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Daily Analysis: Senate Tax Bill Proposal Saves the Day but Bonds Scream Trouble

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Thursday Market Recap

Asset Current Value Daily Change
S&P 500 2583 -0.29%
DAX 13,182 -1.45%
WTI Crude Oil 57.02 0.37%
GOLD 1288.00 0.21%
Bitcoin 7110 -2.83%
EUR/USD 1.1642 0.41%

Today’s session seemed like the end of the narrowing rally that has been plagued by a far-from-rosy picture on the bond market. The yield curve has been flattening in an accelerated fashion recently, which is usually one of the strongest indicators of the end of a business cycle, while high-yield bonds also turned sharply lower lately, signaling risk aversion among bond investors. The negative news flow regarding the GOP’s tax plan struggle also weighed on sentiment, and the major indices lost ground in early trading.

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High Yield Corporate Bond ETF (HYG), 4-Hour Chart Analysis

Later on, rumors and leaks started circling about a coming bill proposal, and that stopped the erosion of prices, resulting in moderate losses at the closing bell, following the actual release of the proposal. The bill is significantly different from the House Bill, and most importantly it would delay the corporate tax cut by a year. Despite the late bounce in equities, safe-haven assets remained stable, with both the Japanese Yen and Gold finishing in the green.

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WTI Crude Oil, 4-Hour Chart Analysis

Forex markets also had an active session despite the relatively empty economic calendar, as the Dollar got under pressure, although the Greenback’s losses remained limited. Besides gold, oil also finished higher among commodities, as the political turmoil in Saudi Arabia continued to make headlines, and the positive Chinese inflation release also boosted the price of the Black Gold.

Cryptocurrencies

The rally in altcoins continued in earnest today, while Bitcoin remained volatile after the Segwit2x cancellation. IOTA was the star of the day again among the majors, now shooting up to the $0.60 level shortly after trading just above $0.30. Ethereum’s move above the $315 resistance also made traders excited, while Litecoin, Dash, and Monero also continued their break-outs.

BTC finished the session on a negative note, trading near the $7000 level after the US close. Ripple, NEO, and ETC had a less stellar day, although NEO briefly traded near the $34 level, and Ripple also attempted a break-out, riding the bullish altcoin wave.

IOTA/USD, 4-Hour Chart Analysis

Key Economic Releases on Thursday

Time, CET Country Release Actual Expected Previous
03:30 CHINA CPI 1.9% 1.8% 1.6%
03:30 CHINA PPI 6.9% 6.6% 6.9%
15:30 CANADA NHPI 0.2% 0.2% 0.1%
15:30 US Unemployment Claims 239,000 232,000 229,000

Key Economic Releases on Friday

Time, CET Country Release Expected Previous
02:30 AUSTRALIA RBA Monetary Statement
11:30 UK Manufacturing Production 0.3% 0.4%
11:30 UK Goods Trade Balance -12.9 bill -14.2 bill
17:00 US UOM Consumer Sentiment 100.8 100.7

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Analysis

Long-Term Cryptocurrency Analysis: All Majors Stretched as Ripple Finally Breaks-Out

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Although the previous leaders of the rally started to correct or at least consolidate in the wake of the overbought long-term setups, another batch of coins turned exponential, with Litecoin, Ripple, and Ethereum all registering lofty gains this week. Bitcoin, Monero, and Dash have been holding up well, and even drifted to new marginal highs during the period, while Ethereum Classic had a more volatile week, before moving to new highs today.

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XRP left the broad trading range that has dominated its market since May, and surged to new all-time highs while almost quadrupling in the process. As the coin was the only major on a long-term buy signal according to our trend model, and the move triggered a sell signal on Thursday, now all of our tracked coins are on sell signals.

Ripple could be in for further short-term gains but long-term investors should reduce their positions after this week’s spike. Support levels are found Major at the prior high near $0.4250 and in the $0.30-$0.32 range.

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XRP/USDT, Daily Chart Analysis

IOTA, which has been leading the market higher before is down by more than 30% off its all-time high, but given the exponential move before, an even deeper correction is likely in the coming weeks, and investors should wait until a more favorable setup to add to their positions. Strong support is only found at $3 and $1.5, but potential Fibonacci support is at $2.35.

IOT/USD, Daily Chart Analysis

Let’s see how the long-term charts of the other majors look this weekend.

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Analysis

Technical Analysis: Bitcoin Up Again as Altcoins Mixed in Volatile Trading

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Bitcoin is at a new all-time high today, although the momentum of today’s move is far below from what we saw recently, and the coin only managed to reach a marginal record high yet again. BTC is now worth $300 billion, and it is still trading right at the short-term trendline, inside a rising wedge pattern that shows a clear momentum divergence.

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With the short-term trend still being intact further gains are still possible, but as all the majors are overbought from a long-term perspective, we still advise investors to wait for a better buying opportunity before adding to their holdings. Primary support is still found near $13,000, with further levels at $11,300, $10,000, $9000, and stronger levels at $8200 and $7700.

BTC/USD, 4-Hour Chart Analysis

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 XRP entered a volatile short-term correction after its two-day surge after giving a short-term sell signal yesterday, and the coin spiked back towards $0.60 before settling down just below yesterday’s highs. The long-term setup also turned overbought thanks to the almost 300% rally, and now investors should reduce their holdings, even as further gains are still possible. 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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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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