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Long-Term Cryptocurrency Analysis: A Major Top Could Be In

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This week will likely go down in the history of the cryptocurrency segment, whether or not we have seen a durable top, given Bitcoin’s epic rally above the $10,000 level. The trading frenzy of the recent period resembles a blow-off top that could be the starting point a deep and lasting correction.

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That said, with the rising short-term trends still being intact, and as the coins receive more and more mainstream media attention, it’s possible that the exact top is still ahead. What’s sure is that there will be much better opportunities to buy, and that correction risk hasn’t been higher.

The price of BTC breached the $11,000 level again, getting close to Tuesday’s all-time high after establishing support near $9000 during the mid-week correction. Below that, the coin has major support near $8200, $7700, $6700, and $6000. The extremely overbought momentum readings point to a deep correction in the coming weeks.

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BTC/USD, Daily Chart Analysis

Litecoin has been the strongest major altcoin, along with Dash and IOTA, and LTC is trading just below the $100 level this weekend. The coin is also in a severely stretched long-term setup, and we don’t expect durable new all-time highs in this cycle. Strong support is found near $75, $64, and $56.

LTC/USD, Daily Chart Analysis

Ethereum

ETH/USD, Daily Chart Analysis

Ethereum’s break-out halted right at the $500 level amid the Bitcoin-Frenzy and the second largest coin followed BTC lower during the volatile break-down and the following bounce. The coin is not extremely overbought, but we expect a segment-wide correction, although ETH should outperform during it. Below the break-out level at $400support is found at $380 and $350.

Ripple

XRP/USDT, Daily Chart Analysis

Ripple is still the laggard among the majors form a long-term perspective and the coin followed the week’s wild moves within its long-standing trading range. The currency is stuck between the key $0.2250 and $0.26 levels this weekend, and it’s still neutral on all time-frames regarding momentum, while remaining on a buy signal. Support is still found just below $0.20, and at $0.18, while further resistance above $0.26 is found at $0.30.

Dash

DASH/USD, Daily Chart Analysis

Dash held up very strongly amid the volatile correction, proving its apparent relative strength once again. That said, the coin is clearly overbought, and although we expect it to remain strong in the coming months, a deep correction is likely. Key support levels are still found at just above $600, at $500, $470, and near $410.

Ethereum Classic

ETC/USD, Daily Chart Analysis

Ethereum Classic’s November rally was one of the strongest among the majors and the 200+% gain lead to an extremely stretched long-term setup. The coin’s initial correction took it back to the previous record high near $23, and we expect that level to be breached in a coming pull-back. Further support is found at $18 while the all-time high is ahead as resistance at $32.

Monero

XMR/USD, Daily Chart Analysis

Monero reached our final target for its break-out this week, and it already re-tested the break-out level during the following correction. The coin remains in a short-term uptrend despite the overbought long-term momentum readings, but we expect further corrective price action before a major move higher with support levels at $180, $150, and $125.

IOTA

IOTA/USD, Daily Chart Analysis

IOTA skyrocketed to $1.50, above our expectations after moving past the $1.1 resistance. The coin remained strong in the second half of the week as well, although it is the most overbought major together with BTC and ETC. Investors and traders should wait for the next correction with entering new positions, with key support levels at $1.1, $1, and $0.75.

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

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 256 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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3 Comments

3 Comments

  1. ezra

    December 3, 2017 at 1:45 am

    Hi thanks for all the analysis and advice – do you think it’s a good strategy to just hold on to what I have right now in cryptos without caring about the coming correction and just ride it all oout?

    • davidschiano

      December 3, 2017 at 4:25 am

      I totally agree with your comments mate, Hacked staff it’s just amazing, i really love all the work they do every day, e all their analysis where they are mostly of the time right and just in time!
      In my opinion to reply to your answer is necessary before to make you a question; What’s your way to invest? Are you an investors for long term investments, or are you a trader looking for fast profits?
      Hacked team always remember us to choose a strategy, and the explain us even between what we can choose.
      n the first case you probably should hold, and maybe get advantage to increase your existing position buying more coin.
      Otherwise if you are a trader looking for fast profit you should take advantage of this bull run, get flat and sell all now before the panic sell starts, and then re-buy with more money at the dip.

      As they start the article with LONG-TERM, that means that even investors should be carefull, and prepared, and maybe should take advantage now of the bull run to get flat and buy again on the dip.

  2. douglash

    December 5, 2017 at 5:16 am

    Does Hacked still see this as a major top, or is the market becoming more stable? Your more recent articles make this unclear. I am holding money on the sidelines to buy in on a correction, but it seems you’re no longer predicting that.

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Analysis

Pre-Market: Oil Plunges Below $70 as Markets Mixed Before Long Weekend

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Financial markets are relatively calm today, despite the hectic week that was highlighted by the Turkish currency crisis, wild swings in bonds, and a step back in US-North Korean relations. Stock markets turned lower globally, with US equities outperforming the rest of the world, essentially drifting sideways all week long, thanks to the slight correction in the Dollar’s rally, and the dip in Treasury yields that was triggered by the dovish Fed meeting minutes.

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S&P 500 Futures, 4-Hour Chart Analysis

Today, the durable goods report came out before the opening bell and although the headline number was a tad worse than expected the more important core figure beat the consensus estimate, helping the slightly dampening economic outlook, even as yields continue to fall, especially with regards to long-dated Treasuries.

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EUR/USD, 4-Hour Chart Analysis

Although emerging market currencies are way less volatile today than recently, despite the rebound in the Dollar, equities shed their early gains and are now slightly in the red. The all-important EUR/USD pair hitting yet another 6-month low near 1.1650, and the test of the key long-term 1.1450-1.15 zone looks more and more likely in the coming weeks, even as the pair is a bit oversold.

Energy Markets in Turmoil as OPEC Signals Production Increase Again

WTI Crude Oil, 4-Hour Chart Analysis

It seems that the crude oil market is in for a strategic switch yet again, as the OPEC, together with Russia made it clear today that the price of the Black Gold finally reached a desirable level. The cartel will be targeting a higher level of output later on this year in order to keep the US shale players under pressure by capping the advance in the key commodity’s market.

The WTI contract reached a 4-year high at $72 per barrel recently and the Brent contract which is more exposed to Middle East woes rose as high as $80 per barrel after trading below the $30 level just two years ago. The last phase of the advance extended above the level where a large portion of the shale plays turn profitable, and as global growth worries also surfaced, the commodity entered a selloff this week.

Gold Futures, 4-Hour Chart Analysis

Safe haven assets continue to be bid despite the relatively calm environment, and gold hit a two-week high today despite the bounce in the Greenback as buyers are back after the wash-out plunge below $1300. With the long-term setup and fundamentals still being favorable for the precious metal, the short-term downtrend line is in danger here.

As US markets will be closed on Monday, which usually favors an active session, volatility might remain high throughout the day.

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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 256 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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Recommendations

Trade Recommendation: Intact Financial

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Technical Overview

  • Since double-bottoming in 2008 and 2009 at $26 (violet horizontal trendline in Figure 1), Intact Financial (IFC.TO) has enjoyed a four-fold increase. During the 2013, 2016 and 2018 corrections, the stock found support at a long-term trendline (support – green trendline; retests – green arrows).

Figure 1. IFC.TO Weekly Chart

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  • Zooming in, after topping in November’17, IFC completed a H&S pattern (tops – yellow ellipses, neckline – yellow trendline in Figure 2).
  • In January, March, April, and May, all up-moves halted at a well-defined short-term resistance (red trendline). Yesterday (May 25), the stock managed to break and close above the resistance.
  • Today, the stock closed in positive territory, whereas the Financial sector (TTFS.TO) declined by over 0.5%.
  • The $95 level had served as support on multiple occasions in 2018 (purple horizontal trendline and arrows).

Figure 2. IFC.TO Daily Chart

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Implications

  • The bounce off of the long-term support and the break above the short-term resistance are considered constructive.
  • The stock is expected to find support in the $95 – $96.50 range during pullbacks (i.e. at the red and purple trendlines).
  • The downward target from the H&S pattern was nearly met during the May decline (target – $92.25 – white vertical trendline in Figure 2, May 9 low – $92.65 – last purple arrow).

Outlook

  • Short-term bullish as long as the stock remains above $95
  • Long-term bullish as long as the stock remains above its long-term support (green trendline in Figure 1).

 Trade Recommendation

  • Buy the stock at current levels ($97.50 at EOD on May 24).
  • Target: Half at $101 (the January low which served as resistance in March – second red arrow). Other half at $108 (origin of the late 2017 decline).
  • Stop: Half upon a close below $95. Other half upon a close below the long-term support (currently at approximately $93.50).

Disclosure: No position yet but may initiate at any time. Will likely recommend the stock to my clients as a potential play within the financial sector.

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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4.8 stars on average, based on 12 rated postsPublished author of technical research. In his work on price “gaps”, published in the 2018 International Federation of Technical Analysts’ Annual Journal, he developed a new technical tool for analyzing and trading the “gap” phenomenon – the “K-Divergence” (http://ifta.org/public/files/journal/d_ifta_journal_18). Besides obtaining a Master in Financial Technical Analysis, he has completed a BBA and an MBA from the Schulich School of Business in Toronto and has completed all exams for the CFA, CMT and CFTe designations. Currently, providing research to investment management and financial advisory firms. http://www.linkedin.com/in/konstantindimov




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Analysis

Stocks Suffer Hit as Trump Cancels Summit, Turkey Hikes Rate

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After yesterday’s late-day bounce, stocks got close to their two-week lows yet again today in early trading, as risk assets got sold across the board after Donald Trump canceled the much-awaited summit with North Korea’s Kim Dong Un. Safe haven assets spiked higher on the news, with gold getting back above $1300, and the Japanese Yen also gaining significant ground on its peers.

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NASDAQ 100 Futures, 4-Hour Chart Analysis

US equities are still not in a terrible short-term position, as the key support levels are holding up, and the trading range is intact, but most European indices gave back all of this month’ s gains, and the cracks on the synchronized global growth narrative are clear.

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Emerging markets are still under pressure, even as the Turkish central bank finally did what we have been expecting, raising its benchmark rate by 3% after an emergency meeting yesterday, but for now, it seems that the this might have been too little too late.

USD/TRY (Turkish Lira), 4-Hour Chart Analysis

The Lira recovered more than 8% off its intraday lows, but today the currency has been plunging again, and it is still dangerously close to its all-time low, and a run on the Lira is still not out of the question. Mr. Erdogan told the Turkish citizens not to exchange their Lira to foreign currency, but the President might need more than “verbal capital controls” to stop the collapse.

Dovish Fed Minutes Cause Slight Dollar Pullback

Dollar Index, Daily Chart Analysis

The US Dollar is lower compared to the Euro, the Pound, and the Yen today, even as the Greenback gained ground against the Canadian Dollar. While the Yen’s advance is due to the risk-off sentiment, the Dollar’s broad pullback started after the release of the FOMC meeting minutes yesterday, as the central bank expressed that it would allow inflation to overshoot the 2% target temporarily.

US 2-Year Yield, Daily Chart Analysis

This caused a drop in Treasury yields across the yield curve, as investors removed their rate hike bets. The 2-year yield briefly hit a level not seen since mid-April, while the 10-year yield got back to the key 3% level. The European Central Bank also released its minutes today, and the bank also cited downside economic risk, capping the dip in the Dollar and helping the pullback in yields.

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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 256 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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