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Analysis

Daily Analysis: Oil and Gold Shine as War Fears Persist

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Wednesday Market Recap

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Asset Current Value Daily Change
S&P 500 2347 -0.25%
DAX 12139 -0.15%
WTI Crude Oil 53.63 0.24%
GOLD 1277.75 1.05%
Bitcoin 1213 0.10%
EUR/USD 1.0614 0.00%

 

Global stocks are relatively strong today, despite the surge in safe-haven assets such as gold and the Japanese Yen. The surprising escalation regarding North Korea added to the tensions concerning Syria, although no direct conflict is likely between Russia, the US, and China. Oil also continued to march higher as Saudi Arabia voiced its intentions to extend the production cuts that were started in late 2016. The major indices are well above the lows from yesterday afternoon, with the European benchmarks being stronger and Japanese stocks being relatively weaker thanks to the yen’s rise.

Currencies are little changed so far, even the Pound is stable, despite the release of the crucial British employment report earlier today, which came in mixed. Wages grew by more than expected, while employment growth disappointed analysts. WTI crude oil is now back to the $54 per barrel level, right where it was in early March before it’s strong move lower, as geopolitical fears drive the price of the crucial commodity higher.

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WTI Crude Oil, 4-Hour Chart Analysis

Crytpocurrencies are mostly stable today, with Bitcoin still holding above the $1200 level, but below the short-term resistance at $1215. Litecoin remains the most volatile major altcoin, as it continues to trade around the $10 level in a wide consolidation pattern. Monero, Ripple and Dash are also trading near yesterday’s levels with Dash still being the weakest of pack. Ethereum is also still in the range that it has been hovering in for two weeks now.

Technical Picture

S&P 500, 4-Hour Chart Analysis

The S&P 500 had a strong momentum move to the downside yesterday afternoon, but the index proved its short-term strength once again as it shot back higher later on and now it’s trading near the line-in-the-sand support/resistance zone near $2350 once again. The MACD also confirms the sideways price action, as t remains stuck near the 0 level, giving no clear signals. The low volatility environment could soon lead to a violent move, when the price leaves the current range.

Key Economic Releases on Wednesday

Time, CET Country Release Actual Expected Previous
10:30 CHINA CPI (yearly) 0.90% 1.10% 0.80%
11:00 UK Average Earnings 2.30% 2.10% 2.20%
14:30 UK Unemployment Rate 4.70% 4.70% 4,7%
14:30 CANADA Base Interest Rate 0.50% 0.50% 0.50%
14:30 US Crude Oil Inventories -2.2 million -0.7 million 1.6 million

 

Key Economic Releases on Thursday

Time, CET Country Release Expected Previous
2:30 AUSTRALIA Employment Change 20,300 -6,400
2:30 AUSTRALIA Unemployment Rate 5.90% 5.90%
3:30 CHINA Trade Balance 76 billion -60 billion
14:30 CANADA Manufacturing Sales -0.40% 0.6%
14:30 US PPI (monthly) 0.00% 0.3%
14:30 US Initial Jobless Claims (weekly) 242,000 234,000
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 99 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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4 Comments

4 Comments

  1. Ershad

    April 12, 2017 at 9:43 pm

    Hi Mate,

    Thanks for your article, I was going to ask you two questions, firstly what price would you recommend selling Ethereum at, and also what price would you recommend selling gold at before we see a pullback?

    kind regards,

    Ershad

  2. Mate Cser

    April 12, 2017 at 10:21 pm

    Hi Ershad,

    in both cases, I would separate long-term investment positions and short-term trading positions. Ethereum is in a powerful long-term uptrend, while gold is most likely starting a new long-term uptrend, so a core investment position should be held through the corrections.

    As for trading, gold is late in its daily cycle and a correction is likely starting around the $1300-$1315 zone. Picking the exact top shouldn’t be your goal, you can simply follow the rise with your stop-loss; that takes away the urge of tracking your positions too closely.

    Same goes for Ethereum, but it’s a much more volatile asset, positions should be smaller. A sustained break below $38 could lead to a deep correction, but for now, another leg up is more likely. In that case, I would sell a part of my position near $53-$55 and follow the rest with a wider stop. I recommend following Jim’s (Jim Fredrickson) articles on cryptocurrencies as well, he has a deep understanding of the price movements.

    • naruto9xit

      April 13, 2017 at 9:14 am

      Hello, can you give me more predictions of how much money you can invest long term

      • Mate Cser

        April 13, 2017 at 5:01 pm

        Hi naruto9xit,

        thanks for your question! Stay tuned for our coming recap of the long-term trends and investment opportunities in global markets in the next few days!

        Mate

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Analysis

Cryptocurrencies: Five Reasons Why The Worst Is Behind

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February 5, 2018 is the day when investor fear was replaced by greed. That marked the current bottom for cryptocurrency prices.  Simple enough to make this claim now that we have had a few good trading days.  But how do we know for sure that the worst is behind?

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Oh if there was a reliable way to measure fear and greed in this nascent crypto world. It could tells us emphatically when market tops and bottoms are occuring, we could make some real digital dough.  True, there are lots of tools that have been tried on traditional markets likes stocks and bonds.  But if these will truly work in crypto land remains to be proven.

Sometimes the most reliable barometer is nothing more complicated than “gut feel”.  Here is what feels encouraging when I apply this test.

The February 5th Bottom

Volatility has been a major feature in crypto trading since day one.  After better than a 7000% appreciation in Bitcoin and Ether in 2017, should a massive correction be a surprise? Between December of last year and February 5th, Bitcoin lost almost two thirds of its value while Ether dropped almost 50%.  We could go on listing every currency but you get the point.

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It this were the infamous Dutch tulip bubble of 1634 the carnage would have continued endlessly.  With crypto, investors collectively found value starting on February 5.  Since then, Bitcoin has gained 50% and Ether about 30%.  That has all taken place in a matter of a two weeks.

This is unprecedented.  When the dotcom price burst in February 2000 the Nasdaq began a 75% fall before hitting bottom in November.  It took fully 14 years before the Nasdaq fully recovered.

Running Scared Of Government

Many investors try to connect the stock market correction with the slide in the cryptocurrency markets.  That would be a mistake because the circumstances are quite different.

The crypto correction and frightening headlines coming from China and Korea about threatened government crackdowns had everything to do with investors heading for the sidelines. This is not to ignore the mechanical influences like the slow transaction speeds etc. But the minute the word government comes into the picture, the worst fears take over.

With the benefit of time, investors are slowly coming to the realization that no government regulation can effectively control ownership of cryptocurrencies. They can however, regulate the operation of exchanges and that is a good thing.  This offers the chance to clean up the bad practices, excessive fees and outright scams which have hurt the individual investor.  

Initial investor reaction to the Chinese and Korean government news reminds us of an important point.  There is no such thing as perfect information in the crypto market.  Even so called professional investors know very little.  The general public are price driven momentum players.  Even erroneous headlines move markets; facts take more time .  

A  Pickup In ICOs

It doesn’t matter if you are dealing with stocks bonds or Bitcoin, when investors are willing to put money in the most speculative sectors, that is a sign of market strength.  Recently we wrote an article noting a precipitous drop in capital raised from ICOs during January.

We used data compiled by ICO Watchlist.  These folks are the only ones collecting data and their numbers don’t alway agree.  But we are using their date consistently for comparative purposes.

From a monthly average of about $400 million during the four peak months of 2017,  January dropped to just $76 million.  Easy to understand, investors lost their confidence in high risk instruments.

Things are beginning to change. With the recovery of major currencies the ICO market is showing new life.  With more than a week left in the month, ICOs have raised over $176 million, according to ICO Watchlist.

These figures exclude the current ICO underway for messaging app Telegram that claims it has raised $850 million thus far in a $2 billion total effort.  If these initial reports prove accurate it would be the largest ICO on record and create bold headlines.

More Hedge Funds Are Coming

According to Autonomous hedge fund money is piling up to between $3.5 and $5 billion marked exclusively for crypto investing.  The rise is dramatic reaching 226 funds globally compared with about half that many as recently as 5 months ago.  At the start of last year there were just 37.

The Negative Headlines Are Gone

There is nothing like raising prices to force the media to seek explanations.  Now instead of naysayers like Warren Buffett being quoted incessantly, CNBC brings on Shark Tank host Robert Herjavec declaring the Bitcoin is “going to skyrocket again” the “blockchain technology is here to stay” and that more government regulation will be the key driver.

CNBC even dragged out an old forecast by Tom Lee prejecting Bitcoin at $25,000 this year and Kay Van-Petersen of Saxo Bank predicting Bitcoin at $100,000.

The market litmus that I call “ gut feel” is hardly scientific.  There are probably analysts of big data that can offer better supporting evidence.  But for now, things are looking pretty good.

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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4.3 stars on average, based on 21 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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Analysis

Technical Analysis: Bitcoin Tests Weekend High as Consolidation Continues

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The major cryptocurrencies entered a shallow correction during the weekend, and most of the coins are still trading below their prior rally highs, with only Ethereum Classic registering new highs. BTC is also very close to its Saturday high, as it is still leading the market higher, outperforming both Ethereum and Ripple.

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Bitcoin is still slightly overbought form a short-term perspective and the correction could still continue in the coming days, with key support zones found near $10,000 and between the $9000 and $9200 levels. That said, the price action in the most valuable coin and the broader segment is still in line with the bullish scenario, and we expect the trend to continue after the correction. Above the $11,300 level further resistance is ahead at $13,000 and $14,250.

BTC/USD, 4-Hour Chart Analysis

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Among the other relatively strong coins, Litecoin and Monero are also holding up well, while NEO is also showing short-term strength, diverging slightly from Ethereum which it has been correlating with in recent weeks.

Monero is also trading close to the weekend highs, as is working its way through the overbought short-term momentum readings. The coin is well above the previously dominant trendline, in clear short-term uptrend. Traders and investors could be looking for entry points during the correction, with strong support at $300, $280, and $240.

XMR/USD, 4-Hour Chart Analysis

(more…)

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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Analysis

Crypto Update: Market Still on Bullish Track as China, US Closed

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The segment might be in for a long weekend regarding trading activity, as both the US and Chinese traditional markets are closed, for the New Year and Presidents’ Day, respectively. That said, the major coins could still provide important clues about the state of the current uptrend, as the crucial correction that started yesterday is still ongoing, even with some of the currencies showing encouraging relative strength.

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The positive signs that we have been monitoring throughout the rally continue to persist, and as we mentioned yesterday, this pullback is very important in establishing a bullish cycle in the sector after the preceding steep decline.

Correlations remain relatively low, the momentum of the decline stayed muted so far, the leaders of the rally are still behaving well, so bulls could be looking for another leg higher soon.

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BTC/USD, 4-Hour Chart Analysis

Bitcoin is trading slightly below its weekend highs after spiking down towards the $10,000 support yesterday, as the largest coin recovered well following the initial move.

BTC still faces strong resistance near $11,300, with the next major level ahead at $13,000, and as the short-term momentum indicators still have room to correct, the consolidation could continue in the coming days with crucial support below $10,000 found in the $9000-$9200 range.

Ethereum Classic Leading Again

ETC/USD, 4-Hour Chart Analysis

Ethereum Classic continues to spearhead the rally, as the coin already hit a new cycle high above $38 today in early trading, and although the correction, which started before the segment-wide pullback could still continue, the relative strength of the coin is encouraging.

Above the current levels, further resistance is ahead only near $43 and $47, the all-time high for the currency. ETC could be the first major to score a record high after the correction, but long-term investors should be aware that another bullish swing could already carry the coin to overbought momentum readings, with it being already up almost three times off the crash lows, so now we wouldn’t add to long-term holdings.

LTC/USD, 4-Hour Chart Analysis

The other major altcoin are behind ETC in the cycle, with LTC and Monero still being the strongest from a technical perspective. Both coins are still trading in orderly short-term corrections above the previously dominant declining trendline, and they will likely continue to lead the broad rally. Ripple could also be ready for a move after its longer correction, and NEO is still showing surprising in today’s quiet environment, with the rest of the majors being virtually unchanged.

Stay tuned for our detailed technical analysis later on today.

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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