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Analysis

Daily Analysis: Ripple Explodes Again as EUR/USD Surges Past 1.10

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Tuesday Market Recap

Asset Current Value Daily Change
S&P 500 2401 0.10%
DAX 12825 0.15%
WTI Crude Oil 48.95 0.18%
GOLD 1234.00 0.30%
Bitcoin 1744 -0.82%
EUR/USD 1.1070 0.85%

 

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The major stock markets continue to trade in a narrow range near their all-time highs after the slight overnight weakness. The performance of the global benchmarks evened out following last week’s strong divergence although the NASDAQ is still the clear leader. The Chinese market is still in a correction, and that helps the US and European indices so far this week. It should come as no surprise that the Chinese authorities revealed that they injected a whopping $25 billion of liquidity to restore confidence in the troubled banking system. Economic numbers once again disappointed in the US and that weighs heavily on the USD, together with the renewed fears regarding Trump’s Russian connections. Building Permits Housing Starts both showed the cooling of the housing market, while Industrial Production was slightly above the consensus estimate.

Shanghai Composite, 4-Hour Chart Analysis

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The Euro is the biggest winner of the Dollar slump among the major currencies, while the Pound is relatively weak despite some favorable British economic reports earlier today. Meanwhile, the Chinese market remained stable, despite the weak industrial production data, helping the rally in commodities and related assets. The Yen, the Swiss Franc and gold are also surprisingly strong against the Dollar, while commodity-currencies are boosted by the continued strength in crude oil and the Chinese rebound.

Cryptocurrencies

Ripple continues to dominate the cryptocurrency market this week, as it completed the break-out above the $0.25 level and is currently trading near $0.33 after a rise of more than 35%. XRP reached a market capitalization of $12 billion, pushing Bitcoin’s market share below 50%. BTC rebounded off the $1600 support once again, as the choppy correction continued in the currency. The other majors remained weak, expect the rising star Stellar Lumen, with Litecoin falling the most once again, correcting back below the $25 level. NEM fully decoupled from Ripple, being down by another 5% today, while Ethereum, Ethereum Classic, Dash, and Monero are all drifting lower as well.

Ripple, 4-Hour Chart Analysis

Technical Picture

The NASDAQ continues to hit all-time highs on a daily basis, led by the big six, Amazon, Apple, Google, Facebook, Microsoft, and Netflix.  The benchmark established an advancing trend channel, although the broader indices are still suspiciously lagging the tech segment despite the more balanced performances this week. The European exchanges also gave up their relative strength, but they are still hovering just below their recent highs, as volatility remains very low, and trading volumes are also muted.

NASDAQ 100 Futures, 4-Hour Chart Analysis

Key Economic Releases on Tuesday

Time, CET Country Release Actual Expected Previous
3:30 AUSTRALIA Monetary Meeting Minutes
10:30 UK CPI Index 2.7% 2.6% 2.3%
11:00 EUROZONE Flash GDP 0.50% 0.50% 0.50%
11:00 GERMANY ZEW Economic Sentiment 20.6 22.3 19.5
14:30 US Building Permits 1.23 mill 1.27 mill 1.27 mill
14:30 US Housing Starts 1.17 mill 1.26 mill 1.22 mill
15:15 US Industrial Production 1.00% 0.4% 0.5%

 

Key Economic Releases on Wednesday

Time, CET Country Release Expected Previous
10:30 UK Average Earnings 2.4% 2.3%
10:30 UK Unemployment Rate 4.7% 4.7%
11:00 EUROZONE Final CPI 1.90% 1.90%
14:30 CANADA Manufacturing Sales 0.40% -0.20%
16:30 US Crude Oil Inventories 55.0
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4.6 stars on average, based on 257 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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  1. SuccessHappinessFreedom@gmail.com

    May 17, 2017 at 12:01 am

    Litecoin is at $24USD? should I buy more or sell out?

    • Mate Cser

      May 17, 2017 at 12:51 am

      Hi, regarding cryptocoins, I suggest following Jim Fredrickson’s posts and advice. In my opinion, LTC is still in an uptrend, possibly close to the end of the current correction, I would be looking for buy signals rather than sell signals here. As always, keep your position sizes manageable, especially in such volatile trends. Great trading!

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Analysis

Bitcoin Bears Running Out of Gas, According to Price Manipulation Theory

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A group of researchers at The Crypto Fam have linked price manipulation to bitcoin’s bear market, suggesting that the arrival of institutional trading allowed investors to dump oversized holdings of digital currency.

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Bitcoin Price Manipulation?

According to a new theory, it is no coincidence that bitcoin’s long unwind began on Dec. 17, the same day that bitcoin futures were launched. Over the next several months, the bitcoin-dollar exchange rate would fall from a high near $20,000 to a low of $5,980.

The rapid decline was aided by futures trading, which allows traders to short assets much more easily. As we’ve written before, shorting bitcoin was practically impossible prior to the launch of futures.

The theory posits that institutional money was stocking up on bitcoin well before Dec. 17, likely in anticipation of the CBOE/CME futures contracts. The bear market that ensued consisted of three major down moves, with the third leg beginning earlier this month.

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Each down move follows a similar pattern: (1) a fake-out dump, (2) a failed rally and (3) a major dump. Each leg down is driven by lower selling volume with each drop less severe than the previous.

The compelling study was presented this week in a series of tweets by The Crypto Fam, which describes itself as “a community of crypto enthusiasts bridging the gaps.” The group’s stated goal, according to its website, is to “make crypto not so cryptic.”

In describing the pattern, the researchers concluded that “the bear market is running out of gas” because their supply of bitcoin has declined since the pump culminated on Dec. 17.

“This is a very simplified explanation of how markets work. A great deal of the total BTC supply is not traded. Some is lost forever in idle or forgotten wallets. Other Bitcoin is hodled by strong hands who never sell. This gives [market makers] greater power with their share of BTC.”

End of the Downtrend?

With the bears and market makers running low on supplies, the researchers concluded that the end of the downtrend is near. Bounces are more shallow than before while bottoms aren’t nearly as low.

Bitcoin prices fell below $7,300 earlier this week but have since recovered to the $7,500 range. Since bottoming below $6,000, prices have failed to test new lows. On the opposite side of the ledger, rallies have also been limited to $12,000 and $10,000, respectively.

Institutional adoption is widely viewed as a positive development in the evolution of cryptocurrency trading, though the latest study sheds light on the downside risks of derivatives trading. A similar conclusion was drawn earlier this month by the San Francisco Fed, which compared the launch of bitcoin futures to innovations in securitization in the mortgage market. However, this model has been criticized heavily for mistaking correlation with causation.

Disclaimer: The author 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.

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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4.5 stars on average, based on 417 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Analysis

Long-Term Cryptocurrency Analysis: Correction Deepens but Leaders Remain Stable

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As the major cryptocurrencies got hit hard this week, losing around 20% on average, the long-term picture in the segment got close to an entry point for investors. The overbought readings that developed during the late-April rally are now cleared and although the short-term trends are still clearly negative, we still expect the coins to resume the recovery. With that in mind, long-term investors could start accumulating the relatively stronger coins.

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On a negative note, even the leaders violated key support levels during this week’s selloff, but the secular long-term trends are not yet in danger. The prior leaders Ethereum, EOS, and IOTA are still in the center of attention, as we expect them to form a bottom soon. Bitcoin and the other relatively weak coins, like Litecoin, Monero, Dash, and NEO are still lagging the form a technical perspective, but they are also well above the support levels that would indicate an end of the secular bull market.

BTC/USD, Daily Chart Analysis

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Bitcoin is below the key $7650-$7800 support level and it remains the biggest drag on the market, despite a brief period of relative strength this week. The upper boundary of the base pattern that we identified in April is found near $6150, with a weaker zone around $6500, and with the short-term trend clearly being negative, the latter might be tested before a bottom forms. Further resistance is ahead at $8400, $8700, and between $9000 and $9200, and traders and investors still shouldn’t enter positions here.

ETH/USD, Daily Chart Analysis

Ethereum is testing the $555-$575 support zone after violating the $625-$645 range, with the declining short-term pattern being intact. A bottom near the $500 would still keep the recovery intact, but the correction low might already be in, and investors could already add to their holdings here. Further resistance zones are ahead between $735 and $780 and near $845, while support is found near $450.

(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

Pre-Market: Oil Plunges Below $70 as Markets Mixed Before Long Weekend

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Financial markets are relatively calm today, despite the hectic week that was highlighted by the Turkish currency crisis, wild swings in bonds, and a step back in US-North Korean relations. Stock markets turned lower globally, with US equities outperforming the rest of the world, essentially drifting sideways all week long, thanks to the slight correction in the Dollar’s rally, and the dip in Treasury yields that was triggered by the dovish Fed meeting minutes.

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S&P 500 Futures, 4-Hour Chart Analysis

Today, the durable goods report came out before the opening bell and although the headline number was a tad worse than expected the more important core figure beat the consensus estimate, helping the slightly dampening economic outlook, even as yields continue to fall, especially with regards to long-dated Treasuries.

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EUR/USD, 4-Hour Chart Analysis

Although emerging market currencies are way less volatile today than recently, despite the rebound in the Dollar, equities shed their early gains and are now slightly in the red. The all-important EUR/USD pair hitting yet another 6-month low near 1.1650, and the test of the key long-term 1.1450-1.15 zone looks more and more likely in the coming weeks, even as the pair is a bit oversold.

Energy Markets in Turmoil as OPEC Signals Production Increase Again

WTI Crude Oil, 4-Hour Chart Analysis

It seems that the crude oil market is in for a strategic switch yet again, as the OPEC, together with Russia made it clear today that the price of the Black Gold finally reached a desirable level. The cartel will be targeting a higher level of output later on this year in order to keep the US shale players under pressure by capping the advance in the key commodity’s market.

The WTI contract reached a 4-year high at $72 per barrel recently and the Brent contract which is more exposed to Middle East woes rose as high as $80 per barrel after trading below the $30 level just two years ago. The last phase of the advance extended above the level where a large portion of the shale plays turn profitable, and as global growth worries also surfaced, the commodity entered a selloff this week.

Gold Futures, 4-Hour Chart Analysis

Safe haven assets continue to be bid despite the relatively calm environment, and gold hit a two-week high today despite the bounce in the Greenback as buyers are back after the wash-out plunge below $1300. With the long-term setup and fundamentals still being favorable for the precious metal, the short-term downtrend line is in danger here.

As US markets will be closed on Monday, which usually favors an active session, volatility might remain high throughout the day.

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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4.6 stars on average, based on 257 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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