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Analysis

Euro Jumps on Draghi as Cryptocurrencies Try to Rebound after Monday Massacre

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Tuesday Market Recap

Asset Current Value Daily Change
S&P 500 2433 -0.10%
DAX 12696 -0.58
WTI Crude Oil 44.09 1.64%
GOLD 1251.00 0.30%
Bitcoin 2365 -5.13%
EUR/USD 1.1277 0.86%

Both fiat and cryptocurrencies are very active today, as “Super Mario” Draghi gave a boost to the Euro on the central bank summit when he hinted on the European Central Bank following the Fed in its tightening journey after speaking optimistically about the growth prospects of the Eurozone. The ECB has always been infamous for being “behind the curve”, like hiking rates in 2008 and 2011, and now once again, it seems that the deterioration in economic numbers (the US Consumer Confidence index also missed today) is no big deal when it comes to following the big brother of central banks. Crypto-coins are trying to find footing after yesterday’s steep drop, but the selling pressure is still apparent in the segment.

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EUR/USD 4-Hour Chart Analysis

Gold recovered above $1250 after yesterday’s flash crash, and oil also got a boost from the weakness in the Dollar, with the WTI contract creeping back to $44 per barrel from its lows around $42 last week. European stock markets are lower again as the Euro’s rally weighs on them, while the major US benchmarks are little changed, with only the NASDAQ resuming its slide. All in all the market still looks shaky, and a deeper correction wouldn’t surprise us in the coming weeks.

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Cryptocurrencies

Ethereum led yesterday’s bounce off the short-term panic lows, but the coins are not out of the woods yet, with the short-term trend still being negative. The long-term picture is approaching neutral now, and a bottoming process might already be in the works. Dash is still looking relatively strong, while the other majors are trading near their lows today. All eyes are still on Ethereum and Bitcoin as correlations remain elevated as several players are still liquidating holdings.

Ethereum, 4-Hour Chart Analysis

Technical Picture

The German benchmark is on the verge of breaking below the dominant long-term trend channel, as we expected, with the words of Mario Draghi pushing the index back towards the 12,650 support. The test of the 12,500 level still looks likely in the coming days, especially if the NASDAQ continues to lag the other global benchmarks.

DAX Index 4-Hour Chart Analysis

Key Economic Releases on Tuesday

Time, CET Country Release Actual Expected Previous
10:00 UK BOE Financial Report
14:30 US CB Consumer Confidence 115.9 116.1 117.9

Key Economic Releases on Wednesday

Time, CET Country Release Expected Previous
10:00 EUROZONE M3 Money Supply 5.0% 4.9%
14:30 US Goods Trade balacne -66.2 bill -67.1 bill
15:00 US Pending Home Sales 0.9% -1.3%
16:30 US Crude Oil Inventories -2.1 mill -2.5 mill

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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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