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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

Crypto Update: Encouraging Bounce before the Weekend

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The correction that started out in the major lagging altcoins and spread to the leaders of the market yesterday is weakening, with a nice rally today in early trading in most of the majors.  Although the segment is not out of the woods just yet, the bullish signs which have been present ever since the lows three weeks ago still persist.

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Bitcoin stayed clear of the key $9000-$9200 support zone, for now at least, which would be an ideal bottom for the correction, but as we noted long-term investors should accumulate the coin during the correction, as the short-term momentum is already back to neutral. The $10,000 level is still in the focus, while the next major resistance is found at $11,300 and the prior rally high near $11,750 is also ahead as an obstacle.

BTC/USD, 4-Hour Chart Analysis

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The early leaders of the rally, Litecoin and Ethereum Classic are once again showing strength and that could signal that the next leg higher already started. That said, with several coins still stuck in broader downtrends, investors should still expect a bumpy road, with the occasional volatile sell-off.

Litecoin got very close to the $180 support that we have been monitoring throughout the correction, but it quickly bounced above the $200 level again, as the broad bounce started after testing the previously dominant declining trendline. So far, the price action in the coin is consistent with a new uptrend and we still expect LTC to lead the market higher.

LTC/USD, 4-Hour Chart Analysis

Ethereum Showing Positive Signs Again

ETH/USD, 4-Hour Chart Analysis

After yesterday’s early signs of relative strength, the second largest coin is now clearly showing evidence of accumulation, as it quickly recovered above the $845 level following the selloff after the US close. The coin established a new support near $780, and as the MACD is close to providing a bullish cross, it might signal the bottom of the correction.

Despite the bullish price action across the board, even in the recently lagging XRP and IOTA, the correction could still continue, but we still advise traders and investors to look for entry points as we expect the recovery to continue, although traders should still use smaller positions in the relatively weaker coins.

Stay tuned for our detailed technical analysis later on today.

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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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Analysis

Daily Analysis: No Questions Answered

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Thursday Market Recap

Asset Current Value Daily Change
S&P 500 2718 0.97%
DAX 12,468 0.31%
WTI Crude Oil 62.61 2.02%
GOLD 1332.00 0.52%
Bitcoin 9780 -8.00%
EUR/USD 1.2324 0.26%

It was a strange day indeed in equity markets, with mixed signals popping up across the board after yesterday’s crazy quasi-FED day. An ugly overnight session, followed by a strong pre-market rally, an early-day pump, and a late-day dump. That is the summary of the day, but under the surface, there is a real struggle between market forces, with still an edge for bears in the battle for control.

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NASDAQ 100 Futures, 4-Hour Chart Analysis

It seems that the Nasdaq is still the key, as the relative strength of the tech benchmark is the most reliable gauge of the market direction, at least regarding the intraday trends. That said, at the end of the day, the Nasdaq closed in the red 4 times in a row, at least as far as the normal trading day is concerned, and still, the major indices are trading not far off last Friday’s top, despite the downward drift.

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Forex Markets and Commodities

Adding to the confusion, the Dollar corrected lower after a positive period, and with Treasury yields trading all over the place, investors were left scratching their heads yet again. The Japanese Yen was the clear winner of the day among currencies, as the primary safe-haven got bid heavily during the Asian session, and it remained throughout the up-and-downs of the day, despite the strong bounce in stocks and risk-on currencies.

USD/JPY, 4-Hour Chart Analysis

The EUR/USD pair had a very active and volatile session, but the common currency remained above the lows from two weeks ago, while also halting below yesterday’s highs, so all-in-all, no technical conclusion to draw. As in stocks, the next clear directional day will be crucial, as the tug of war is getting tenser and tenser.

EUR/USD, 4-Hour Chart Analysis

The Canadian Dollar plummeted during the day, thanks to the dismal Retail Sales figures, but it finished well off its lows, boosted by the stock recovery and the jump in the price of crude oil. The Black Gold was pushed higher by the surprisingly bullish US inventory data, and the WTI contract closed back above $62.50 per barrel.

USD/CAD, 4-Hour Chart Analysis

Gold continued to follow the Euro, finishing the day slightly higher, but the precious metal showed notable relative strength during the Asian session, and that could be the precursor of a move to new rally highs, should the bearish scenario play out in equities.

Cryptocurrencies

The segment had another bearish session, and the bleeding continued after the US session, with BTC leading the way lower this time around after a long period of relative strength. A crucial test might be ahead of the most valuable coin, as the $9000-$9200 support zone would be a perfect target for the current correction, to keep the uptrend going. That said, that zone is still almost 50% above the prior low, leaving plenty of room for the coin to bottom out.

BTC/USDT, 4-Hour Chart Analysis

With all of the major altcoins also sporting significant losses, bulls would like to see more of the early relative strength that some coins have been showing, to establish a leadership that can guide the segment out of the plunge. For now, the crash lows are way below the current levels, and the bullish long-term scenario remains intact.

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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 111 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

Technical Analysis: Correction Continues but Coins Remain Stable

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It’s been another mixed session for cryptocurrency investors as judging by only the price action, the segment suffered losses across the board, but comparing the current sell-off to the January plunge reveals that the majors are much more resilient this time around.

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The largest digital currencies are holding on to most of the gains of the recent weeks, and the price action near the crucial support zones is also encouraging. With all that said, the correction is not over yet, and further losses are still in the cards, but barring a substantial change in price action, the coins will likely continue the rally.

BTC/USD, 4-Hour Chart Analysis

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Bitcoin has been trading around the key $10,000 level all day long, and, so far, a clear break-down has been averted. The short-term momentum indicators are now in neutral territory regarding the most valuable coin, and that could mean that a bottom is close, and investors should already add to their holdings here. Further strong support is found between $9000 and $9200, while targets are ahead at $11,300, $13,000, and $14,250.

XMR/USDT, 4-Hour Chart Analysis

Correlation between the majors has increased during the sell-off, but there are still clear outperformers and laggards, adding to the bullish case. Monero remains among the strongest coins from a technical perspective, trading right at the lower boundary of the bullish consolidation pattern, with the $280 price level holding up for now. The coin faces strong resistance near $300 and $335, but we expect the uptrend to continue with the next target being ahead at $400, while further support is found at $240.

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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 111 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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