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Draghi Flip-Flops Twice as Bitcoin Surges Past $2500

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Thursday Market Recap

Asset Current Value Daily Change
S&P 500 2474 0.11%
DAX 12522 0.56%
WTI Crude Oil 47.67 0.61%
GOLD 1239.00 -0.25%
Bitcoin 2575 12.11%
EUR/USD 1.1562 +0.42%

Well, that was quick; the European Central Bank backtracked from its recent hawkish position today, as the President of the central bank announced in its monetary statement that the ECB is ready to expand its Quantitative Easing program in “time and extent” if needed. The move was probably fueled probably by the Federal Reserve’s change in rhetoric in reaction to the soft economic data in the US. Later on, The ECB continues its “Fed-dependant monetary policy, while the recent surge in the Euro is also likely to pose a problem for the European policy makers.

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Financial markets reacted in line with the ECB’s announcements, with the common currency first turning lower, especially compared to the Dollar, while the most important European indices recovered strongly with the DAX rallying past the 12,500 level. The moves were mostly retraced following the press conference, but the DAX and the Euro Stoxx 50 both remained in the green. US indices continued slightly higher after hitting new all-time highs yesterday, with the NASDAQ still leading the way, after the recent correction. As the US earnings season is heating up, we expect volatile overnight moves in the major indices in the coming period.

EUR/USD, 4-Hour Chart Analysis

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Currencies are very active today, as expected, as the Euro’s volatility is accompanied by the Yen’s choppy reaction to the mixed BOJ monetary statement. The bank raised its GDP forecast but lowered its inflation projection, while leaving its monetary policies unchanged. The Pound also fell despite the better than expected British Retail Sales report, while the Aussie and the Canadian Dollar declined slightly compared to the Greenback. Commodities are mixed amid the forex volatility, with oil still being strong and gold consolidation its recent gains.

Cryptocurrencies

The crypto market continued its strong rebound today, with Bitcoin leading the way higher, still boosted by the bullish sentiment and the oversold conditions. Dash is also among the strongest majors, nearing the $200 level during the European session. Monero and Stratis also posted a higher high today, as the broad based recovery of the segment continues following the weekend’s panicky moves. Ethereum is consolidating below its highs, and while Bitcoin is breaking out of its declining trend, in line with our previous projection for the correction, ETH is still stick below the long-term trendline.

Bitcoin, Daily Chart Analysis

Technical Picture

The DAX remains the weakest major global index, as the ECB’s announcements failed to break the short-term trend, despite the strength in US equities. That said, a move above the declining trendline and the 12,650 level, and could set up a move towards 13,000. The crucial support between 12,350 and 12,500 is still in focus, and another move lower is more likely, given the relative weakness of the benchmark.

DAX, 4-Hour Chart Analysis

Key Economic Releases on Thursday

Time, CET Country Release Actual Expected Previous
3:30 AUSTRALIA Employment Change 14,000 14,400 42,000
3:30 AUSTRALIA Unemployment Rate 5.6% 5.6% 5.5%
Tent. JAPAN BOJ Interest Rate Decision -0.1% -0.1% -0.1%
Tent. JAPAN BOJ Monetary Statement
13:45 EUROZONE ECB Rate Decision 0.0% 0.0% 0.0%
14:30 EUROZONE Monetary Statemement
14:30 US Initial Jobless Claims 233,000 245,000 247,000
14:30 US Philly Fed Index 19.5 23.4 27.6

Key Economic Releases on Thursday

Time, CET Country Release Expected Previous
10:30 UK Public Sector Borrowing -0.1% 0.1%
14:30 CANADA CPI Index -0.1% 0.1%
14:30 CANADA Core Retail Sales 0.0% 1.5%

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Analysis

Daily Analysis: Dollar Rally Continues amid Fed Chair Confusion

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Tuesday Market Recap

Asset Current Value Daily Change
S&P 500 2554 -0.09%
DAX 12995 -0.07%
WTI Crude Oil 51.53 -0.66%
GOLD 1287.00 -1.22%
Bitcoin 5652 -0.86%
EUR/USD 1.1751 -0.38%

Yesterday’s trends are mostly continued in financial markets, such as the low-volatility levitation in stocks and the slightly more active trading in currencies with the apparent Dollar strength. The Great British Pound continued to be under pressure amid the amplified Brexit-related worries, but most of the other majors also lost ground to the Greenback.

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The Dollar rally has been fueled by the rise in the odds of some of the hawkish Fed Chair candidates, while overall, the “race” for the positions looks more chaotic than ever. Interestingly, the long-end of the yield curve is refusing to follow the short-term moves, and without the effects of the Fed’s QE program, the yield curve would probably be inverted by now, signaling strong recession risks.

Dollar Index (DXY), 4-Hour Chart Analysis

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The major stock indices are virtually unchanged yet again and even the previously surging Nikkei entered a consolidation, adding to the unusual October lull. Commodities have been quite active thanks to the Dollar’s vigor, with crude oil and gold both turning lower. Oil gave back most of yesterday’s gains as the Iraqi-Kurdish conflict turned out to be less violent than previously feared, and the brief rally fizzled.

WTI Crude Oil, 4-Hour Chart Analysis

Cryptocurrencies

The major coins are having a mixed session at best, as yesterday’s rebound wasn’t durable, and most of the coins turned back lower again. That said, despite the recent choppy price action, the total market cap of the segment is close to its all-time high, even as only Bitcoin is trading near its own record price level.

The optimism regarding Ethereum major Byzantium upgrade wasn’t enough to lift the second most valuable coin today, and the price of the ETH token retreated below the key $330 level after touching $350 yesterday after the upgrade’s lock-in. Ripple and NEO have been among the most active majors today, but with opposing performances, as Ripple fell significantly after yesterday’s break-out attempt, while NEO defied gravity and jumped above the $30 level after a corrective period.

BTC/USD, 4-Hour Chart Analysis

Technical Picture

The S&P 500 is grinding higher despite the overbought short-term momentum readings, and the benchmark is trading very close to its all-time high. The 2550 level is still in focus, but until volatility remains near record lows, the minuscule moves are unlikely to change the technical setup. While a sudden drop in prices could quickly negate the recent break-out, the consolidation could very well lead to further upside, as bulls remain firmly in control, despite the lofty valuation levels.

S&P 500 Futures, 4-Hour Chart Analysis

Key Economic Releases on Tuesday

Time, CET Country Release Actual Expected Previous
02:30 AUSTRALIA RBA Meeting Minutes
10:30 UK CPI 3.00% 3.00% 2.90%
11:00 GERMANY ZEW Sentiment 17.6 20.3 17
12:00 EUROZONE Final CPI 1.50% 1.50% 1.50%
15:15 US Industrial Production 0.30% 0.40% 0.20%
15:15 US Capacity Utilization Rate 76.00% 76.20% 76.10%

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Analysis

Technical Analysis: NEO Jumps as Broad Markets Turns Lower

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As the new waves of regulatory changes keep on hitting the segment, the major cryptocurrencies are mostly lower today. After the major update of Ethereum, and the recent surge in the price of Bitcoin, choppy conditions developed, with no clear short-term trend in most of the coins.

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NEO is the best performing major today, as it surged back to the $30 level after a frustrating period that was dominated by a downward drift.  The coin is now just below the key resistance level, and it could be ready to test the $34 level, with a further target found at $40. The long-term picture still looks positive, with strong support levels at $27 and $25.

NEO/USDT, Daily Chart Analysis

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Ethereum is in a consolidation after the encouraging rally towards the end of last week, while Bitcoin is also correction after its stellar rise. The two largest coins pulled the rest of the majors lower, while Ripple remained very volatile after touching the $0.30 level yesterday, trading below the $0.26 again.

Litecoin, Dash, Monero, and IOTA are all a bit lower today, while Ethereum Classic found some relative strength, although it remains stuck in a declining short-term trend. All in all, the segment is still in a clear uptrend, so let’s see which coins are the most promising regarding the short-term picture.

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Analysis

Daily Analysis: Volatility Near Record Low 30 Years After Black Monday

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Monday Market Recap

Asset Current Value Daily Change
S&P 500 2555 0.12%
DAX 13003 0.09%
WTI Crude Oil 51.88 0.82%
GOLD 1296.00 -0.61%
Bitcoin 5680 2.95%
EUR/USD 1.1793 -0.25%

Stocks markets in the US are at a standstill near their all-time highs, with the major indices trading in extremely narrow ranges yet again. Volatility, as measured by the VIX, is close to its all-time high, in stark contrast to the average October readings, as this month is the most negative for equities regarding seasonality. In fact, this October is the least volatile ever so far, while this week is the 30th anniversary of the most volatile day ever on Wall Street.

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A Riskless Market?

On Black Monday in 1987, the Dow crashed by more than 23% during one session, as widespread bullishness coupled and novel portfolio techniques lead to a massive wave of selling. Although such one-day moves should be prevented by circuit breaking rules in today’s market, the notion that risk is non-existent in the current environment is as dangerous as it was three decades ago.

VIX, Weekly Chart

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Stocks have been very quiet across the globe today, with only the Nikkei continuing its break-out to two-decade highs yet again. In Europe, British assets were the most active, as the Brexit talks seem to be in quite a big trouble, and that pushed the Pound and the Euro lower compared to the Dollar. The Greenback’s rally put pressure on gold as well, and the Japanese Yen also declined, as safe-haven assets were sold in the calm environment.

Nikkei Index, 4-Hour Chart Analysis

Oil has been very active as the Iraqi army took control of Kirkuk defying the Kurdish resistance, the WTI contract rose as much as 2% before retreating below the $52 per barrel level, and as we speculated during the weekend, the spike is unlikely to cause a structural change in energy markets, and we expect the range trading environment to continue in the crucial commodity.

WTI Crude Oil, 4-Hour Chart Analysis

Cryptocurrencies

Today was a big day for the crypto segment thanks to the Byzantium update of the Ethereum network, and although the hard fork went smoothly, the session ended on a slightly negative note. Ethereum pulled back towards the $330 support/resistance level, while Bitcoin remained stuck near the $5700 level after recovering from Sunday’s dip.

Ripple has been the other major mover of the day as the coin first surged higher and hit the $0.30 resistance just to fall back swiftly below the $0.26 level towards the end of the day. Despite the decline, the currency is still in a clear uptrend, but more volatile moves are expected in its price. Among the smaller coins, Stellar Lumens more than doubled in price after the announcement of a deal with IBM, as blockchain adoption continues in full force, pointing out the sound fundamentals behind the boom in the segment

ETH/USD, 4-Hour Chart Analysis

Key Economic Releases on Monday

Time, CET Country Release Actual Expected Previous
3:30 CHINA CPI 1.6% 1.6% 1.8%
3:30 CHINA PPI 6.9% 6.3% 6.3%
14:30 US Empire Manufacturing Index 30.2 20.3 24.4

Key Economic Releases on Tuesday

Time, CET Country Release Expected Previous
2:30 AUSTRALIA RBA Meeting Minutes
10:30 UK CPI 3.0% 2.9%
11:00 GERMANY ZEW Sentiment 20.3 17.0
12:00 EUROZONE Final CPI 1.5% 1.5%
15:15 US Capacity Utilization Rate 0.4% 0.2%
15:15 US Industrial Production 76.2% 76.1%

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