDAQ led the decline in the US once again, as the tech index fell back to its flash crash lows from two weeks ago. Bank stocks held up the S&P 500, as the rising yield environment would be helpful for the sector, although long-term yields don’t reflect the optimism of central banks.

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Dollar Index 4-Hour Chart Analysis

Currencies are also less active today, with no major speeches from the central bankers, as the Dollar rebounded off its lows from yesterday. The long-term downtrend in the currency is still ongoing, as the USD now retraced all of the Trump-Rally (and then some). The better than expected final GDP print wasn’t enough to cause a meaningful change in the trend, as the more forward looking indicators are still notoriously showing weakness in the US economy.

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The Citibank Economic Surprises Index and The S&P 500

Gold and oil changed courses this week, with the precious metal showing weakness on the tightening speculation, while oil gained ground on the calmer geopolitical environment and the rising yields, as the shale oil segment would suffer from the stricter funding conditions, and that could drive US production lower in the coming period.

Oil Futures 4-Hour Chart Analysis

Cryptocurrencies

The crypto market remained calm today, as we expected this morning as both Bitcoin and Ethereum are stuck between crucial support and resistance zone while the other coins are finally less correlated to their “Big Brothers”. Volatility declined across the board after the strong moves in the majors and the smaller coins alike this week, and more consolidation is expected before another significant move. Litecoin, Dash, Stratis, and Antshares are the notable outperformers today, while Golem, Ripple, and Ethereum are slightly in the red for now.

Litecoin, 4-Hour Chart Analysis

Technical Picture

The NASDAQ fell sharply in US trading after a bullish overnight market yesterday, but it failed to sustainable exit short-term range, despite the strong downside momentum. The long-term trendline converges with the crucial 5600 support level just below the current price, and the prior low at 5650 is also still in play, possibly leading to a very choppy session today, as the second quarter is drawing to a close.

NASDAQ 100 Futures 4-Hour Chart Analysis

Key Economic Releases on Friday

Time, CET Country Release Actual Expected Previous
3:00 CHINA Manufacturing PMI 51.7 51.0 51.2
3:00 CHINA Services PMI 54.9 54.5
8:00 GERMANY Retail Sales 0.5% 0.3% -0.2%
10:30 UK Current Account -16.9 bill -16.5 bill -12.1 bill
10:30 UK Final GDP 0.2% 0.2% 0.2%
11:00 EUROZONE Flash CPI 1.3% 1.3% 1.4%
14:30 CANADA GDP 0.2% 0.2% 0.5%
14:30 US Personal Spending 0.1% 0.1% 0.4%

Key Economic Releases on Monday

Time, CET Country Release Expected Previous
1:50 JAPAN Tankan Manufactring Index 12
1:50 JAPAN Tankan Services Index 20
3:45 CHINA Caixin Manufacturing PMI 49.6
8:00 SPAIN Manufacturing PMI 55.4
9:30 UK Manufacturing PMI 56.7
16:00 US ISM Manufacturing PMI 54.9
16:00 US Vehicle Sales 16.7 mill

 Featured image from Shutterstock

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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.

Featured image courtesy of Shutterstock.

 

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