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Daily Analysis: Markets Turn Volatile after ECB-Meeting as UK Election Looms

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 Thursday Market Recap

 

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Asset Current Value Daily Change
S&P 500 2434 0.06%
DAX 12718 0.37%
WTI Crude Oil 45.67 -0.07%
GOLD 1281.00 -1.01%
Bitcoin 2729 -2.94%
EUR/USD 1.1223 -0.30%

Financial markets turned volatile today after a period of low volatility, as the “Super-Thursday” of the week arrived, with the European Central Bank’s monetary meeting, the British snap election, and the hearing of ex-FBI Director Comey. European stocks are higher after the dovish ECB-statement that pushed the Euro lower. The central bank slashed inflation expectations for the Eurozone, in line with yesterday’s rumours, but the Euro’s losses are fairly limited so far. US equities are virtually unchanged despite the choppy price action, with the major indices still hovering around their all-time highs.

Gold entered a correction after its strong recent rally, and it got hit hard in early US trading, after rebounding off the $1300 level once again this week. Oil is slightly higher after yesterday’s massacre, trading near the $46 per barrel level in very volatile fashion. The Qatar situation hasn’t gotten any better, with Iran and Turkey offering help for the country, making the “front-lines” in the crisis even clearer. With the OPEC-deal now looking more fragile than ever, crude oil might remain under pressure in the coming weeks.

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Gold, 4-Hour Chart Analysis

Currency markets are dominated by the moves of the Euro, while the Great British Pound is also active on the day of the referendum, as it is also down against the rebounding Dollar. The Yen followed gold lower although it’s still trading near the 110 level on in the USD pair. Industrial commodities decoupled from oil, as they jumped higher with the help of the Chinese stock market that reacted well to the worse than expected trade balance data.

Technical Picture

The US financial sector has been one of the worst performing segments during the recent rally in global stocks, but today it’s finally showing some relative strength, although it’s still well below the prior highs with several strong resistance zones ahead. A break-out from the current short-term consolidation pattern could set up a move back to the $25 level. Investors are expecting a rate hike next from the Federal Reserve next week, and an optimistic Fed statement could boost the sector, as increasing rates would help profitability.

XLF (US Financial Sector ETF), 4-Hour Chart Analysis

Key Economic Releases on Thursday

Time, CET Country Release Actual Expected Previous
1:50 JAPAN Final GDP Growth 0.30% 0.60% 0.50%
3:30 AUSTRALIA Trade Balance 0.56 bill 1.99 bill 3.11 bill
4:00 CHINA Trade Balance 282 bill 336 bill 262 bill
14:30 EUROZONE ECB Interest Rate Decision 0 0 0
14:30 EUROZONE ECB Monetary Statement
14:30 CANADA NHPI Index 0.80% 0.30% 0.20%
14:30 US Initial Jobless Claims 245,000 241,000 248,000

 

Key Economic Releases on Friday

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