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Long-Term Cryptocurrency Analysis: Correction Continues on Chinese ICO Crackdown

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The major coins are sharply lower this weekend as the two new Chinese regulatory proposals that surfaced spread uncertainty in the segment during the week. The ICO ban proposal on Monday and the following alleged exchange ban delivered a double blow to the overbought market that we have already been expecting to correct. BTC is showing relative strength amid the volatile moves, but the rest of the majors are 30+% off their highs. Ethereum is back below $300, and it is testing the $285 support yet again after the strong mid-week bounce. The coin already almost fully cleared the overbought readings regarding the daily chart, but we still expect a move towards the $235-$250 zone.

ETH/USD, Daily Chart Analysis

Litecoin, Monero, Dash, are all trading near important support/resistance levels after their huge gains, and all three coins look prone to correct more. NEO has been hit the hardest by the Chinese news, and it is hovering around the $22 support this weekend after trading at $16 and $35 on the course of the week. Ripple and Ethereum Classic remain similar technical positions, after the break-out attempts that were interrupted by the broad correction. As the bearish move already covered significant ground in terms of percentages, let’s see how it changed the long-term view for the majors.

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Bitcoin

BTC/USD, Daily Chart Analysis

BTC is holding up above the $4000 level for now, with a 20% loss top-to-bottom so far. The overbought readings of the MACD indicator are getting cleared, but we still expect the correction to continue in the coming week, and investors should still wait with opening new positions. Key support levels are at $3800, $3500, and $3150 while resistance is ahead at $4400.

Litecoin

LTC/USD, Daily Chart Analysis

Litecoin turned lower off the upper boundary of the long-term trend channel, and it’s now testing the $64 support/resistance level again. As the coin is still deeply in overbought territory, more correction should follow in the coming weeks, with targets at $60, $56, and $51, with the $56 line being the most likely candidate, as the 61.8% Fibonacci retracement is also near the area.

Ripple

XRP/USDT, Daily Chart Analysis

Ripple is trading near the $0.20 level holding on to some of its break-out gains, despite the deep correction. The coin is neutral regarding the long-term picture, and that could point to a period of outperformance during the current move lower. Investors could add to their positions on the short-term dips, with support near $0.18, and $0.16.

Dash

DASH/USD, Daily Chart Analysis

Dash is testing the $300 support once again, and the coin remains overbought, suggesting more downside movement in the coming week. The currency turned lower off the $360 resistance, and now it’s probably headed towards the support at $265, with the test of the prior high near $220 also being possible.

Ethereum Classic

ETC/USD, Daily Chart Analysis

Ethereum Classic broke below crucial support today in early trading, and that means that it re-entered its prior trading range. The long-term base around the $14 level should hold the coin during the current move, giving investors the opportunity to add to their holdings. Above $16 strong resistance is at $18 and near the all-time high at $23.

Monero

XMR/USD, Daily Chart Analysis

Monero is trading near the $100 level for the second time this week, and we expect the coin to move below that zone in the coming days. The MACD remains bearish after turning lower in overbought territory. XMR has support at $80 and $68, while resistance is still ahead at $125 and above that near $150.

How to Use These Charts?

As we stressed in our article on Bitcoin: “…not all strategies are binary (either holding an asset or not).There are many long- and short-term investment and trading strategies that can be successful in a roaring bull market like the one that the crypto-coin segment is experiencing, but mixing the time-frames and mixing trading and investing (see our article on the topic) could lead to troubles.”

Here is a reminder of some of the possible strategies once again:

  • Buy and hold, without caring about day-to-day (or even month-month) fluctuations
  • Buy and hold a core position and add on the major dips; a very powerful strategy
  • Buy a certain amount every week or month, and even-out your entry price, without the hassle of timing the market
  • Try to catch major turning points to reduce and “re-boost” your position
  • Trade short-term movements with stop-losses, targets, and strict risk management (this is trading not investing)”

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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4.6 stars on average, based on 276 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: Coins Pop Higher as Consolidation Continues

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Trading activity increased in the major coins today, amid a mixed news flow, and for now, bulls scored a small victory following last week’s bearish price action. Bitcoin, Ethereum and most of the largest digital currencies gained several percents, despite the weekend’s deterioration, and although the technical setup didn’t change significantly, an immediate breakdown has been averted.

The discouraging BIS report that has been making waves today wasn’t enough to push the coins below support, but for now, the short-term strength left the trading range intact with the primary resistance levels still keeping a lid on prices. Given the uncertain long-term picture, the coming weeks will be crucial for the largest coins and the whole segment alike, with Bitcoin being in the center of attention after its long period of relative weakness.

BTC/USD, 4-Hour Chart Analysis

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Bitcoin held up above the April low, despite the bearish short-term picture, and the coin the highest price level in a week, breaching the $6750 level in the process. While the most valuable coin fared relatively well today, it clearly remains a laggard from a broader perspective, and it is still trading in a declining short-term trend, with several strong resistance levels just ahead.

The $5850 is the key from a long-term perspective, with further support levels at $6500 and $6275 and resistance ahead at $7000 and $7350.

Bearish Rotation Among Altcoins

ETH/USD, 4-Hour Chart Analysis

On a negative note, the leaders of the latest rally were among the weaker coins today, and that is a sign of bearish rotation in a segment, and until major resistance levels are broken traders shouldn’t enter new positions here. Ethereum managed to rally above $500 yet again, but it remained below week’s bounce high, leaving the trading range intact, while the declining short-term trend is also still dominant.  Strong resistance is still ahead between $555 and $575, while support below $500 is found at $450, $400, and $380.

EOS/USD, 4-Hour Chart Analysis

EOS, which is one of the strongest majors technically speaking also edged higher today, but it remains stuck in the declining short-term pattern, and below key support/resistance zone near $12. The coin is well below last week’s high and until a confirmed short-term trend change, traders shouldn’t enter positions here.

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 276 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

Brent Crude Might Be at Risk

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At the beginning of this week, the Oil prices are still under pressure. By the middle of Monday, Brent is trading at 73.36 USD, but it was much lower during the Asian trading session.

Attention of market players is focused on the OPEC meeting, which is scheduled to take place in Vienna on June 22nd and 23rd. The Austrian meeting has been under scrutiny for some time now: earlier, investors were worried by discussions about possible increase of the daily output by 1 million barrels, but now they are concerned by intention of three countries, namely Venezuela, Iraq, and Iran, to block such decision.

In fact, 1 million barrels per day is about 80% of the oil supply excess, which the OPEC+ has been fighting over the last 18 months. If the countries make decision to increase the daily output, the oil market will be quickly back to the numbers it was against for a long time. The oil supply will rise, but the demand won’t be able to grow at the same pace. As a result, the oil prices will have to fall again.

Still, there is one interesting detail. The OPEC+ can’t increase the daily output by a split decision. However, Saudi Arabia and Russia need this decision, that’s why one may assume that these countries will try to find the way to increase the daily output by sidestepping other members of the organization.

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From the technical point of view, Brent is trading downwards. In the H4 chart, one can see two descending channels: the major channel, which is quite wide, and the internal one, which is narrower. Speaking of the first channel, one can see that the price was reaching new lows step by step, without touching the support line, which shows the downtrend weakness. The internal channel is looking more stable and if the price rebounds from its support line, the instrument may resume growing towards the resistance level at 76.00. However, if the price breaks the support line at 72.00, Brent may fall to reach the psychologically-crucial support level at 70.00.

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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4.5 stars on average, based on 3 rated postsHaving majored in both Social Psychology and Economics, Dmitry went on to continue his education in post graduate. He then worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped him to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. Dmitry is a pro in the financial field who authors articles for various international media. He also holds the position of Chief Analyst at RoboForex.




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Altcoins

Crypto Critics: Fractured Facts

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I have another confession.  As a long time investor, I believed in the theory of efficient markets. This basically means that every participant in the market has immediate and complete access to all information facts like price, earnings and other data.  

I made the mistake in applying this theory to cryptocurrencies. Lately, this has been a mistake.  Yes it is true that anyone with the time and interest can go about gathering all the facts. But are all facts telling the truth or are they really fractured facts?  Either way they are dictating investor thinking and that is a key to this market.

According to reports on MarketWatch, crypto prices slumped on the release of a 24 page report from the Bank of International Settlements. BIS stated that cryptocurrencies suffered from “a range of shortcomings that would prevent cryptocurrencies from ever fulfilling the lofty expectations that prompted an explosion of interest — and investment — in the would-be asset class”.

The BIS is no small town organization. They serve as a central bank for other banks and they have been doing this since 1930.  When the BIS talks, people take things they say very seriously.

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The doomsday article released Sunday paints an accurate picture of the state of cryptocurrencies today. But what about tomorrow?  Most everyone is familiar with the issues of speed, security and energy consumption, not to mention regulation. But for the BIS to conclude that none of this problems will ever be solved is down right nieve.  It is the equivalent of declaring in 2001 that the Internet was doomed because 90% of users were connect on dial up modems.

Rotten Research

The BIS report is not the first fracturing of facts presented by well regarded organizations that is scaring investors. Remember back in May? We were treated to the research headline: Bitcoin Futures Caused The Crypto Market Crash according to Federal Papers.

Both the Federal Reserve Bank of San Francisco and a Stanford University professor released a report concluding the launch of bitcoin futures last December contributed to the ensuing price collapse. Pretty far fetched stuff, and here is why.

Bitcoin futures trading began on December 10. BarChart.com shows the CME traded a measly 932 contracts while the CBOE handled 3,887.  Of that total some 2,828 contracts were still “Open Contracts” on December 29th leaving just 1991 coins to do all the harm. During that final week of December over 1.4 million coins were traded. The findings were simply flawed.

Much like the BIS, when the Federal Reserve speaks, people believe they have done their homework carefully.  Throw in Stanford and that adds further weight to this conclusion.

And Then There Are Those Other Facts

And then there was the revelation last week that, much of bitcoin’s 2017 boom was market manipulation, research says.  In a huge 66 page report it was claimed that at least half of the 2017 rise in bitcoin prices was due to coordinated price manipulation using tether.

The author, University of Texas at Austin finance professor John Griffin, argues that Tether was used to buy bitcoin at key moments when it was declining, which helped “stabilize and manipulate” the cryptocurrency price. BTW: this is the job of the specialist on the floor of the New York Stock Exchange.

Professor Griffin appears to have done an excellent job correlating events without much consideration for the economics involved.  According to Bloomberg’s Aaron Brown, for Professor Griffin to be correct in his assertion that tether pushed up bitcoin prices four basis points per 100 bitcoin, Bitfinex would have needed to spend a boatload to inflate the cryptocurrency.  With Bitcoin at $10,000, for example, that means Bitfinex spends $1 million to push the price up to $10,004.

When you look at things from this perspective, Griffin’s findings look pretty absurd.

Look Closely At The Facts

These days with crypto psychology the worst since Mt. Gox in 2014, it seems like a good time for investors to capitalize on the fractured facts.  Technical analysis shows that cryptocurrencies bitcoin, Ethereum, Ripple and others are hovering around key support levels. It would not be shocking at anytime to find some academic study linking crypto to the common cold.  By the way, it is a fact that last years dramatic crypto price spike came right at the start of the flu season.

A far more relevant fact was last week’s announcement by the Securities and Exchange Commission that neither bitcoin or Ethereum were securities. Perhaps equally important is the conclusion that when ICO do not convey an equity ownership position, they too are considered in the same non-security category as bitcoin and Etherrun.  This is a fact.

What we do know is that crypto prices are as low as they have been since well before the spike last December.  Just as the markets recovered from Mt. Gox, the mindset of investors will recover and that is the key.

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 81 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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