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Analysis

Five Things to Watch Next Week: Bitcoin, Central Banks, Qatar, Gold, and the Market Top

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1.            Cryptocurrencies Still in Correction Mode

Ethereum, Bitcoin, and Ripple are both still well below their all-time highs following a choppy sideways week for the crypto market. Litecoin’s break-out was the biggest move of the week and we expect more to come from LTC before BTC’s “Judgement Day” in August. The weekend brought another wave lower for the majors, but so far, the damage is limited and the consolidation patterns are intact. The long-term picture remains supportive of more correction for the coins after the stellar rally of the past few months, but it’s a bull market, and surprises usually come on the upside so getting rid of one’s core positions is probably not a good idea.

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BTC/USD 4-Hour Chart Analysis

2.           The Central Bank Summit

The European Central Bank Forum will take place in Portugal next week, and that might prove to be a game-changer, as the Federal Reserve is in a totally different phase of the monetary cycle than its peers, having hiked the interest already twice this year. The European Central Bank and the Bank of the Japan are still in the middle of the “extreme easy” territory, and given the recent troubles on the global economic front, a dovish change in the Fed’s rhetoric is probably more likely than a shift from the other major banks. The Dollar’s weakness is reflecting this risk already, and the dip in long yields also shows the pressure on the Fed.

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3.           The Qatar Ultimatum

The Saudi Arabia-Iran power struggle moved to a new era this week, with the ultimatum sent to Qatar by the kingdom and its allies. The surprising move in the leadership of the country also, the anointment of the new crown prince, also put Saudi Arabia in the spotlight, and the next moves could determine the region’s political landscape, and of course, the environment for the world’s energy sector. The ultimatum will expire in a bit more than a week, but the reactions of Iran and Turkey will surface before, and we might learn what sanctions (or other measures) the blockading countries will apply in the likely event of Qatar’s “non-compliance”.

4.           Gold on the Move?

The post-Fed correction in precious metals might have run its course and the geopolitical tensions together with the Dollar’s slide sets up a possibly great week for gold. Gold has been moving in concert with the Yen and US treasuries, but the central bank summit could change that if we see a new effort from the heroes of money printing again. Cryptocurrencies could also benefit from a shift towards “hard” assets, with primarily Bitcoin being considered a safe haven currency by some. The US GDP, Durable Goods Orders, and CB Consumer Confidence reports could pose a risk for the metal, as a much better than expected string of reports could break the Dollar’s losing streak.

5.           Stock Markets Still Look Shaky

Market tops are processes, not events. The old saying seems to be proving true once again, as global stock markets are long overdue for a deeper correction following the Trump-rally, the signs (loss of momentum, deteriorating market internals…) are there for several weeks now, but stocks continue to grind higher or sideways in the summer environment. Corrections usually are hard to exactly predict, but conditions are favorable, and what we the market needs is a trigger to start a sell-off. It might be the escalation in the Middle East, further economic weakness, or something unforeseen, but bulls should keep the gunpowder dry and wait for it before jumping in the late-bull-market party.

NASDAQ 100 Futures 4-Hour Chart Analysis

Key Economic Releases of Next Week

Day Country Release Expected Previous
Monday GERMANY IFO business Climate 114.7 114.6
Monday US Core Durable Goods Orders 0.4% -0.5%
Tuesday UK BOE Financial Report
Tuesday US CB Consumer Confidence 116.2 117.9
Wednesday EUROZONE M3 Money Supply 5.0% 4.9%
Wednesday US Goods Trade balacne -66.2 bill -67.1 bill
Wednesday US Pending Home Sales 0.6% -1.3%
Wednesday US Crude Oil Inventories -2.5 mill
Thursday GERMANY Prelim CPI 0.0% -0.2%
Thursday US Final GDP 1.2% 1.2%
Thursday US Initial Jobless Claims 240,000 241,000
Friday CHINA Manufacturing PMI 51.0 51.2
Friday CHINA Services PMI 54.5
Friday GERMANY Retail Sales 0.3% -0.2%
Friday UK Current Account -16.5 bill -12.1 bill
Friday UK Final GDP 0.2% 0.2%
Friday EUROZONE Flash CPI 1.3% 1.4%
Friday CANADA GDP 0.5%
Friday US Personal Spending 0.1% 0.4%
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2 Comments

2 Comments

  1. badjava

    June 25, 2017 at 7:21 pm

    Thanks Mate, good article. I have been reducing my stock holdings and increasing gold holdings (normally only 5%). What’s your opinion on silver?

    • Mate Cser

      June 26, 2017 at 2:41 am

      Hi Badjava, right now I like gold better, silver follows industrial metals as well. That said, with $15.85 stop-loss, a speculative long could be played.

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Analysis

Daily Analysis: Dollar Falls, Gold Jumps after Yellen’s Final Move

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Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2668 -0.02%
DAX 13125 -0.45%
WTI Crude Oil 56.65 -0.68%
GOLD 1258.00 1.35%
Bitcoin 16,100 -6.32%
EUR/USD 1.1842 0.73%

The Federal Reserve hiked interest rates as expected today, and although the central bank’s monetary statement was slightly more hawkish than expected, the market’s reaction didn’t reflect the much-anticipated move. The worse than expected Core CPI reading that underlined the low-inflation narrative weighed on the recently strong Greenback, while stocks were unchanged after decision and bonds gained ground as yields retreated.

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EUR/USD, 4-Hour Chart Analysis

The major indices are hovering near their all-time highs with the DOW leading the way higher, hitting a new record for the second day in a row. While volatility Is expected to remain low as we approach the end of the year, market internals and valuation levels are still concerning from a long-term perspective, and stocks outside the US are also negatively diverging. The action in crude oil could be slightly more interesting as the commodity is starting to act in a slightly bearish manner after a grinding multi-month rally.

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WTI Crude Oil, 4-Hour Chart Analysis

The Brexit process is still in the center of attention in Europe, although volatility took a nosedive on the old continent as well, and it’s unlikely that the Christmas period will be much different, given the predictable drop in volumes and trading activity. The date of the next election in the financially and politically troubled Italy has been set to March 4th next year, and the early date caused some turmoil in the countries assets, which dragged the Euro Stoxx 50 lower today, together with the DAX and the other major indices.

Cryptocurrencies

As the total market cap of the crypto-market crossed the incredible $500 billion mark, Ripple, NEO, and Ethereum made headlines with lofty gains in the face of the severely overbought readings elsewhere in the segment. While XRP and NEO are still not overbought from an investment perspective, Ethereum reached our final target for its break-out and triggered a long-term sell signal.

ETH/USD, 4-Hour Chart Analysis

The previously surging IOTA continued its correction, Litecoin consolidated in a relatively narrow range, while Dash, ETC, and Monero scored marginal new highs before turning lower together with BTC. The most valuable coin that has lost some of its momentum “mojo” in recent days fell back below last week’s highs, and that could mark a failed break-out and a start of the deeper correction that seems more and more likely.

BTC/USD, 4-Hour Chart Analysis

Key Economic Releases on Wednesday

Time, CET Country Release Actual Expected Previous
11:30 UK Average Earnings 2.5% 2.5% 2.3%
11:30 UK Claimant Count Change 5,900 3,300 6,500
11:30 UK Unemployment Rate 4.3% 4.2% 4.35
15:30 US Core CPI 0.1% 0.2% 0.2%
15:30 US Crude Oil Inventories -5.1 mill -3.6 mill -5.6 mill
21:00 US Fed Rate Decision 1.5% 1.5% 1.25%
21:00 US FOMC Statement

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Analysis

Technical Analysis: Volatility on the Rise Again, as Ripple and Ethereum Hit Targets

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Ripple has been the star of today’s session in the cryptocurrency segment, as the only major coin on a long-term buy signal in our trend model continued yesterday’s break-out, and surged to a new all-time high. The currency cleared the $0.425 level that marked the top in May, and after the more than 6-month long consolidation phase, it promptly neared the $0.50 level.

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While the short-term momentum indicators are now stretched, the coin is still in an encouraging long-term setup, although the best period to buy already passed. The coin could be dragged lower in the case of the expected broad correction in the segment, but we expect XRP to outperform in the coming period, with support levels found at the prior high and below that in the range between $0.30-$0.32.

XRP/USDT, 4-Hour Chart Analysis

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Ethereum has been the other top coin on the rise, as the second largest digital currency surged past the final range projection target of the break-out two weeks ago at $685 in the aftermath of the launch of the BTC futures on Monday. The ETH token is now also on a sell signal on all time-frames, and we advise investors and investors to wait for the next major correction to establish new positions. Support levels are now found at $575, $500, $480, and $400.

ETH/USD, 4-Hour Chart Analysis

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Analysis

Technical Analysis: Bitcoin Grinds Higher as Records Tumble in Altcoins

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The historical surge in the segment, which is the second such move this year, continued today, with another round of break-outs in some of the major altcoins and tepid gains for BTC investors. Ethereum, Ripple, Dash, and first and foremost Litecoin was leading the charge, with the recent star LTC topping $300, just after a day of hitting the $200 mark.

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Litecoin defied all odds after reaching extremely overbought readings, and the coin rode the speculative wave, turning exponential, not unlike IOTA and Bitcoin previously. With the coin being stretched in an unprecedented way on all time-frames, investors could even consider selling their core positions at the current levels, as a deep correction is almost granted in the coming period. The first meaningful support level is found at $125, and a re-test of the $100 level is probable during the next major correction.

LTC/USD, 4-Hour Chart Analysis

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Ripple finally ended a long period of relative weakness today, and the only major on a long-term by signal jumped over primary resistance at $0.26 and crossed the $0.30-$0.32 too in the euphoric sentiment. As the coin is not long-term overbought following the 6-month long consolidation, the buy signal in XRP remains intact, with the only major resistance level being found at the all-time high near $0.425.

XRPUSDT/USD, 4-Hour Chart Analysis

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