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Daily Analysis: Stocks Take a Breather before Busy Thursday

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Wednesday Market Recap

 

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Asset Current Value Daily Change
S&P 500 2430 -0.09%
DAX 12660 0.12%
WTI Crude Oil 46.12 -4.27%
GOLD 1296.00 0.05%
Bitcoin 2810 -1.20%
EUR/USD 1.1252 -0.23%

Stock markets are slightly higher today in calm trading as investors took a step back before the European Central Bank’s interest rate decision that is scheduled for tomorrow, together with the British snap election. European markets are marginally higher after yesterday’s negative performance, with the US and Asian indices being virtually unchanged. The Qatar situation is still making waves, and causing volatility in the price of oil. Low volatility is expected to remain dominant later on today, while things could get bumpy tomorrow, especially in late-trading.

Safe-haven assets are mixed after yesterday’s rally, with Gold consolidating just below the $1300 level while the Yen still trending lower against the Euro and the Dollar. The Euro dipped suddenly during the morning session, on reports that the ECB will cut its inflation forecast tomorrow, which could mean even easier monetary conditions. The Great British Pound is up by a healthy margin as the polls show the stabilization of the gap between the Conservative Party and the Labour Party one day before the referendum.

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WTI Crude Oil 4-Hour Chart Analysis

Oil’s decline is accelerating in US trading, as the already shaky OPEC production cut deal might get under pressure, while US inventories showed a surprising rise after a series of bullish releases. Industrial commodities are also down today despite the relatively good performance of Chinese stocks, as the strong downtrend in oil weighs on the segment.

Technical Picture

The DAX’s long-term uptrend seems to be in trouble lately as the MACD is showing a pretty significant negative divergence, and the latest upswing quickly reversed, with the price of the German Index falling back in the previous trading range. The short-term resistance level near 12,800 is the key for the current setup, and long-term traders are advised to get some chips off the table, as a deeper correction could be coming in the next few weeks. That said, a move above 12,800 could set up another leg up and a test of the 13,000 level, although a decline to 12,500 seems more likely.

DAX, 4-Hour Chart Analysis

Key Economic Releases on Wednesday

Time, CET Country Release Actual Expected Previous
6:30 AUSTRALIA GDP Growth 0.30% 0.30% 1.10%
6:30 UK Halifax HPI 0.40% -0.20% -0.10%
16:00 CANADA Building Permits -0.20% 2.40% -5.80%
14:30 US Crude Oil Inventories 3.3 mill -3.1 mill -6.4 mill

 

Key Economic Releases on Thursday

Time, CET Country Release Expected Previous
1:50 JAPAN Final GDP Growth 0.60% 0.50%
3:30 AUSTRALIA Trade Balance 1.99 bill 3.11 bill
4:00 CHINA Trade Balance 336 bill 262 bill
14:30 EUROZONE ECB Interest Rate Decision 0 0
14:30 EUROZONE ECB Monetary Statement
14:30 CANADA NHPI Index 0.30% 0.20%
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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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