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Forex Analysis And Chartbook: Dollar Ticks Higher as Trade Worries Intensify

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Tuesday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,677 0.60%
DAX 30 11,309 -0.40%
WTI Crude Oil 51.39 -0.41%
GOLD 1,212 -0.79%
Bitcoin 3,717 -0.27%
EUR/USD 1.1296 -0.28%

Risk assets had a mixed day following yesterday’s rally attempt, as Asian and European markets struggled to extend yesterday’s move, with pronounced weakness in China, while US stocks managed to recover off their early lows, trading in the green for the second day in a row.

The Dollar’s push higher was the most important trend of the day, which was fueled by the slightly hawkish tone of an FOMC member ahead of the week’s key events, the Fed’s meeting minutes and the G20 summit.

EUR/USD, 4-Hour Chart Analysis

The Greenback also gained ground due to the rumors regarding a 25% auto tariff that could be introduced as soon as next week by the Trump administration, which dampened hopes of a constructive G20 summit with regards to trade tariffs.

The broad Dollar index edged closer to its recent 16-month high and the EUR/USD pair broke below the 1.13 level for the first time in two weeks, while the GBP/USD pair confirmed the Pound’s recent relative weakness, plunging below the 1.28 level and getting close to its lows form August and October.

Dow 30 Futures, 4-Hour Chart Analysis

The major US indices opened lower following a hectic and bearish overnight session, but with the help of the relatively strong Dow, the benchmarks quickly recovered and traded in the green in the afternoon session.

The worse than expected CB consumer confidence and Case-Shiller Housing Price Index pushed Treasury yields off their session highs, helping equities in the rally, and despite a few volatile spikes lower, stocks remained stable throughout the day. That said, the declining short-term trends are still intact on Wall Street, and we need further evidence before declaring the start of the “Santa Claus” rally.

China Shows Weakness as Gold Tumbles

Shanghai Composite Index CFD, 4-Hour Chart Analysis

While globally we have seen a slight risk-on shift this week, China has been relatively week due to trade fears ahead of the G20 summit, and today, mainland shares continued to struggle, even before the fresh tariff rumors.

The Shanghai Composite, which entered a bear market back in June is drifting back towards its September low, after failing at its broad declining trendline, and even as a year-end short-covering rally is still possible, the long-term outlook remains very negative.

The persistent weakness in China and the other main emerging markets continues to reaffirm our view that we are seeing a global bearish shift, and with the key European indices also struggling, the beginning of 2019 will be crucial for risk assets around the world.

Gold Futures, 4-Hour Chart Analysis

Commodities had a volatile session amid the Dollar’s rally, and most of the segment traded with a bearish bias, with only the battered crude oil contracts attempting an intraday rally of their one-year lows. Gold and copper both declined as the Greenback pushed higher, with the industrial metal being hurt by the weakness in China again.

For gold, the combination of the hawkish Fed, the rally in US stocks, and the bullish USD led to a dip below the key short-term support level near $1215. The precious metal failed to show resilience the face of the still bearish long-term technicals, and despite the positive fundamental backdrop we still haven’t seen a clear technical buy signal in gold.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Nasdaq 100 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

 

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

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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4.7 stars on average, based on 444 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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Altcoins

Cardano Price Analysis: ADA Must Hold This Key Support or Be Forced to Give Up $0.04 & $0.03

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  • ADA/USDT price action has formed a head and shoulders pattern, subject to a possible neckline break.
  • Chunky supply is heavily capping upside for ADA/BTC, tracking from 0.00001400-0.00001200.

ADA/USDT in the very latter stages of trading on Sunday was seen nursing chunky losses of over 5%. The price has continued to trade within a choppy nature, a failure to see commitment from either bear or bull camp for ten sessions now. Market participants have been treading extremely cautiously since the steep fall on 10th January. ADA/USDT had plummeted a whopping 22% within the mentioned session. It was the biggest drop in a single session observed since 16th January 2018, where the price tanked around 44%.

Head and Shoulders Formation

ADA/USDT daily chart.

Looking via the daily chart view, price action has been constructing a head and shoulders pattern formation. The left shoulder and head are seen with the right shoulder close to completion. Currently the price on the latest candlestick heading south is edging closer to the neckline, which will determine whether the textbook pattern will materialize. In terms of the vital support (neckline), this is tracking at $0.047000. Should the bears sustain the downside momentum observed in this session, then a breakout could be seen in the next day or two.

Key Support Areas

A breach of the above-detailed neckline will likely open another wave of hard selling pressure. On this potential note, key areas of comfort should be known at $0.039000 (daily support), $0.035500 (27-28th December 2018 low area). Going by the distance between the head and neckline of the pattern, a drop down to the December 2018 lows may be seen. As a result, this would see a retest of the low area from 7th-15th December, $0.027600. Strong buyers came into play here in mid-December to send ADA/USDT back into a decent upside trend.

ADA/BTC Technical Review

ADA/BTC daily chart.

Upside is capped as the price trades within a very stubborn area of supply. There is a chunky amount of resistance that tracks from 0.00001400 down to 0.00001200. The price has not traded comfortably above this region since the start of September 2018. Furthermore, given the continued rejection and lack of upside momentum, ADA/BTC could be seen back down to the demand area below, 0.00001000. Further south, eyes would be on December low area, 0.00000800.

Disclaimer: The author 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.

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 111 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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Altcoins

Dash Price Analysis: DASH/USDT Downside Risks Linger Despite Trust Wallet Support Announcement

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  • DASH/USDT price action is moving within a narrowing range formation, subject to further downside risks.
  • Trust Wallet, Binance-owed crypto wallet provider, announces support of DASH.

Price Behavior

DASH/USDT has been trading within a $6 range for the tenth session in a row, at the time of writing. The upper part of this range should be noted at $73. Looking to the downside, the lower support of the formation is seen at $67. The price, like many of its peers within the cryptocurrency market, is stuck within a narrowing range block. They are all currently demonstrating strong downside vulnerabilities, given the current behaviour.

This trading range came after a steep fall in the market last Thursday, 10th January. Double-digit losses were seen across the board after moving within a prior narrowing range formation. DASH/USDT had a strong run from 15th – 24th December, gaining as much as 81% within that time frame. Following the high print towards the latter part of that period, at $102.50, price cooling was seen and then begun to trade sideways.

Between 26th December 2018 – 9th January 2019, DASH/USDT was moving between a narrow $86 at the high and $73 at the low. This led to the explosive breakout to the downside, where the price dropped around 20% on 10th January.

Trust Wallet Supports Dash (DASH)

Trust Wallet, a mobile crypto wallet owned by Binance, announced earlier this week that it has added support for Dash. The announcement followed after just a week ago, when the wallet provider revealed the support of Litecoin (LTC), Bitcoin (BTC), and Bitcoin Cash (BCH). In addition, the app also supports Ethereum (ETH), Ethereum Classic (ETC), Tron (TRX) and others.

The team at Trust Wallet, upon their DASH support update, also left users somewhat excited about further announcements lined up. They stated, “Going forward, we will monitor the performance and stability of our Dash release very closely, and if everything works well, hopefully, we can surprise you with more new coins in the coming weeks!”

Technical Review – DASH/USDT

DASH/USDT daily chart.

A breakout of the key mentioned levels that make up either side of the range, $72 and $67, will likely determine the next committed trend. Firstly, in terms of the next major area of support south, eyes will be on the December low area, $58. To the north, drop supply remains heading into and just above the psychological $100 mark.

Disclaimer: The author 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.

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 111 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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Analysis

5 Things To Watch Next Week + ChartBook

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ECB Faces Tough Task as Eurozone Continues to Slow

DAX 30 Index CFD, 4-Hour Chart Analysis

This week’s G20 meeting in Tokio for finance ministers and central bankers was eclipsed by the trade-war-related developments, but next week, the European Central Bank will surely be at the center of attention. The ECB is lagging behind the Fed in the normalization of its monetary policies, and we doubt that it will ever reach hiking rates before the next recession strikes Europe.

Economic numbers alarmingly deteriorated in recent months, the Euro is among the weakest major currencies, and with the Brexit process still looking uncertain, it’s hard to see how Mario Draghi &. Co. will navigate through the next months. While the current risk rally might make bulls think that all is well, the major European indices are still in deep technical trouble, and the as the economic cycle is turning down, we don’t think that the ECB has too many options.

The recent dovish shift could mean that the ECB will also sound the alarms, and we will see further weakness in the Euro and a possible extension of the counter-trend move in the European indices as well. That said, the ECB’s position is desperate from a broader perspective, as its only ammunition is more quantitative easing in the case of a deeper economic downturn.

$1.5 Trillion of Earnings Out after Trade-Fueled Surge on Wall Street

S&P 500 Futures, 4-Hour Chart Analysis

Following a mixed weak of financial earnings, with strength in the core businesses and weakness in trading performance for the most important players, this week we will have a more balanced mix of quarterly earnings reports in the US. Johnson & Johnson (JNJ), Procter & Gamble (PG), IBM (IBM), and Intel (INTC) will be the most important, and although the dollar’s Q4 strength could weigh on global revenues, the domestic numbers should be still fine.

With that in mind, the reports could still boost stocks after the December plunge, but we think that the fuel is running out, and investors shouldn’t get excited about the historic short squeeze. Also, we have doubts about the Chinese plan to reduce the US trade deficit, as even the Asian giant is serious about it, implementing such a plan seems to be more borderline impossible, let alone in a few short years. So while the rally could still go on, at these levels, short positions could already be opened on US equities.

EUR/USD Falls Despite Risk Rally as Treasury Yields Hit 3-Week High

EUR/USD, 4-Hour Chart Analysis

We saw signs of technical weakness this week in the most traded forex pair, as it completed a failed break-out pattern above the 1.15 level and dipped clearly below 1.14 towards the end of the week. US Treasury yields continued to rise, on the heels of the strong rally in stocks, and the relatively stable economic numbers from the US added to the pressure on the common currency.

With the ECB’s monetary meeting coming up, we could see wild swings especially in the second half of the week, but for now, the direction looks clear, and new lows are likely in the coming months. Given the technical weakness even a quick test of the 1.12 level and a sharp sell-off to new lows is possible, should risk assets turn south next week.

AUD/USD, Our Canary in the Coalmine, Showing Weakness

AUD/USD, 4-Hour Chart Analysis

The Aussie, which has been rising together with other risk assets showed relative weakness this week, despite the rise in commodities and the positive news concerning the US-Chinese trade talks. The AUD/USD pair has been a very good indicator for the risk-on/risk-off shifts in recent months so this weakness should be closely monitored by investors.

From a technical standpoint, the pair is trading in a crucial price range between 0.7150 and 0.72 following the post-flash-crash rally. The bounce was distorted by the flash crash, as it wiped clean several important stop-loss zones, causing pain for bears and bulls alike. With the declining long-term trend clearly being intact, we would once again favor short positions here, even as the short-term trend could still take time to top out.

Chinese GDP, Eurozone PMIs, and Rate Decisions Highlight Economic Calendar

Besides the ECB and the Bank of Japan we will have key economic indicators coming out almost every day next week. The week will kick off with the quarterly Chinese GDP print and Industrial Production, but elsewhere the economic calendar will be empty on Monday, with US markets being closed oin observation of teh Marting Luther King Jr. day. Europe will be in focus on Tuesday, with the British Employment Report and the German ZEW Sentiment number coming out, while on Wednesday, the BOJ’s monetary meeting and the Canadian Retail Sales Report will likely make waves.

The last two days of the will likely be the most active in traditional financial markets, with the Eurozone Manufacturing and Services PMIs and the ECB’s monetary meeting being scheduled for Thursday. Given the pace of the recent slowdown, which usually precedes recessions, another set of negative surprises could hurt the Euro and European equities alike.

ChartBook

Major Stock Indices

Nasdaq 100 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Gold Futures, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

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.

Rate this post:

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4.7 stars on average, based on 444 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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