Connect with us

Analysis

Dow Drops As Cryptos Pop

Published

on

Inflation is the enemy of stock and bond investors but this is when crypto is coming to the rescue.  The market awoke to a Valentine’s Day present called the January Consumer Price Index.  It was borderline ugly at 0.5%.  After the opening, the Dow was down 142 points. At this time cryptos are going in the opposite direction: Bitcoin + 9 %, Bitcoin Cash +11%, Ether +8 % and Litecoin + 35%.   Is this a one time event or is there there a lasting connection.  Let’s take a look.

// -- Discuss and ask questions in our community on Workplace.

Inflationary expectations drive the stock and bond markets.  It is not how much any one month reading shows, it is the way the market extrapolates a single month into the future. For the last 20+ years, inflationary expectations have been coming down and this has been the fuel that has fired the stock and bond markets.

Since the financial crisis of 2008, the Federal Reserve has been targeting a 2% rate of price increases.  Most times they have fallen short of their goal. This is no more the case.  The January increase annualizes to 6%.  If this were a one month event it could be ignored.  However, over the last six months since August, inflation has averaged 4% on a yearly basis. That is a troubling sign for several reasons.

Inflationary Expectations Are Growing  

// -- Become a yearly Platinum Member and save 69 USD and get access to our secret group on Workplace. Click here to change your current membership -- //

It is hardly news that the global economy has fully recovered from the financial crisis of 2008.  For the US this means the longest economic recovery in modern history.  The signs of excesses are showing.  Labor markets are much tighter than anytime in the past 50 years.  Costs have to be rising especially for the most highly sought after positions in technology and finance.

Debt financed consumer spending was adding to inflationary expectations even before the $1.5 trillion Trump Tax Cut and plans to increase spending.  Goldman Sachs CEO called this combination like throwing a bit more lighter fluid on a fire that was already going.  His concern is that the economy will get overheated, forcing the Federal Reserve to raise interest rates faster.

Add to this the news that inflation hawk Loretta Mester was being considered for the post of Fed Vice Chair and that is all that is necessary to shake investor confidence.

Storehouse Of Value

In times like this when investors are seeking safety from declining stock and bond prices, gold has been the go to storehouse of value.  Gold investors got their Valentines candy with the price shooting up over 1.5% on the day.  OK that is cool but we can’t ignore the fact that cryptocurrencies had their best day in a long time.  What is that all about?  Against the opinion of all the critics, are cryptocurrencies finally being viewed by investors as their own unique storehouse of value.

Granted recent crypto volatility makes it hard to put Bitcoin or Ether into the same category as other assets like gold.  But today’s price divergence reminds us that Bitcoin’s fixed number of coins was designed and intended to be independent of global government policies that create excess debt or excessive expansion that results increased inflationary expectations.

Blockchain technology in general is showing up more and more as a cost saving mechanism. Of course, Ethereum with its smart contracts and open source platform stand out.  

Separating Fact From Opinion

Are cryptocurrencies gaining believers as a storehouse of value.  That is one opinion. Obviously, it will take much more time to develop enough data to measure the correlation. Several things seem clear.  The massive crypto price correction that started back in December has taken a whole lot of fluff off of crypto markets.  That’s a good thing.

In recent times, prices have been directionless as investors tried to figure what to do next. During this time there was an overabundance of technical analysis but an absence of any fundamental compelling reason the buy.  Valentines Day news that pushed up inflationary expectations may have provided the single most important reason in many weeks. The critics may be right that cryptocurrencies have a way to go before becoming a storehouse of value, but at current levels, they seem to be an attractive value nonetheless.  Stay tuned for more.   

Featured image courtesy of Shutterstock. 

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.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
6 votes, average: 4.83 out of 56 votes, average: 4.83 out of 56 votes, average: 4.83 out of 56 votes, average: 4.83 out of 56 votes, average: 4.83 out of 5 (6 votes, average: 4.83 out of 5)
You need to be a registered member to rate this.
Loading...

4.4 stars on average, based on 62 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




Feedback or Requests?

Analysis

Crypto Update: Ethereum Tops $700 as Short-Term Sell Signals Pop Up

Published

on

The major cryptocurrencies are having another strong session, with all of the top 10 coins sporting gains, adding more than 5% on average since yesterday. The largest digital currencies are trading in clear short-term uptrends, with the broad declining trendlines also being broken in most cases.

// -- Discuss and ask questions in our community on Workplace.

That said, the short-term momentum indicators are overbought with regards to altcoins, and now several majors triggered short-term sell signals following the first signal by IOTA yesterday. While this doesn’t mean that traders should exit all short-term positions here, taking some profits and/or setting tighter stop losses is advised, as there will likely be opportunities with much better risk/reward profiles to re-enter the market.

BTC/USD, 4-Hour Chart Analysis

// -- Become a yearly Platinum Member and save 69 USD and get access to our secret group on Workplace. Click here to change your current membership -- //

Bitcoin finally topped the $9000-$9200 resistance zone after a period of relative weakness, further boosting the already positive overall picture. The momentum of the move is still not stellar, but the coin is still not severely overbought, and although a deeper pullback is still likely soon and short-term traders shouldn’t open new positions here, a test of the $10,000 level is still possible in the coming days. The long-term setup is clearly bullish, and investors could still add to their holdings during the short-term pullbacks, with further support found at $8400.

ETH/USD, 4-Hour Chart Analysis

Ethereum continued to rally, despite the already overbought reading, and now the coin is severely overbought, and a correction is very likely in the coming days, so short-term traders should exit their positions or use tight stop losses here. We expect the rally to continue after a correction, and long-term investors should hold on to their coins. Resistance zones are ahead near $735 and $780, while primary support is between $625 and $645.

Altcoins Overbought but Uptrend Intact

XMR/USD, 4-Hour Chart Analysis

While correlations are getting lower and lower among the major coins, which is a bullish sign, most of them are already overbought from a short-term perspective. Although further gains are still possible, chasing those coins higher here is not a good strategy, even as the long-term setups remain encouraging.

Litecoin, ETC, and NEO are not severely overbought yet, while Ripple, Stellar, and Cardano are already in short-term corrections clearing the overbought readings, but traders should be cautious with Dash, EOS, Monero, and IOTA as they are ripe for a move lower.

Featured image from Shutterstock

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.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
3 votes, average: 5.00 out of 53 votes, average: 5.00 out of 53 votes, average: 5.00 out of 53 votes, average: 5.00 out of 53 votes, average: 5.00 out of 5 (3 votes, average: 5.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.5 stars on average, based on 231 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.




Feedback or Requests?

Continue Reading

Analysis

Pre Market: Dollar Pulls Back from 7-Week High as Stocks Rebound

Published

on

Global equities are attempting to rally after drifting lower for three sessions, with Asia leading the bounce thanks to rumors regarding possible monetary easing steps in China. The rumors surfaced on the heels of the Yen’s plunge which followed Bank of Japan governor Kuroda’s dovish words. Mr. Kuroda is worried about the stubbornly low inflation rate, and hinted on a delay of the ”normalization” process of the central bank’s monetary policies.

// -- Discuss and ask questions in our community on Workplace.

USD/JPY, 4-Hour Chart Analysis

As a reminder, the BOJ now owns the majority of the stock ETFs in Japan, but we might reach a point where it will own the whole float (why not?), while also technically controlling the whole Japanese government bond “market”. Meanwhile, the Euro also got under pressure lately thanks to the string of negative economic surprises and Mario Draghi’s cautious words regarding growth, and with Thursday’s ECB meeting looming, forex traders could be in for a very active week of trading.

// -- Become a yearly Platinum Member and save 69 USD and get access to our secret group on Workplace. Click here to change your current membership -- //

EUR/USD, 4-Hour Chart Analysis

The Dollar reached a 7-week high against the Euro yesterday, while the Dollar index closed at the highest level since January, and although the Greenback is correcting the recent rally today, it seems that the growing number of Dollar bears might be in for more pain after a likely short-term correction, as Treasury yields continue to rise relentlessly.

US 2-Year Treasury Yield, 4-Hour Chart Analysis

Stocks are having a relatively quiet week so far, but the bearish trend of the recent sessions remains dominant despite today’s bounce, even as volatility is still low, and trade war fears and geopolitical tensions have been easing somewhat lately. We switched to a bearish bias last week, and we maintain that the stocks look vulnerable here, although the short-term overbought readings have been cleared.

S&P 500, 4-Hour Chart Analysis

Bulls still have the hope that the major US indices can resume the recovery and launch a rally towards the all-time highs, but unless we see a quick move above last week’s highs, bears remain in control, and another test of the correction lows is likely.

On a slightly positive note, European equities enjoyed some relative strength in the last couple of days, as they were boosted by the weakness in the Euro, but looking at the broader picture, the Old Continent continues to be among the weakest regions globally since the start of the correction.

Commodities Mixed but Commodity Currencies Still Weak

AUD/USD, 4-Hour Chart Analysis

Interestingly, the Aussie and the Canadian Dollar are still under selling pressure today, despite the risk rally, and that fact strengthens our short-term bearish view on stocks, as they have been reliably leading equities since February.

In the meantime, commodities have been trading in a choppy fashion amid the Dollar rally, as gold has been pushed back below $1330 again, continuing its lengthy consolidation phase, while crude oil slightly retreated from its multi-year high near the $70 per barrel level concerning the WTI contract.

Featured image from Shutterstock

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.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
0 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 5 (0 votes, average: 0.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.5 stars on average, based on 231 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.




Feedback or Requests?

Continue Reading

Analysis

Long-Term Cryptocurrency Analysis: Bitcoin and Ethereum Break-Out of Declining Trends

Published

on

The altcoin-led rally continued since our previous look at the long-term charts, and the major coins all confirmed a new short-term uptrend. Most of the largest digital currencies also broke out from their broad declining trends, as the total value of the segment is now more than 50% above the level around the correction low.

// -- Discuss and ask questions in our community on Workplace.

BTC/USD, Daily Chart Analysis

The overall picture remained positive, with only Bitcoin’s weakness causing headaches for crypto bulls, as the most valuable coin is hovering close to declining trendline that dominated trading throughout the first quarter of the year.

// -- Become a yearly Platinum Member and save 69 USD and get access to our secret group on Workplace. Click here to change your current membership -- //

Despite the short-term weakness, BTC is still among the stronger majors from a long-term perspective, and with the secular uptrend clearly being intact, long-term investors should hold on to their coins and add to their holdings on the short-term pullbacks.

Crucial resistance is still just ahead between $9000-$9200, with further levels at $10,000 and $11,300, while support is found near $8400, $7650, and in the $6150-$6250 zone.

ETH/USD, Daily Chart Analysis

Ethereum built upon its recent relative strength, and the coin broke out convincingly above the declining trendline, and reached the next key resistance zone between $625 and $640 before the momentum of the move stalled.

While there are still several strong zones ahead, with the closest ones near $725 and $845, barring a quick move back below the declining trendline, the coin should continue the advance. With the long-term MACD still just in neutral territory, long-term investors could add to their holdings during short-term corrections, with key support levels at $500, $450, and $400.

(more…)

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.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
5 votes, average: 5.00 out of 55 votes, average: 5.00 out of 55 votes, average: 5.00 out of 55 votes, average: 5.00 out of 55 votes, average: 5.00 out of 5 (5 votes, average: 5.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.5 stars on average, based on 231 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.




Feedback or Requests?

Continue Reading

Recent Comments

Recent Posts

A part of CCN

Hacked.com is Neutral and Unbiased

Hacked.com and its team members have pledged to reject any form of advertisement or sponsorships from 3rd parties. We will always be neutral and we strive towards a fully unbiased view on all topics. Whenever an author has a conflicting interest, that should be clearly stated in the post itself with a disclaimer. If you suspect that one of our team members are biased, please notify me immediately at jonas.borchgrevink(at)hacked.com.

Trending