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Analysis

Markets Prepare for Next Move as Fed Minutes Loom

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Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2425 -0.03%
DAX 12430 -0.04
WTI Crude Oil 46.20 -1.81%
GOLD 1220.00 0.09%
Bitcoin 2575 -1.58%
EUR/USD 1.1324 -0.22%

Markets still seem to be stuck in the “long-weekend” mood after the quiet period around the US Independence Day. Volumes and Volatility are low around the globe and the major stock indices are trading in their recent narrow ranges. The Arab States that sent an ultimatum to Qatar are meeting today in Cairo to discuss the answer by the Gulf State, and a confrontative move could serve as a trigger for the next major shift in the main asset classes. Oil is already down in early trading today following the strong bounce of the past week, while the Dollar also continues to rally, reversing some of its recent losses.

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WTI Crude Oil, 4-Hour Chart Analysis

Currency markets are otherwise calm, in line with the broader trends, as investors are waiting for today key releases of the Federal Reserve’s meeting minutes. Central banks were the main drivers in of forex trends recently and the Fed’s future policies are the most important ones for all of the major currencies. It wouldn’t be a surprise to see another bullish counter-trend move from the Greenback, as the recent plunge drove sentiment to a bearish short-term extreme. The Australian Dollar continues to be active following the RBA’s meeting yesterday, with the dip in gold and oil also weighing on the currency, together with the Canadian Dollar.

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Cryptocurrencies

The crypto market is mixed today, with diverging performances from the majors and the small cap coins as well. Ethereum and Bitcoin are slightly lower, although the primary support levels are holding for now and there is no strong downside momentum. Among the relatively strong coins, Dash is testing its all-time highs, while Litecoin bounced off its overnight highs after nearing some long-term target levels. Zcash, Stratis, Bitshares, and NEM are among the weaker currencies today after their recent rally, as range trading continues to be dominant in the segment.

Dash, 4-Hour Chart Analysis

Technical Picture

The DAX is in a holding pattern inside the crucial support zone that we have been monitoring in the previous weeks, with the 12,500 and 12,350 levels being in focus. The long-term uptrend has been broken last week, and, for now, the trend is bearish although the oversold short-term MACD suggest more consolidation before the next leg lower. We expect a test of the support zone around 12,200 efore a meaningful move higher could develop.

DAX 4-Hour Chart Analysis

Key Economic Releases on Wednesday

Time, CET Country Release Actual Expected Previous
10:30 UK Services PMI 53.4 53.5 53.8
16:00 US Factory Orders -0.4% -0.2%
20:00 US FOMC Meeting Minutes

Key Economic Releases on Thursday

Time, CET Country Release Expected Previous
3:30 AUSTRALIA Trade Balance 1.11 bill 0.56 bill
9:15 SWITZERLAND CPI Index 0.0% 0.25
13:30 EUROZONE Monetary Meeting Accounts
14:15 US ADP Employment Change 181,000 253,000
14:30 CANADA Trade Balance -0.5 bill -0.4 bill
14:30 US Initial Jobless Claims 245,000 244,000
16:00 US ISM Non-Manufacturing PMI 56.6 56.9
17:00 US Crude Oil Inventories 0.2% 0.2%

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Analysis

Cryptocurrency Analysis: Ripple Continues Rampage as Litecoin and Ethereum Enter Correction

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Ripple remained in the center of attention in the segment after breaking out to a new all-time high yesterday, and the coin almost doubled in value, climbing above the $0.80 level. The currency concluded a 6-month long consolidation pattern with the move after being the only major on a long-term buy signal in our trend model.

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XRP gave a short-term sell signal today, while turning neutral regarding the long-term setup. Investors now shouldn’t add to their positions, although further gains are still possible, and reducing holdings somewhat is a good idea here. Major support is still found at the prior high near $0.4250 and in the $0.30-$0.32 range.

XRP/USDT, 4-Hour Chart Analysis

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While Bitcoin stagnated, and Bitcoin Cash jumped, Ethereum, Litecoin, Dash, and IOTA has been drifting slightly lower, although the recent gains are still mostly intact, and the basic setup in the segment is unchanged.

Litecoin fell below the $300 level after yesterday’s consolidation, and the coin faced strong selling pressure in the latter half of the session. The currency remains extremely stretched regarding the long-term momentum indicators, and although the short-term uptrend is still intact, a deeper correction is likely in the coming weeks, with key support levels found at $125 and $100, and weaker levels at $260 and $170.

LTC/USD, 4-Hour Chart Analysis

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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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