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Is the Pullback Over Yet?

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This communications tool that we call the internet is very powerful but it can also be dangerous.

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Those of you who’ve been reading my updates for a while know that I love getting messages from people, especially when people send me information and links to sources. Don’t be surprised though if I ask you what’s in the link before clicking.

One of the most common ways for hackers to seize control of your device is by getting you to click on a malicious link. A malware attack known as Digmine was recently discovered on Facebook Messanger. Unsuspecting users who click on the link expecting to watch a video from their friend, inadvertently download a bit of software that runs in the background and uses the victim’s computer to mine currencies.

Though, I’m not sure what’s scarier, instant messenger mining this Dutch company who recently had success mining cryptocurrencies by harnessing the power of the human body. Even though inefficient compared to solar energy, it seems with these new devices body energy can in fact be harvested.

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These type of images instantly bring up memories of the Matrix movies and give me the heebeegeebeez. I mean, if robots are eventually going to farm humans, why are we doing the work for them?

Happy boxing day!!
@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

Ridiculous Spikes

Crypto for Garbage

Are we out of the woods yet?

Please note: All data, figures & graphs are valid as of December 26th. All trading carries risk. Only risk capital you’re prepared to lose.

Liquid Example for Crypto

Most of the markets are back online already but it’s still a holiday in Europe and many investors simply take the entire week off. So liquidity is still thin. In fact, for those of you who are new in the market and joining due to the recent excitement in crypto, we actually have an excellent example of what low liquidity can do.

In eToro, as with many brokers, we too the decision to close the currency markets yesterday for Christmas. Some brokers however, decided to remain open despite the lack of customers.

The conventional currency markets are usually pretty fluid and the prices are quite stable. However, when there are no regular order flows, a small group of people or even a single player can move the market in leaps and bounds.

Yesterday, we saw this type of ridiculous price spikes all over the currency markets. Here lets take a look at the chart of the Euro/Dollar from Bloomberg’s pricing…

Notice, how the price per Euro suddenly dropped from about $1.19 to around $1.165 in the span of about 20 minutes. This is not a normal movement, especially on a day that there is no special news happening.

As we can see, the prices remained erratic for a total of six hours before returning to normal. Of course, any trader who might have had their stop loss anywhere within the line of fire would certainly have been shot and killed.

Here you can see eToro’s chart where the prices were simply closed for the long weekend and opened back up last night with little change from Friday’s close. Had we been open, prices would have spiked all the way down to that red X on the chart below.

What this means for Crypto

In the cryptocurrency market prices are always illiquid. During a regular day, if you want €100 Million you can usually get it from the top tier financial institutions literally faster than you can say “Jack Robinson.” Automated systems have been built over the last few decades that can produce the liquidity within milliseconds.

In the Crypto-market no such systems exist and when there are a large number of orders in a single direction, buy or sell, it can sometimes be difficult to execute those orders.

Note: This is also why the price moves so darned fast in this market.

Is the pullback over???

Short answer: It is in Asia.

Bitcoin is back at $18,500 in Japan, and almost $19,000 in South Korea. The price of Ethereum broke through 1,000,000 KRW (S Korean Won), which is about $955. In this holiday themed chart from cryptowat.ch we can see a clean breakout of the round number, with high volume.

The price level has been tested as a support but if the West manages to use the momentum from Eastern Cryptotraders over the next few hours, the pullback might just be over.

However, as we noticed over the last few days, the West has been driving this sell-off so we should soon see if they’ve gotten it out of their system.

Over the course of the year, we’ve noticed the different types of pullbacks. Sometimes it has taken a few days or even weeks for the market to recover and gain confidence, and sometimes it’s snapped back instantaneously.

For Bitcoin, the recent pullback has been the largest bitcoin has ever seen in terms of Dollar amount and largest this year in percentage terms. The decline has taken us from high of $20,155 on December 17th to a low of $10,720 on December 22nd, a total retracement of 46%.

I would assume that this type of blow might take a while to recover from and it’s possible we’ll see some gigantic range trading opportunities in the next few weeks.

Of course, a breakout in either direction above $21,000 or below $9,000 could also have serious psychological implications on the market in the long term.

For today, Bitcoin is leading the market with her 10% gains. 😉

Happy holidays!!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation. The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro. Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose. Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

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

Technical Analysis: Cryptocurrencies Start Week on a Quiet Note as NEO Shines

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The broad Bitcoin-led correction continued to dominate trading in the crypto-segment throughout the weekend, as the most valuable coin drifted sideways above the key technical level at $13,000, with dwindling trading volumes.

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BTC remains in a declining short-term pattern, although the digital currency still holds well above the mini-crash lows from December, spending almost a month now in the daily range of the year-end plunge. We still expect the largest coin to complete the current cycle with a move below the crash lows and the $10,000 level after the stellar rally of the previous months. Key support is still found near $13,000, with further levels at $11,300, $10,000, $9000, and stronger levels at $8200 and $7700

BTC/USD, 4-Hour Chart Analysis

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Altcoins also settled down across the boards with only a few coins registering strong activity. Ethereum and NEO have been among the coins making headlines, as the second largest coin continued to grind, higher still trading near its recent all-time high today. The price of the ETH token is moving in a short-term uptrend, in the face of the stretched momentum indicators, but we expect a meaningful correction soon, and long-term investors should wait for a more favorable technical setup before entering new positions, with key support levels at $1000, $850, $740, $625, and near $575.

ETH/USD, 4-Hour Chart Analysis

Ripple remained under heavy selling pressure in the meanwhile, as the oversold bounce of the weekend faded away and the coin got close last week’s lows again. As the short-term downtrend is intact, traders should stay away from entering new positions, while investors should wait for short-term sell-offs towards the main support levels at $1.50, $1.25, and $0.85 to add to their holdings.

XRP/USDT, 4-Hour Chart Analysis

(more…)

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

Technical Analysis: Coins Rebound as Key Support Level Holds Bitcoin

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The $13,000 level in the price of Bitcoin continued to be the center attention of traders today, as the most valuable coin successfully tested the crucial support zone overnight, despite another brief dip below it. The other majors followed the subsequent bounce higher, with Ethereum pushing past $1250 once again, while Ripple reclaiming the $2 level.

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Despite the bounce, the short-term trend in Bitcoin is clearly bearish and the correction is still likely to continue, although the extreme long-term overbought readings are now cleared. We still expect a move towards the previous correction low near $11,300, with a likely dip below $10,000 before the end of the current cycle, with further important support levels are found at $9000, $8200, and $7700.

BTC/USD, 4-Hour Chart Analysis

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Ripple recovered slightly after nearing the $1.50 level and reaching short-term oversold readings, and the coin tested the primary resistance level at $2.1 yesterday in late trading. The currency remains in a strong short-term downtrend despite the bounce and the continuation of the correction is likely, although long-term investors could already accumulate new positions near the main support levels at  $1.50, $1.25, and $0.85.

XRP/USDT, 4-Hour Chart Analysis

Ethereum bounced of the dominant short-term trendline, but the coin remains overbought on all time-frames and we expect a trendline break in the coming days. That said, traders could hold smaller positions here with tight stops as a push towards the prior all-time high is still possible. Key support levels are found at $1000, $850, $740, $625, and near $575.

ETH/USD, 4-Hour Chart Analysis

(more…)

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

Technical Analysis: Bitcoin Tests $13,000 as Hectic Correction Continues

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The cryptocurrency segment remained generally bearish in the middle of the week, as the Ripple and Bitcoin-led move spread to almost all of the majors, with even the recent leader Ethereum getting hit today.

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As BTC got smashed below the dominant rising trendline, a wave of selling pushed the coin under the key $13,000 level before a violent bounce started. Despite the bounce, the long-term picture remains negative, and we still expect a test of the correction low near $11,300 in the coming weeks, with a likely dip below $10,000 before the end of the current cycle. Further important support levels are found at $9000, $8200, and $7700.

BTC/USD, 4-Hour Chart Analysis

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Ripple got very close to the key support level at $1.50 today in early trading, and after the sell signal six days ago, the coin is nearing a neutral short-term signal in our trend model, and a more durable bounce is possible here. That said, the long-term picture remains bearish and further corrective price action is likely before the end of the current cycle. Despite the likely consolidation, long-term investors could already accumulate new positions on the short-term sell-offs near the main support levels at  $1.50, $1.25, and $0.85.

XRP/USDT, 4-Hour Chart Analysis

Ethereum’s rally topped out near $1350 for now, and given the now severely overbought long-term picture we expect the short-term trend to end in the coming days. With that in mind, although traders could still enter small positions near the trendline, correction risk is now high, and investors should wait for a deeper move lower before entering new positions. Key support levels below $1000 are still found at $850, $740, $625, and near $575.

ETH/USD, 4-Hour Chart Analysis

(more…)

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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13 votes, average: 4.08 out of 513 votes, average: 4.08 out of 513 votes, average: 4.08 out of 513 votes, average: 4.08 out of 513 votes, average: 4.08 out of 5 (13 votes, average: 4.08 out of 5)
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