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Daily Analysis: Pound Turns Volatile as Brexit-Worries Return

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Thursday Market Recap

Asset Current Value Daily Change
S&P 500 2550 -0.12%
DAX 12982 0.09%
WTI Crude Oil 50.62 -1.25%
GOLD 1296.00 0.61%
Bitcoin 5308 9.55%
EUR/USD 1.1835 -0.20%

While generally speaking, financial markets remained at a standstill, there were “pockets” of volatility especially in currencies (both fiat and crypto) and some commodities. Equities were virtually unchanged globally, although Asian stocks edged higher, and the Nikkei continued to hit two-decade highs.

The Great British Pound had a rollercoaster ride, as the lead negotiator of the EU-UK Brexit talks told the press that the progress made during the talks has been insufficient. The Pound took a nosedive after the strength of the recent sessions, but despite the significant intraday drop, the currency recovered strongly and finished in the green for the day and above the previous rally high. All in all, the day confirms the trend in the GBP, and we could in for more gains in the Cable and downside in the EUR/GBP pair.

GBP/USD, 4-Hour Chart Analysis

 With no news coming out from Catalonia, the Euro wobbled and finished unchanged against the Dollar, while losing ground to the Pound and the Yen. The widespread Asian rally dragged the Aussie and the Kiwi higher for the third day in a row, while gold continued to rally as well despite the quiet environment and the hawkish FOMC meeting minutes. The weak and volatile rally in oil ended with a decline to the $50 per barrel price level in the WTI contract, but choppy trading is likely to continue, with the looming OPEC meeting.

Gold, 4-Hour Chart Analysis

Cryptocurrencies

The segment had a very busy session, especially Bitcoin and Litecoin, as the historic rally above $5000 in the most valuable coin made headlines. BTC produced a massive and convincing break-out, reaching up to almost $5400 while Litecoin 10% to its price. LTC is currently testing the key resistance zone near $56, and bulls are anxiously waiting for a break-out. With only for days left until Ethereum’s Byzantium fork, the second largest coin confidently sits above $300, but it failed to show upside momentum amid the BTC rally. The other majors were mixed, with NEO and IOTA remaining under pressure, while Ripple continuing its short-term correction.

BTC/USD, 4-Hour Chart Analysis

Technical Picture

The Nasdaq hit a marginal new high today, despite the overbought readings and the low-momentum trading environment. The benchmark still looks vulnerable here, and at least a dip to 6000 is expected in the coming days, while a test of the long-term trendline at 5900 is also possible. Bulls should wait with opening new positions until a correction, while bears could enter shorts with favorable risk-reward ratios.

NASDAQ, 4-Hour Chart Analysis

Key Economic Releases on Thursday

Time, CET Country Release Actual Expected Previous
14:30 CANADA NHPI 0.1% 0.3% 0.4%
14:30 US PPI Index 0.4% 0.4% 0.2%
14:30 US Unemployment Claims 243,000 255,000 260,000
16:30 EUROZONE Mario Draghi Speaks
14:30 US Crude Oil Inventories -2.7 mill -1.9 mill -6.0 mill

Key Economic Releases on Friday

Time, CET Country Release Expected Previous
2:30 AUSTRALIA RBA Stability Report
Tent. CHINA Trade Balance 266 bill 287 bill
14:30 US Retail Sales 1.5% -0.2%
14:30 US CPI 0.6% 0.4%
16:00 US UOM Consumer Confidence 95.4 95.1

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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Analysis

Long-Term Cryptocurrency Analysis: Bearish Trend Intact Despite Explosive Rally Attempts

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The negative trend in the cryptocurrency segment continues to be dominant, with almost all of the top coins trading below the structural support levels that were broken during the summer months. Bitcoin is still above the $5850 level, the last base support before last winter’s explosive speculative event, but Ethereum, Ripple, Litecoin, and the other main altcoins all continued relentlessly lower.

Most of the majors formed a bottom in August, even though Ethereum continued to lead the way lower amid the bleak sentiment and capital flight. Several oversold rally attempts already failed in the segment, leaving the long-term declining trends intact, with last week Ripple providing hope for bulls with its explosive move higher.

While some of the coins tried to follow Ripple higher, the development of a healthy leadership failed yet again, add our trend model continues to be overwhelmingly bearish from a long-term perspective. With that in mind, the short-term buy signals should still be treated cautiously by traders. The August lows are not in direct danger right now, and a more durable bottom might already be in, but a broader rally would be needed to confirm a trend change.

BTC/USD, Daily Chart Analysis

While BTC has been holding on relatively well during the summer months, in the past weeks, as the largest coin was hurt by selling related to large wallets. The coin failed to show bullish momentum despite its stability, and a break below the key long-term support zone near $5850 is still possible here.

Primary support is at $6275, and in the case of a breakdown below $5850, the next major support zone is found near $5000, while resistance is ahead at $7000, between $7200 and $7300, and in the $7650-$7800.

ETH/USD, Daily Chart Analysis

After spiking below $180 and forming a panic-bottom, Ethereum rallied up to $260, but due to the extent of the preceding decline, it didn’t reach the declining trendlines which dominated the market for several months. The coin has been leading the selloff in the segment, and now a re-test of the lows is once again likely, even if a more durable bottom is already in.

Short-term support is found at $200 and $180, while below the recent low, further zones are found near $160 and $130, with resistance zones ahead between $275 and$280, near $300, and in the $330-$335 zone.

(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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4.6 stars on average, based on 353 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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Analysis

Investors Getting High on Cannabis

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By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets

A year ago, you would hardly find even the most financially illiterate person in the world that had not heard of Bitcoin or cryptocurrency. Regardless of whether they know what it was — at least they know you can earn money with it!

Opportunities to earn easy money sometimes do appear, but they do extremely rarely, and in this light the crypto boom is often compared to the tulipmania that happened in the 17th century. At that time, speculators with no experience joined the tulip futures trading, which eventually led to a sharp increase in flower bulb prices, while a year later the overheated market collapsed, bringing huge losses to all.

The chance to earn huge profits for people who do not have a close connection with the markets does not appear so often. But for those who work with stocks, such opportunities arise almost every quarter.

The price of bitcoin at the peak of its popularity, when almost everyone knew about it, went up by 2,000%. In the stock market, some companies can yield a return of 1,000% within a week or a month, and there is no need to wait a whole year around.

The last sharp increase in share prices after an IPO, which broke all records this year, was shown by Tilray. Since the IPO on July 19 this year, the stock yielded a return of 1,300% over 2 months, and for those who follow the IPO, there was plenty of time to buy this stock, as the price was at about $20 for about a month.

Tilray is a Canada-based company specializing in cultivation and sale of medical marijuana to consumers and pharmaceutical distributors.

When a stock experiences such a rise, however, it usually falls afterwards, and Tilray was no exception as it lost 50% of its maximum value, although it continues to trade at 600% higher against the initial IPO price.

2018 was a landmark for marijuana manufacturers, as in January California legalized the use of marijuana for recreational purposes. Currently, medical marijuana products can be consumed in 29 US states. It is expected that, by 2022, the marijuana market in the US and Canada will have grown by more than three times.

Tilray is a clear indicator of investors’ interest in such companies. However, it’s not just traders who are interested in marijuana producers. Constellation Brands, one of the largest beer producers in the US, announced its intention to invest $4B into Canopy Growth, another Canadian company. This will allow it to increase its share in Canopy Growth from 8.70% to 38.00%. In the next 3 years, the US company will get the right to buy another 139.7M shares for $3.5B, thereby increasing its stake to the controlling one.

Meanwhile, Microsoft has partnered with the Kind Financial, a US based startup company which develops software for government agencies that control the production and sale of marijuana.

On September 17, rumor had it that Coca-Cola was negotiating with Aurora Cannabis to create a beverage containing cannabis. Most likely, this drink will be used to reduce inflammation, seizures, and as an anesthetic.

All this confirms the interest of large companies and investors in marijuana manufacturers. At this rate, finding a marijuana company and investing your money in it could seem a good idea, but there is a risk of high volatility, just like in case of Tilray, which can put your deposit under serious threat. An easier way would be investing in an ETF with the same companies stocks.

The most interesting ETF in the marijuana industry is ETFMG Alternative Harvest (NYSE: MJ).

According to some sources, since August 22, this fund recorded a cash inflow of $112M, which is about 20% of the total value of its entire portfolio. With the money supply growing, the trading volumes increased up to 10M shares, which is 3 times higher than the volume in July.

The interest towards this ETF was especially frantic when California passed the law early this year: at that time, ETF MJ price rose from $29 to $39. Then, in March, the price tried to go up further, but the volumes stayed low, so the price had to get back and even sank a bit. It was only in August when $27 got broken out, and then the price went well up to reach $45, this time also with increased trading volumes. Currently, the support levels are at $34 and $39. Given the increased volatility, the price is quite likely to go down to $34.

ETF investment has always been considered less risky, and in case we are now on the brink of a marijuana boom, this ETF is certainly going to be the best investment vehicle.

 

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 liable 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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4.4 stars on average, based on 7 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: Ripple Leads Selloff After Weekend Consolidation

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Sellers are back in full force in the cryptocurrency segment as Ripple retraced a large chunk of last week’s surge Monday in late trading. The coin dragged the whole market lower, with Bitcoin, Ethereum, and all of the major altcoins registering significant losses. The 5-10% decline and the almost 20% plunge of XRP hurt the total market cap of the coins badly, which fell by more than $15 billion off the weekend levels to around $210 billion.

The fact that most of the coins failed to extend the gains from last week, leaving the bearish long-term technical setups intact, is a negative for the coming weeks, with especially Bitcoin’s relative weakness being worrying for bulls. While there is still hope that a leadership might develop, with the likes of Monero Dash, Stellar, and Ripple being in short-term uptrends, given the long-term segment-wide downtrend, traders should still be cautious with new positions even in the technically stronger coins.

XRP/USDT, 4-Hour Chart Analysis

Ripple has already been testing the $0.42-$0.46 zone as we expected following the quiet weekend period, and volatility is expected to remain elevated, with the steep short-term uptrend line also being found near the current price level. The coin has to hold up above the key zone to confirm a longer-term trend change, but for now, the weakness in the rest of the market makes the move suspicious.

With that in mind, traders should still not enter full positions in the coin, even as the short-term overbought momentum readings are almost cleared. Further support below $0.42 is found near $0.3750 and $0.35, while resistance is ahead near $0.51, $0.54, and $0.57.

BTC/USD, 4-Hour Chart Analysis

Bitcoin fell back below $6500 amid the broad selloff, and the most valuable coin is close to the weak rising short-term trendline yet again. While a short-term sell signal hasn’t been triggered, a sustained move below $6275 would be a bearish sign and would make another test of the key long-term zone near $5850 likely again. Further resistance zones are now ahead near $6750 and $7000 while weaker support is also found near the $6000 price level.

Altcoins Still Mixed but Bulls Need to Show Strength Soon

ETH/USD, 4-Hour Chart Analysis

Ethereum failed to hold above the key $235 support/resistance level after reaching up to the zone near $260 during last week’s rally and the coin is close to triggering another short-term sell signal in our trend model. ETH is trading right at the short-term uptrend line, and with all the major declining trendlines being left intact by the rally, a move towards $200 is likely with a possible test of the bear market low near $170 as well.

LTC/USD, 4-Hour Chart Analysis

Litecoin remained relative weak during the rally, never triggering a buy signal, and the coin is now testing the $0.56 level and the weak short-term uptrend line as well. A clear move below those would mean a sell signal for LTC and with the long-term trend clearly being bearish, a dip below $50 would be likely afterwards. Further support is found near $51, while resistance is ahead near $59 and $64.

While some of the stronger coins are still showing stability as we mentioned above, the relatively weaker currencies haven’t been able to gather strength, and IOTA, NEO, Ethereum Classic, and EOS are still looking negative from a technical perspective.

IOT/USD, 4-Hour Chart Analysis

Although IOTA managed to avoid a test of the August lows, last week’s failed move makes a break below $0.50 likely in the coming weeks, as the steep long-term downtrend remains intact. A quick move above last week’s highs would be a bullish sign, but for now, sellers are still clearly in control of the market.

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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4.6 stars on average, based on 353 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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