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Analysis

Daily Analysis: Stocks and Dollar Rally on Positive Economic Numbers

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Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2455 0.53%
DAX 12002 0.45%
WTI Crude Oil 45.94 -0.04%
GOLD 1313.00 0.02%
Bitcoin 4550 -0.90%
EUR/USD 1.1892 -1.03%

Traders can conclude that another North Korea dip has been successfully bought, as the major US indices continue to shrug off every piece of negative news, while also ignoring the internal weakness that still plagues the long-term outlook for equities. The better than expected GDP reading coupled by the bullish ADP Employment Report sparked heavy buying in US stocks, while also lifting the Dollar after yesterday’s reversal. The EUR/USD pair quickly dipped below 1.19, just one day after hitting 1.2075 for the first time in more than two years. The USD/JPY pair also surged higher, as the fears regarding the North Korean missile launch faded, and risk assets rallied across the board.

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EUR/USD, 4-Hour Chart Analysis

Gold followed the Yen lower amid the risk-rally and the precious metal is probably headed back towards the $1300 level after the crucial break-out form its trading range earlier this week. Oil can’t seem to find a footing, despite the supply troubles in the Gulf area, and the favorable US inventories data, as the Dollar-bounce pushed the crucial commodity even lower, to yet another one-month low. The WTI contract looks to be on track to test the lower range of the long-term range near in the $40-$42 per barrel area. With all eyes on Trump’s tax plan, next week could bring very volatile trading in all of the main markets as the summer season ends.

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WTI Crude Oil, 4-Hour Chart Analysis

Cryptocurrencies

Ethereum, Bitcoin and, NEO were in the center of attention, as BTC traded on new all-time highs earlier on, while ETH hit a new 2-month high above the $380 target level that we have been monitoring for weeks now. NEO had two volatile sessions in a row, falling to $30 from $40 in a matter of hours and trading in a volatile range afterward. Litecoin is consolidating just below its recent highs while Dash and Monero are somewhat lower after hitting new highs over the weekend, already being overbought regarding the long-term picture. The crypto-rally might be in its final stages now, but the topping process could last for weeks, so patience will likely be required from investors in the coming period.

ETH/USD, 4-Hour Chart Analysis

Technical Picture

The S&P 500 confirmed its recent resilience today, breaking out from a short-term correction pattern despite the recent sell-off attempts. The index might be ready for a retest of the all-time highs near 2480, but before that it faces resistance just above the current price level at 2460. The rising long-term trendline is at 2420, slightly below the key 2425 support. The next weeks could be very volatile as the long-term bearish pressures clash with the short-term bullish picture.

S&P 500, 4-Hour Chart Analysis

Key Economic Releases on Wednesday

Time, CET Country Release Actual Expected Previous
3:30 AUSTRALIA Building Approvals -1.7% -5.1% 10.9%
10:00 GERMANY Prelim CPI 0.1% 0.1% 0.4%
14:15 US ADP Non-Farm Payrolls 237,000 186,000 178,000
14:30 US Prelim GDP 3.0% 2.7% 2.6%

Key Economic Releases on Thursday

Time, CET Country Release Expected Previous
3:00 CHINA Manufacturing PMI 51.3 51.4
3:00 CHINA Non-Manufacturing PMI 54.5
11:00 EUROZONE CPI Flash 1.4% 1.3%
14:30 CANADA Prelim GDP 0.1% 0.6%
14:30 US Unemployment Claims 237,000 234,00
14:45 US Chicago PMI 58.7 58.9
16:00 US Pending Home Sales 0.4% 1.5%

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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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