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EUR/USD Entering Turbulence Zone

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By Dmitriy Gurkovskiy, Chief Analyst at RoboForex

In the nearest future, EURUSD might come under pressure from a couple of factors at the same time. Right now, it is the fundamental background that will determine which scenario will continue and influence the technical aspect.

On Wednesday evening, the two-day meeting of the US Federal Reserve will be over. Investors are barely worrying about the key rate: they are sure that the rate will go up from 1.75% to 2.00%. The Federal Reserve usually makes the range, where the rate is “balancing”, but it’s better to use exact numbers. It is expected to be the second rate increase out of three this year, which were announced by the regulator earlier. However, what happens next is the most interesting part.

It is believed that the comments to be made by the Federal Reserve Chairman Jerome Powell this evening may somehow indicate or hint at the regulator’s further monetary policy. Considering that earlier the labor market showed good numbers and the inflation remained stable, investors can expect everything. What investors want to hear is the fourth rate increase in November or December 2018: market expectations for this move are 75% right now. If the Federal Reserve does provide any information relating to the fourth possible increase, it will be an excellent piece of news for the USD.

On Thursday, the European Central Bank will have another meeting and the situation is quite similar here. Investors are worrying about the things the ECB Governor Mario Draghi may have to say after the meeting. First of all, they are expecting him to tell the financial world if the regulator is really going to close the QE program in September and whether the European economy is ready for this. There have already been several positive evaluations on this topic, but Draghi himself is mum so far.

In case of the European Central Bank, it’s quite clear: if the economy is strong and may improve without the QE program, the program will be closed within specified time. It’s a good signal for the Euro.

Analyzing the movement of EURSUD in the H4 chart over the last couple of weeks, one can consider it as the correction to the upside. After breaking the resistance line of the descending channel, the pair has formed a channel for a new ascending tendency. The short-term technical picture shows an internal descending correction after the price broke the support level of the rising channel. The closest target of this correction may be the support line of the lower projected channel and the current descending channel at 1.1690. To continue the uptrend, the instrument has to break the local resistance line at 1.1795. After breaking the resistance area, the price may continue moving towards the broken support line, which is now a resistance level. The short-term upside target may be close to 1.1877.

EURUSD

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 6 rated postsHaving majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.




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Altcoins

Crypto Pricing: Still Searching For The Bottom

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It seems like this entire year has been devoted to rational thinking people searching for rational answers. Why are crypto prices so consistently under such unrelenting selling pressure? There has been no shortage of explanations.  Unfortunately most of them fall far short of the task.

We all remember all those rational thinkers at the San Francisco Federal Reserve who teamed up with Stanford University in a study that concluded that the CBOE was responsible.  The thinking goes that creating a futures market for Bitcoin lead to the collapse.

That study was grossly misleading.  During the first month of Bitcoin futures trading, there were fewer than 900 contracts traded, most of which remained open contracts.  That is less than 0.01% of Bitcoin’s daily volume. Come on folks, you can’t be serious.

More recently on a rainy weekend,  I came across an article noting how short sellers were ganging up on Bitcoin. True, the short position had about doubled in just one month from something like 16,000 to 28,000 coins. Frankly, I was surprised that the short position was so small given the collapse of Bitcoin.

This amount of short selling is far too small to account for more than $300 billion in lost Bitcoin value.  Bitcoin trades over 500,000 coins on any given day. That means that short selling volume over that month was 0.0008% of Bitcoin volume: totally inconsequential.

Something to remember, every short sale at some point will have to cover.  The only way is to buy into Bitcoin. So at this point, a gigantic short position would be good.

Blame It On ICOs

And there are those who pin the blame for crypto prices on Ethereum based ICOs cashing out. Even though it comes nowhere close to explaining the loss of $600 billion in total crypto losses, there may be some truth to this point. Since the beginning of 2017, according to ICOWatchList, tokenized startups have raised a total of $8.5 billion of which about $3.7 was accounted for last year.

Recent studies have concluded that 75%+ of last years ICO were scams. This is a highly debatable point but it is likely to be a conservative measure for the number of failures of last year’s crop of crypto financed business startups.  But even here there is a limit. At its peak in January ETH was valued at $133 billion. Currently that value is $100 billion+ lower than just eights months ago.

There is no question that ICOs influenced ETH speculators but what that doesn’t begin to explain the loss of more than $600 billion in aggregate losses for all crypto assets, nor does it explain how closely matched has been the difference in price performance between Bitcoin and Ether during the last six months of this year.   

Where Is The Market For Crypto Spenders

During the current threat of global trade wars, crypto may prove to be a haven for citizens of China, Turkey and other countries.  But the real problem is the the world’s 7 billion inhabitants have almost no place to spend their Bitcoins and still fewer places to spend their altcoins.

The drop in crypto prices this year has done nothing to encourage its acceptance as a medium of exchange.  The CBOE claims that the presence of Bitcoin futures helps reduce the notorious volatility. This is supported by July showing the lowest volatility in more than a year. It will take more than one month of calm to make a difference.

The fact remains that most ICO, whether they succeed or not, are geared more toward speculation than anything else. Only 2% of capital raised is for commercial/retail projects while over 20% went to financial projects like crypto exchanges.

While certain financial projects like cryptocurrency merchant processors helps limit volatility risk for retailers. Most major outfits that did accept the cryptocurrency have stopped citing volatility concerns. None the less this hasn’t helped crypto adoption by business.

According to Chainalysis, merchant processing over nearly the past year has dropped 85% for all crypto.  Projects like Bitwala, Wirex and TenX, that serve as a consumer bridge between crypto and fiat currencies, are just getting started. The crypto world needs more major brands than just Overstock.com, Expedia, Subway and PayPal to accept a full range of crypto not just Bitcoin,  before speculators are replaced by crypto spenders.

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 97 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

Crypto Update: Coins Lower in Choppy Trading

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Summer conditions have been dominating the cryptocurrency segment in recent days as the majors failed to gather bullish momentum after the oversold bounce of the second half of last week. The technical setup didn’t change much in the top coins, although the consolidation cleared the short-term oversold momentum readings.

Ripple remains the strongest altcoin from a short-term perspective after its strong oversold rally, while Bitcoin is the most stable in the whole segment. That said, as Ripple is still in a declining broader trend, well below the structural break-down level from two weeks ago, traders should be cautious with new positions. Also, Bitcoin failed to move above the $6500 level, so the largest coin didn’t trigger a short-term buy signal, leaving the overall picture overwhelmingly bearish.

ETH/USDT, 4-Hour Chart Analysis

Ethereum is still among the weakest majors, and as it failed to stay above $300, and spiked below $275, a renewed short-term sell signal is very close, while the long-term sell signal is clearly in place. ETH cleared the short-term oversold momentum readings, and now a test of the lows near seems likely even as from a longer-term perspective the coin is still stretched on the downside. Above $300 strong resistance is at $335, while the next level of support is near $235.

BTC/USD, 4-Hour Chart Analysis

Bitcoin has been trading in a narrow range in the last few days, as the market settled down near the $6500 level. The coin spiked below the short-term resistance near $6275 in late trading, but with no clear momentum in the market, BTC remains neutral from a short-term standpoint. As the long-term support level near $5850 is still standing, Bitcoin also avoided a long-term sell signal so far, but traders still shouldn’t enter new positions.

Still No Leadership Present as Coins Fail to Join Rally

LTC/USD, 4-Hour Chart Analysis

While correlations broke down somewhat during the bounce, the conditions for a broader trend change are still not met, as despite Ripple’s strength and Bitcoin’ stability there is no strong evidence of accumulation among the majors. Litecoin and Monero failed to build on the early signs of strength that they showed during the latest leg lower, and the other relatively weak coin, like NEO, Dash, and IOTA continue to show vulnerability.

XRP/USDT, 4-Hour Chart Analysis

With all those in mind, the rally in Ripple remains suspicious, despite the spike up to $0.375. The coin is currently trading in a choppy consolidation pattern, stuck between the $0.30-$0.32 zone and the $0.35 resistance level. While the short-term buy signal remains intact for now, a dip below $0.30 would warn of a test of the lows near $0.26.

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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4.6 stars on average, based on 322 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.




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Analysis

Crypto Update: Ethereum Classic on Track for a Bullish Reversal

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Ethereum Classic (ETC/USD) is among the many altcoins that suffered a massive beating this year. While the pair managed to go as high as $47.296 on January 14, 2018, it has been on a downward spiral ever since. On August 14, it registered a low of $10.10 and at that price point, Ethereum Classic has shed close to 80% of its value from this year’s high.

Just as gloom and doom articles started to circulate on the internet, Ethereum Classic came back from the dead. The market is still weak but it is gaining strength. In this article, we reveal three reasons why we believe ETC is on track for a bullish reversal.

Successful Backtest of a Breakout

Many investors believed that Ethereum Classic was headed into even deeper bear territory. It breached support of $12.00 on August 13 and generated another lower low. After all, lower highs and lower lows are the hallmarks of a downtrend. ETC seems consistent in following the textbook definition of a downtrend.

With these developments, it’s difficult to imagine that Ethereum Classic has already broken out of a reversal pattern. However, it did break out of the large falling wedge on the daily and weekly charts. What we’re seeing right now is the backtesting of the breakout.

Daily chart of ETC/USD

In technical analysis, a resistance becomes a support level once breached. The chart above shows the clear breach of the resistance, hence the breakout. Even with the breakout, Ethereum Classic still dropped. This may seem counterintuitive that’s why many are still saying that the market is bearish.

However, the chart clearly depicts that ETC bounced from the support. It is respecting the new support, which means the breakout is still valid. The backtesting was a resounding success.  

Ethereum Classic Indicators Look Strong

We’re bullish on Ethereum Classic because technical indicators are glowing. Ignore the price drop and you’ll see that the market is gaining strength.

A quick look at the weekly chart reveals that bulls are returning in massive numbers. The extreme volume surge over the last two weeks tells us that bulls are buying the market. The last time ETC printed the same volume level was back in February 2018. However, this is the first time the market is printing such heavy volume for two consecutive weeks.

Weekly chart of ETC/USD

On top of that, a long bullish divergence can be spotted on the daily MACD. Also, ETC has bounced from historic daily Stochastic support of 7.00. These indicators tell us that bulls are wrestling the momentum away from bears.

Daily chart of ETC/USD with indicators

Projected Move

ETC/USD may be looking bullish, but that doesn’t mean that the market will skyrocket anytime soon. On the contrary, it would be better for the long-term health of the market for the price to consolidate between $12 – $20 before making a major move up. If a massive rally occurs that works, too. Whatever happens, we believe that the future looks rosy for ETC.

ETC/USD may have bottomed out

The main reason for the optimism is because the market just bounced from its historic support. This tells us that a bottom may be in place and it’s highly likely that ETC will not go anywhere but up.

Bottom Line

ETC may look extremely bearish but a closer look tells us the exact opposite. The successful backtest of the breakout and the flashing of bullish signals from multiple technical indicators tell us that Ethereum Classic is on track for a bullish reversal.

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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3.6 stars on average, based on 225 rated postsKiril is a financial professional with 4+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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