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Analysis

Daily Analysis: Verbal Currency War Ensues between the ECB and the US

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Thursday Market Recap

Asset Current Value Daily Change
S&P 500 2467 0.49%
DAX 12055 0.45%
WTI Crude Oil 47.36 3.05%
GOLD 1324.00 0.81%
Bitcoin 4708 -0.89%
EUR/USD 1.1742 3.17%

The recent surge in the EUR/USD hasn’t gone unnoticed among politicians and central bankers, and the arguably most important currency pair’s rise to 1.20 triggered a response today from the ECB that stated the risks of a too strong currency. It took only a few hours for the other side of the trade to respond, when Treasury Secretary Steve Mnuchin warned of the risks of a strong Dollar. As traders can imagine the currencies reacted with a crazy session to the verbal intervention, and the pair has now traded at 1.2075 and 1.1825 in only three days. With the recent reversal day in the Dollar, odds favor a rally in the Greenback, especially given the excessively negative sentiment towards the currency.

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EUR/USD, 4-Hour Chart Analysis

Stock markets mostly ignored the FX volatility, as especially in the US, the short-term strength of the major indices is still apparent. The NASDAQ is just shy of its all-time high right now, and given the positive momentum, a break-out to new highs looks baked in the cake. European equities are still under pressure, despite the dip in the Euro in the last couple of days, and that could spell trouble for the coming weeks. Gold regained its strength after a pull-back to $1300, confirming the recent key break-out in the precious metal, while oil is also showing signs of life today after a period of dismal performance.

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Gold, 4-Hour Chart Analysis

Cryptocurrencies

Litecoin is leading the way higher today, on a generally bullish day for cryptocurrencies. LTC finally touched the $70 level and reached our next target just above that key resistance. Bitcoin also hit a new high again, above $4700 while Ethereum failed to reach the $400 level yet. Dash and Mare trading below their recent record levels as both coins are stretched concerning the long-term picture, while NEO is still struggling to move away from the $30 zone after its deep correction. Ripple is also in a bullish move today, just as NEM, while Ethereum Classic remains the most notable laggard of the sector, at least regarding the short-term performance.

LTC/USD, 4-Hour Chart Analysis

Technical Picture

The tech benchmark is getting close to the 6000 level once again after a lengthy and volatile correction that ended yesterday with a clear break-out of the dominant pattern. The long-term uptrend remains intact in the NASDAQ, and although we expect weakness during the autumn, the short-term momentum is clearly bullish and a new high is likely in the coming days, as the sector is outperforming the rest of the market. Strong support levels are found near 5850 and 5725.

NASDAQ 100 Futures, 4-Hour Chart Analysis

Key Economic Releases on Thursday

Time, CET Country Release Actual Expected Previous
3:00 CHINA Manufacturing PMI 51.7 51.3 51.4
3:00 CHINA Non-Manufacturing PMI 53.4 54.5
11:00 EUROZONE CPI Flash 1.5% 1.4% 1.3%
14:30 CANADA Prelim GDP 0.3% 0.1% 0.6%
14:30 US Unemployment Claims 236,000 237,000 234,00
14:45 US Chicago PMI 58.9 58.7 58.9
16:00 US Pending Home Sales 0.3% 0.4% 1.5%

Key Economic Releases on Friday

Time, CET Country Release Expected Previous
10:30 UK Manufacturing PMI 55.0 55.1
14:30 US Average Hourly Earnings 0.2% 0.3%
14:30 US Non-Farm Payrolls 180,000 209,000
14:30 US Unemployment Rate 4.3% 4.3%
16:00 US ISM Manufacturing PMI 56.5 56.3

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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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