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Daily Analysis: North Korea and Cryptocurrencies in Focus as Irma Targets Florida

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Tuesday Market Recap

Asset Current Value Daily Change
S&P 500 2448 -1.09%
DAX 12123 0.18%
WTI Crude Oil 48.66 2.85%
GOLD 1342.00 0.93%
Bitcoin 4278 2.16%
EUR/USD 1.1900 0.03%

With the major North American exchanges closed for Labor Day and Canada Day yesterday, global markets traded with thin volumes, but today, traders and volatility are back in full force. The most important indices are trading lower after the opening bell, and Asian stocks are underperforming their global peers. This is especially true of Japan, as local equities got hit by the Korean escalation and the jump in the Yen that surged together with other safe-haven assets.

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After Hurricane Harvey caused devastation in the Gulf of Mexico, another Category 5 storm, Irma is nearing the coast of the US, already causing damages in the Caribbean region, and giving a boost to the risk-off sentiment. The hurricane will likely make landfall in Florida, and although the extent of the damage is highly uncertain, the event contributed to a spike in the VIX and a steep decline in stocks. Crude oil is trading sharply higher on the renewed supply and war fears, nearing the $50 per barrel level agian int he WTI contract amid the persistent long-term fundamental pressures.

S&P 500, 4-Hour Chart Analysis

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Forex markets are fairly active on the first post-Labor Day session, as the hydrogen bomb test and coupled by the preparation for yet another ICBM launch in North Korea caused massive buying in safe haven currencies and gold. The Dollar is broadly lower today, and even the Great British Pound is up against it as the currency rebounded strongly from yesterday’s slump, recapturing the 1.30 level in the pair.  The Euro is also slightly higher compared to the USD, although it’s down against most of its peers in the negative environment.

Huge decline towards kewy support in the USD/JPY, 4-Hour Chart Analysis

Cryptocurrencies

The segment experienced an oversold bounce today, as the major coins rallied in early trading after the Monday massacre. The Chinese ICO ban is still affecting the market that has surged tremendously in the past one and a half months, with the likes of NEO and Ethereum suffering steep losses thanks to the legal troubles. Bitcoin is holding up well amid the sell-off, but the long-term picture suggests that more correction is on the horizon for most of the segment after the monster rally.

NEO/USDT, 4-Hour Chart Analysis

Technical Picture

The precious metal is probably approaching a more durable top after Monday’s gap higher, as the daily chart is overbought, and some consolidation is likely after the break-out above $1300. The long-term picture remains encouraging for the metal, and the coming correction could form a bottom slightly below the key $1300 support. That said, further escalation in the North Korean situation could fuel more upside in the commodity, and investors should keep a core position in gold despite the likely pull-back, but wait with adding to their holdings.                

Gold, 4-Hour Chart Analysis

Key Economic Releases on Tuesday

Time, CET Country Release Actual Expected Previous
6:30 AUSTRALIA Rate Decision 1.5% 1.5% 1.5%
6:30 AUSTRALIA RBA Monetary Statement
10:30 UK Services PMI 53.2 53.6 53.8
16:00 US Factory Orders -3.3% -3.1% 3.0%

Key Economic Releases on Wednesday

Time, CET Country Release Expected Previous
3:30 AUSTRALIA GDP 0.8% 0.3%
14:30 CANADA Trade Balance -3.8 bill -3.6 bill
14:30 US Trade Balance -44.6 bill -43.6 bill
16:00 CANADA Rate Decision 0.75% 0.75%
16:00 CANADA Monetary Statement

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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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