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Daily Analysis: Stock Volatility Collapses as Traders Await the FED

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Tuesday Market Recap

Asset Current Value Daily Change
S&P 500 2448 0.82%
DAX 12229 1.35%
WTI Crude Oil 47.89 0.76%
GOLD 1290.00 -0.51%
Bitcoin 4007 -0.55%
EUR/USD 1.1749 -0.57%

Global stock markets are having a great day, especially the US indices as the major benchmarks all bounced off their lows once again, as volatility dropped sharply while trading volumes remained very low. The summer environment and the looming Jackson Hole symposium favored a mean-reversion move, and sure enough, early bears got caught cold feet, even as the internal weakness of the indices still suggests a deeper correction in the coming weeks. That said, the NASDAQ, the S&P 500, and the DOW are not far off their all-time highs, even as only the 55% of stocks are trading above the 200-day Moving Average. The strong outperformance of large caps is usually a warning sign, but the short-term uptrends are still intact in the US, while the European benchmarks are already trending, lower.

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DOW 30, 4-Hour Chart Analysis

Currencies, at least the Dollar, remained relatively active as the Greenback bounced back after Monday’s drop, and choppy conditions are expected to continue throughout the week, as the Federal Reserve related moves will intensify. The Dollar’s bounce and the decline in volatility dragged Gold lower today, but the precious metal remains in a favorable position just below $1300, consolidating its recent gains. Oil is still acting weak, trading near the $47.50 per barrel level, while industrial metals are still strong despite the deteriorating Chinese-US trade relations and, as the positive news regarding Trumps planned tax reforms pushed industrial assets higher.

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WTI Crude Oil, 4-Hour Chart Analysis

Cryptocurrencies

Ripple is following in the footsteps of Monero and Dash, being the next major coin to move higher on huge volume. The bull market’s buying wave hit the currency in earnest, and it’s now surpassed the $0.16, $0.18, and $0.22 resistance levels thanks to the strong momentum move. The all-time highs of the coin are still way above the current price, and a test of the $0.30 level is likely in the coming period. Bitcoin fell strongly in early trading, dragging most of the majors lower, before recovering to the $4000 level that has been in focus for several days now. Ethereum retraced yesterday’s bullish move as it dipped lower together with BTC but the token remains in an uptrend. Monero is trading just below its recent highs, while Dash is stuck below $300 for now after its break-out, as the broad bullish trend continues in the segment.

XRP/USDT, 4-Hour Chart Analysis

Technical Picture

The DAX worked its way through last week’s broad weakness without technical damage, and the German index still looks poised to break-out from the current downtrend and re-test the 12,500 level. The Euro might put the benchmark’s relative strength in danger, if it resumes its uptrend against the Dollar, but for now the common currency is well off its highs, helping European equities. Resistance is ahead below 12,500 at 12,375, while support is found at 12,000 and slightly above 11,900.

DAX, 4-Hour Chart Analysis

Key Economic Releases on Tuesday

Time, CET Country Release Actual Expected Previous
10:30 UK Public Credit -0.8 bill 0.0 bill 6.3 bill
11:00 GERMANY ZEW Economic Sentiment 10.0 14.8 17.5
14:30 CANADA Core Retail Sales 0.7% 0.0% -0.1%

Key Economic Releases on Wednesday

Time, CET Country Release Expected Previous
9:00 EUROZONE ECB President Draghi Speaks
9:30 GERMANY Manufacturing PMI 57.8 58.1
9:30 GERMANY Services PMI 53.3 53.1
10:00 EUROZONE Services PMI 55.4 55.4
10:00 EUROZONE Manufacturing PMI 56.3 56.6
16:00 US New Home Sales 615,000 610,000
16:30 US Crude Oil Inventories -8.9 mill

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Analysis

Technical Analysis: Litecoin and NEO Jump as Bitcoin Trades near $8000

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The cryptocurrency segment continued its bullish run, as the total value of the coins climbed above $230 billion for the first time ever, while Bitcoin also posted marginal new highs. The most valuable currency is still overbought regarding the long-term picture, and we continue to expect a deeper correction in the coming period, despite the recent strong rally. Support levels are still found $7700, $7000, and $6700 while the $8000 level is ahead as a major obstacle.

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BTC/USD, 4-Hour Chart Analysis

Litecoin has been the most active major besides Bitcoin, as it rallied strongly after breaking out above the key $64 resistance and it breached the next target at $75 before heading below $70 again. The coin remains in bullish long- and short-term patterns, and we expect a move above the major resistance zone ahead with the next target found at $82.50.

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Litecoin/USD, 4-Hour Chart Analysis

NEO is showing strength in the second half of the session, while Monero is recovering well from a short-term dip, similarly to IOTA and Ethereum Classic. Ethereum continues to represent stability in the segment, while Ripple failed to build up momentum so far after yesterdays spike higher. With still most of the altcoins being in bullish setups, let’s see the short-term charts.

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Analysis

XRP Looking to Make a Significant Rally

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The XRP/USD pair went into a deep correction after hitting 0.29490 a month ago. It nosedived to the major support level of 0.19052. The pair consolidated for a few weeks which gave the market the legs to test resistance at 0.22924.

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Technical indicators show that the pair was ready to breach its immediate resistance, which it did this morning. Now that resistance has broke at 0.22924, it’s time to buy. This successful breakout will take the pair to 0.23997 first and 0.26563 next before hitting the target of 0.26796 which is coincidentally a major resistance level.

Technical indicators hint that the market would most likely be overbought by the time it hits 0.26796. Should it respect the major resistance level, the likelihood of the market turning extremely bearish increases. Therefore, it is recommended to closely watch your trail stops to preserve your gains.  

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Summary of Strategy

Buy: As close to 0.22924

Support: 0.22224 and 0.20081

Target: 0.26796

Stop: If the market breaches 0.20081 as next reliable support is 0.19052

 

Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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Analysis

Technical Analysis: Ripple Breaks Out as Bitcoin Tests Highs

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Cryptocurrencies are having another bullish session as the total value of the market surged to a new all-time high near $225 billion, with the help of the rally in BTC and Ripple, and despite the drop in the value of Bitcoin Cash. The most valuable coin its record high yet again after the brief but steep weekend correction, despite the still overbought long-term picture. We still urge traders and investors to wait for a deeper correction before entering new positions here, with support levels found at $7000, $6700, and $6000.

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BTC/USD, 4-Hour Chart Analysis

Ripple has been the other main mover of the day so far, as the coin skyrocketed on huge volume and breached the $0.26 level before turning lower and stabilizing near $0.23. The coin triggered a short-term buy signal by moving above $0.2250 and it remains bullish on both time-frames, despite the pull-back, with another major target level ahead at $0.30.

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Ripple/USD, 4-Hour Chart Analysis

The other majors are little changed expect IOTA, which further added to yesterday’s gains and reached overbought readings, while Ethereum Classic and Dash continue to drift lower in short-term correction patterns. Let’s see the detailed analysis of the short-term charts.

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