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Analysis

Daily Analysis: Stocks Retreat from Highs as Trump Targets North Korea

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Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2470 -0.09%
DAX 12154 -1.12%
WTI Crude Oil 49.33 -0.32%
GOLD 1277.00 1.16%
Bitcoin 3285 -2.92%
EUR/USD 1.1202 0.07%

The summer lull was interrupted yesterday by an unusually – even with Donald Trump standards – aggressive tweet regarding North Korea that sparked a significant sell-off in risk assets globally. While it’s hard to judge how the POTUS really intends to respond to the growing threat of the communist nation, for sure the current situation comes handy for him as his domestic position is getting weaker and weaker. The major indices all turned lower from their all-time highs in late trading yesterday, and they are still under pressure today, with the Dollar’s strength also weighing on US equities.

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NASDAQ, 4-Hour Chart Analysis

Asian and European stocks joined the sell-off, confirming that the Euro-strength narrative is fading away, with the common currency dipping below 1.17 today in early trading. That said, even the short-term supports are still in place for the US indices, and the low volume environment will likely persist throughout the week despite yesterday’s dip. Gold is being bought aggressively again, and the precious metal breached the $1275 level again, while crude oil is still fighting with the $50 per barrel resistance following today’s mixed US report that showed another increase in shale production.

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Oil, 4-Hour Chart Analysis

Cryptocurrencies

The crypto segment entered short-term correction led by Bitcoin after a late day spike higher yesterday, as the most valuable coin hit $3500, while Ethereum rose above $300, to an almost 6-week high. The other majors followed the two giants through the moves, as even the previously weaker Ripple and Ethereum Classic both tried to rally before being stopped by their respective declining trendlines.  Litecoin, Dash, and Monero continue to look strong, with the latter being the closest to its all-time high, while NEM is consolidation its recent gains.

BTC/USD, 4-Hour Chart Analysis

Technical Picture

The DAX is flirting with the crucial support near 12,100 as even the dip in the Euro couldn’t spark a meaningful bounce in the relatively weak German index. The Trump sell-off pushed the benchmark back to 4-monht lows, and with the declining trend being intact, and the MACD being back to neutral, another leg lower seems likely. The shallow correction didn’t even reach the 12,375 resistance, while primary support is now between 11,850 and 11,915.

                                                                           DAX, 4-Hour Chart Analysis

Key Economic Releases on Wednesday

Time, CET Country Release Actual Expected Previous
3:30 CHINA CPI Index 1.40% 1.50% 1.50%
3:30 CHINA PPI Index 5.50% 5.60% 5.50%
14:15 CANADA Building Permits 2.5% -1.8% 10.7%
14:30 US Nonfarm Productivity 0.9% 0.8% 0.0%
16:30 US Crude Oil Inventories -6.5 mill -2.6 mill -1.5 mill

Key Economic Releases on Thursday

Time, CET Country Release Expected Previous
1:50 JAPAN PPI Index 2.3% 2.1%
10:30 UK Manufacturing Production 0.0% -0.2%
10:30 UK Goods Trade Balance -11 bill -11.9 bill
14:30 CANADA NHPI 0.5% 0.7%
14:30 US PPI Index 0.1% 0.1%
14:30 US Initial Jobles Claims 244,000 240,000
14:30 US PPI Index 0.1% 0.1%
14:30 US Initial Jobles Claims 244,000 240,000

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Analysis

Technical Analysis: Litecoin and Ethereum on the Move as Rotation Continues

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The altcoin bull run continued today despite the US Thanksgiving holiday, as trading remained active in the majors, and another important break-out occurred, this time in Ethereum. Litecoin is also strong today, and the coin is testing the key $75 resistance level, as it follows in the track of ETH again. The currency still looks set to hit the next target at $82.50, with the all-time highs below just below the $100 level also in sight. While the long-term momentum is edging towards overbought territory, the coin remains bullish on both time-frames, with strong support still found at $64 and $56.

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LTC/USD, 4-Hour Chart Analysis

Ethereum scored a new record high after moving past $400 for the first time in five months, and considering the lengthy consolidation before the move, more upside is likely for the second largest coin. With the long-term momentum still not being overbought, the token’s price might test the $500 mark in this leg higher, with Fibonacci targets ahead at $475 and $512. Support levels are found below $400 at 4380 and $350.

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ETH/USD, 4-Hour Chart Analysis

Ripple is also attempting another bullish move, while Monero and Dash are consolidating just below their recent highs, while IOTA is in a short-term correction pattern as well. More and more altcoins are now in the latter phases of their rallies, just like Bitcoin, but traders still have opportunities with favorable risk-rewards ratios. Let’ see the short-term charts.

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Analysis

Break-Out: Another Crazy Rally in Ethereum?

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What crazy rally you might ask? Bitcoin is the star, right? Everything was about BTC (and BCH) in the last few months, and lots of traders forget the gains that ETH posted amid the take-off of the ICO Rocket during the spring.

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Comparing ETH and BTC in 2017

By the numbers, out of the two largest coins, 2017 is still the year of Ethereum as the 3600% rise in the token’s price dwarfs Bitcoin’s impressive 630% gain. Could Ethereum be on the verge of another epic surge? Before answering that question, first let’s see what happened with the coin in recent months.

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How Did We Get Here?

ETH/USD, Daily Chart Analysis

Ethereum finally broke above the magical $400 barrier that has kept a lid on the token’s price for five months after the crazy run-up in May. What first followed after that stellar move, was a 70% decline top-to-bottom, with a flush-out panic low in July.

Our trend model turned long-term positive even before the spike lower, but since then, the coin only managed to get close to the all-time highs, while Bitcoin eclipsed the previous star with its dominant performance. Now the tide might be turning, as ETH is finally gathering bullish momentum and today it breached the $400 mark, flirting with a break-out from the giant triangle consolidation pattern.

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Altcoins

Zcash Dip Offers Chance to Buy

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The ZEC/USD pair went into a downtrend for several days after hitting the 435 level in June. It shed more than half of its value before establishing strong support at 140. The market tried to reclaim resistance at 310 twice, but was sent back on both occasions. As a result, we have a massive reversal structure that might skyrocket the pair into a new all-time high.

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The market closed above 310 a couple of days ago on weak volume which is why it’s struggling to stay above that level. Technical indicators show that momentum is weakening, increasing the likelihood of a dip. A slight correction not only gives the market legs for its next move up, but it also offers you a chance to place orders.

They key indicator to watch for is volume. As long as volume remains sluggish, the market will most likely slide down to 280 first and then 262 next. That’s a good zone to accumulate positions. If volume suddenly spikes, at least 230k at Bitfinex, then we have a legitimate breakout that will take the market to 465.

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 Summary of Strategy

Buy: between 280 and 262 OR confirmed breakout with volume of at least 230k at Bitfinex

Support: 280, 262, and 243

Resistance: 310, 352, 400, and 412

Target: 465

Stop: If the market breaches 243

 

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.

Featured image courtesy of Shutterstock.

 

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