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Analysis

Euro Hits 2-Year High as Market Calls Draghi’s Bluff

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Friday Market Recap

Asset Current Value Daily Change
S&P 500 2470 -0.01%
DAX 12334 -0.89%
WTI Crude Oil 46.49 -0.92%
GOLD 1249.00 0.24%
Bitcoin 2751 11.81%
EUR/USD 1.1638 0.05%

The most important trend in financial markets continued yesterday and today in early trading as the Euro hit yet another new high compared to the US Dollar, rising to levels not seen since 2015. The common currency dipped briefly after the ECB’s monetary meeting, but later surged back and extended its rally above 1.16, delivering another blow to European equities. The DAX and the Euro Stoxx 50 both declined substantially from their short-term highs from Thursday. US markets are on the other side of the trade, as all major indices remained strong and hit more new all-time highs.

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The DAX pushed lower by the Euro rally, 4-Hour Chart Analysis

Currency markets are dominated by the weakness of the USD, as the Yen and the Great British Pound also gained ground on the Greenback, with the broader Dollar index also falling to a 12-month low. Commodities are also active, with oil retreating after a multi day rally, while Gold benefiting from the weakness of the Dollar and getting close to $1250. Industrial commodities are also higher, helped by the gains in China, and the decline in US yields. We expect a calm US session after the busy week, as trading volumes are already declining and volatility is back near all-time lows in stocks.

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The Dollar Index still in a crucial downtrend, 4-Hour Chart Analysis

Cryptocurrencies

The crypto market possibly hit short-term top after the news that miners locked in the BIP 91 protocol upgrade and Bitcoin jumped above $2750 this morning. The other relatively strong major, Dash, also surged higher and spiked above $200 after two weeks before dipping back below the key level. Ethereum failed to join the party, as it still consolidates its epic rebound off the $135 level that it hit on Sunday. NEM, Monero, and Litecoin were also among the stronger currencies, while ETC and Ripple remained weaker. Small cap coins outperformed ETH since yesterday, led by the likes of Stratis, Bitshares, and Antshares. The weekend might bring a less volatile consolidation after the huge moves, despite the hurdles that are still present before August 1, the big day for BTC.

Bitcoin, 4-Hour Chart Analysis

Technical Picture

The NASDAQ breached its all-time high after last week’s break-out from the “flash-crash” correction pattern, and it’s now consolidating near the new high. The short-term picture is overbought suggesting more corrective action in the coming days, but the long-term trend is clearly bullish, and as long as the Dollar remains under pressure, US equities should continue to experience strong tailwind. Primary support is found at 5800, while the 6000 level is ahead as a possible resistance.

NASDAQ 100 Futures, 4-Hour Chart Analysis

Key Economic Releases on Friday

Time, CET Country Release Actual Expected Previous
10:30 UK Public Sector Borrowing 6.3 bill 4.3 bill 6.4 bill
14:30 CANADA CPI Index -0.1% -0.1% 0.1%
14:30 CANADA Core Retail Sales -0.1% 0.0% 1.5%

Key Economic Releases on Monday

Time, CET Country Release Expected Previous
2:30 JAPAN Manufacturig PMI 52.4
9:30 GERMANY Manufacturig PMI 59.6
9:30 GERMANY Services PMI 54.0
10:00 EUROZONE Manufacturig PMI 57.4
10:00 EUROZONE Services PMI 55.4
14:30 CANADA Wholesale Sales 1.0%
16:00 US Existing Home Sales 5.62 mill

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Analysis

The Raiden Network: Is Now A Good Time To Invest In RDN?

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It seems like we have talked about the need for speed whenever the topic of blockchains and cryptocurrencies are mentioned.  These days, transactions are consuming huge amounts of energy and still only perking along at 10-15 per second. If there is a crypto future this rate isn’t going to get us there.  As we all know, Mastercard and Visa work with a system supposedly doing 100,000 per second.

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Who knows if that number is absolutely accurate of some smoke but one thing we know: 10-15 per second is pathetic.  Bitcoin’s potential savor is The Lightning Network. The latest version was released within the last few weeks. Along with about everybody else, we will be watching closely to get a read on TLN.

A Savior For Ether Investors?

The Raiden Network could save Ethereum from techno irrelevance.  The important word here is could. That is because there is lots of Ethereum envy out there.  There are folks such as Cardano and NEO that have their own blockchain platforms complete with smart contracts.  Then there is Liquidity.Network, the recently announced Ethereum focused competitor to Raiden.

Creating A Separate Coin For Investors

Raiden Network completed its ICO last November, raising $32.8 million.  Rather than simply creating a fork of ether, developers created the opportunity for investors to directly participate in a solution that could save the day for Ethereum and investors in ether.  

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I do not own any RDN.  A small amount of ETH has my name on it, so I am eager to find the protocol that can protect my measly holdings.  Here is what gets me interested in Raiden.

Well Along In The Development Process

RDN has been around for about the same amount of time as Ethereum dating to 2015. That is about 21 in dog years and practically a millennium in crypto time.  But the development team strikes me as the most interesting part.

RDN is being developed by BrainBot Technologies AG.  This is not a smattering of amateurs but a company with a deep bench of developers and a history of successful projects.  Check them out at brainbot.com.

Last November, Brainbot demonstrated the high throughput and low latency of the Raiden Network with a demonstration of Micro Raiden applied in real-time, showcasing the great potential for products that require the type of high speed transactions involved with the Ethereum blockchain.

Off The Blockchain

Technical reports describe The Raiden Network as an open source, trustless, fast, inexpensive and scalable off-chain payment solution for the Ethereum blockchain. This means it functions smoothly with the Ethereum platform. The Raiden Network provides bidirectional payment channels for low scale value exchanges of ERC20 compliant tokens to users within the Raiden Network. These bidirectional payment channels may interlock to create a system of channels between infinite parties in a hive.

Translated into comprehensible english, Radien promises almost instantaneous transactions with fees low enough to attract low value transactions. At less than $0.01 per transaction, a $5 latte fits.  Ethereum fees at the peak last year were more $4.15. So the potential for Raiden is really big.

In fairness it should be mentioned that Ethereum is considering options such as sharding and that would reduce the singular importance of Raiden. So perhaps the role of savior is a bit extreme.  But sharding is not likely to be a preemptive force. Raiden development is that much further along.

Speaking Out

Members of the Raiden development team are taking their show on the road having made presentations recently in Tokyo.  The next event is scheduled for Toronto this coming week on May 4th. The presentation is being billed as an opportunity to give an update on the progress in deploying the network.  This is a date to put in your digital calendar if you own ETH or have an interest in RDN.

Aside from the obvious reasons, here is why.  Like about every other crypto, RDN peaked in price in early January around $8.65 before taking a plunge to less than $1.20 by April.  This drop of 87% made RDN one of the worst performers in the recent crash. In addition to all the crypto market woes, there were delays in the network deployment.  That is enough to disappoint anyone.

Since early April RDN’s price has rebounded to about the $2.00 level.  Even so this is a long way from the good old days of 2017. Logic dictates that a good showing in Toronto might translate into investors taking notice.   By good showing we are talking about favorable news about Raiden deployment.

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.

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4.4 stars on average, based on 64 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.




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Analysis

Euro hits 3-Month Low Despite Hawkish Draghi

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All eyes were on the European Central Bank and Mario Draghi today, as the recent string of disappointing economic data put pressure on the Euro. Investors started questioning that the ECB will follow through with its monetary tightening plans. As far as the actual momentary policies are concerned, the central bank left everything unchanged today, while the head of the bank signaled that he is confident about growth in the Euro-zone, sparking initial buying in the common currency.

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EUR/USD, 4-Hour Chart Analysis

Despite the hawkish words of “Super Mario” the Euro took a sharp turn lower right at the US open, and the EUR/USD dipped below 1.2150, hitting the lowest level since January. From a technical standpoint, the most traded pair is at a very important juncture, and should the break below support hold, a quick move below $1.20 is likely.

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S&P 500 Futures, 4-Hour Chart Analysis

Stocks are higher for the second day in a row after the strong bearish move in Tuesday, with the NASDAQ leading the way higher, led by Facebook, as the recently troubled social media giant is staging a strong bounce following yesterday’s positive quarterly earnings report. Despite the rally, the charts still suggest that there are more troubles ahead for bulls, with the short-term downtrend clearly being intact in the major indices.

Facebook (FB), 4-Hour Chart Analysis

US Treasury yields which have been in the focus in the last days are slightly lower today, especially regarding the longer end of the curve, as core durable goods orders came in much lower than expected, even as the less reliable headline number beat the consensus estimate. While it’s unlikely that the rising trend in yields will be broken, a correction is in the cards after the strong move higher in rates.

Dollar Rally Dominates Forex Markets

USD/JPY, 4-Hour Chart Analysis

Should Treasury yields pull back substantially from their highs that could mean that a correction the Dollar rally is also ahead, as the Greenback looks stretched from a short-term standpoint too. The Dollar’s strength also weighs on commodities, with gold dropping below $1320 and WTI crude oil falling back below $68 per barrel.

Commodity currencies are still under pressure too, while European and Asian stocks are benefiting from the USD rally, which will remain in the center of attention this week.

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.

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Analysis

Crypto Update: Correction Continues but Uptrend Not in Danger

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The major cryptocurrencies are consolidating in a choppy range today following yesterday’s sharp pullback, with the total value of the market stabilizing near the $400 billion level. All of the largest coins found support above key support levels, keeping the bullish trend intact, as the overbought readings are being cleared.

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While the correction will likely continue and our trend model is still only neutral from a short-term perspective in the case of most of the coins, the underlying trend is positive, and we expect the recovery to resume after the dip.

BTC/USD, 4-Hour Chart Analysis

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Bitcoin fell below the $9000-$9200 support/resistance zone during the pullback, but it remained above the $8400 level that marks the previous swing high. The MACD indicator is still showing a downswing, but it is now in neutral territory, and the coin could already be ready to resume the uptrend and aggressive traders could enter new positions, using the overnight low as a stop loss level. Below $8400, further support is found near the $7650 level, while targets are ahead at $10,000 and $10,500.

ETH/USD, 4-Hour Chart Analysis

Ethereum found support just below the $600 level and moved back to the vicinity of the $625 support level holding within the steep short-term uptrend.  A break below the trendline is still likely, and a test of the $555 to $575 zone is possible after the strong rally. That said, ETH, one of the leaders of the upswing is expected to resume the recovery after the correction, and long-term investors should hold on to their coins despite the move. Further support is at $500, with targets still ahead near $735, $780, and $845.

EOS Holding Up Well Amid Broad Correction

EOS/USD, 4-Hour Chart Analysis

EOS has been spearheading the broad rally in the segment, and the coin got close to the prior all-time high before the current correction, being the largest coin to do so since January. Although the currency retreated somewhat from the highs, it remains from a short-term perspective and traders should use tight stop losses or reduce their positions as correction risk is high here.

IOTA is the closest to giving a short-term buy signal among the majors, as it began the correction earlier and found strong support near the previous swing high, while there are no negative outliers that would hint on a failed rally off the recent multi-month lows. With that in mind, long-term investors could still use the current correction to boost their altcoin holdings.

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.

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