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Analysis: Monday Morning Massacre for Ethereum

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Bitcoin

Bitcoin finally succumbed to the selling pressure we have been forecasting for the past few days.  All things considered, the selling has been muted and reasonable, far more so than I expected.   This sentiment may be premature of course.  There could be another shoe waiting to drop.  But I note that a 5th arc on a 15 minute chart has (so far) stopped the decline, so I lost my bearishness  at the arc. I sent a tweet at the time.

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Ethereum

Editor’s update: Ethereum’s flash crash only happened at “Kraken” due to a DDoS-attack.

Ethereum was a massacre.  The selling took out every leveraged trader I am sure.  Prices took a nosedive to $30 in a manner I briefly described in yesterday’s column. Short-selling, stop-running, margin calls and panic crushed a lot of people. I hope my leveraged readers were smart enough to take my advice and lighten their leveraged positions yesterday.  If not, they saw their dreams dashed a few minutes ago.

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I believe the low is in at $30, but there could be another show left to drop.  It seems unlikely though, because the margin calls have already closed everyone out and the stops are cleared also.

Litecoin

Litecoin hit our target of $30 and has sold off a bit since then.  Given the selling going on today, it may still correct pretty hard as well.  Beware…

ETCUSD

We suggested that ETC might correct to the $5.50 area. At this writing we have a low of $5.17.  It seems like a low might be in, but it is hard to say.  The bears are in full control this morning in a coordinated attack across the spectrum.   It’s hard to say where any of it will end.

Overall, it’s a good morning to be either  in cash, or short.  There will be some great buying opportunities soon, but be careful!

 

 

Remember:  The author is a trader who is subject to all manner of error in judgment.  Do your own research, and be prepared to take full responsibility for your own trades.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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30 Comments

30 Comments

  1. eko6321

    May 8, 2017 at 6:38 am

    Hello Jim

    What happen to ethereum last night it was scary I be honest. Do you think can we hold ethereum or we sell.
    Or where we setup trailing stop limit.

    Please advice

    • Jim Fredrickson

      May 8, 2017 at 7:27 am

      I don’t like anwering such questions because I don’t know your situation. It WAS scary, but imho the selling is over for now. Me? I would hold here…

  2. [email protected]

    May 8, 2017 at 6:59 am

    Hi Jim, I can see ETH is around $90 on GDaX and Coinbase and BTC near $ 1650. Which exchange you are referring for the prices?
    Also, I am heavily invested in LTC. Should I exit since it’s near$28.9 now?

    • Jim Fredrickson

      May 8, 2017 at 7:40 am

      I use kraken. My prices are the ones that exchange registers. LTC is still a good asset, imho…

  3. jedadoo

    May 8, 2017 at 7:14 am

    I’m a bit confused. Eth holding at $90+. I see some comments on polo about kraken being hacked. I pulled my Eth to a local wallet to prevent myself from selling it quickly 🙂

  4. iamniks

    May 8, 2017 at 7:14 am

    Any thoughts on XRP?

    • jedadoo

      May 8, 2017 at 7:15 am

      He gave some a few days ago, saying ti may triple this summer. Looks like it may sooner than that… I’d be interested in STR. Had a HUGE day at polo. Didn’t get in, but thoughts would be good.

      • iamniks

        May 8, 2017 at 7:16 am

        As I remember the goal was 0.2 which was today in the night:)

  5. Gabriel

    May 8, 2017 at 7:28 am

    Each exchange has different prices, because different people agree on different prices, depending where they trade. This leads to certain arbitrage opportunities. The prices seem to be mostly from Kraken aren’t they?
    My personal opinion is that it is best to invest broadly, and buy each coin after much research, to see if you would still be happy holding it one year from now (you may like the tech, etc.). That way you will benefit from the global rise of the crypto markets. Trying to always chase the fastest horse and switching all the time is too stressful, and also makes it hard to track your results.

  6. foryou

    May 8, 2017 at 8:39 am

    Hy, Jim,

    Seeing the ETH scary situation yesterday, I sold my holdings because it was well over my cost! I mostly do short term trading so that way it works for me.

    1. ” why do not you cover other potential AltCoins like Strat, Pink, SYS, Factom, …etc ? ” May be you do not want to confuse your followers but it would be much appreciated if I get to read on them as well. I see that there lots of money in these coins. I saw someone asking this in a comment under a recent post you made but you did not reply that!

    2. Any buy signal for now would be helpful.

    Will appreciate your reply on this.

    I have recently subscribed to your recommendations, it has been a good experience so far.

    Thanks 🙂

    • Jim Fredrickson

      May 8, 2017 at 11:56 pm

      Hi, I am stretched thin trying to cover the few coins I actively cover already. Also, I trade on Kraken so charts on kraken are the ones I most easily see. Which exchange lists those coins? I will look into it.

      • foryou

        May 9, 2017 at 12:25 pm

        Poloniex. Do have a look, covering around 10 coins would be good. I have been closely watching them and made good money too. Your expert advice would always be helpful for everyone here. Thanks

  7. amirheavy666

    May 8, 2017 at 9:05 am

    AND Abour XRP what happen now 0.18 goto 0.25????

    • Jim Fredrickson

      May 8, 2017 at 4:27 pm

      .25 was our target, but i didn’t expect to get there for another month. amazing.

  8. excesstomcat1

    May 8, 2017 at 9:05 am

    Can you please go into more detail about when to potentially sell Ethereum? Also what did you mean by ETH dropped to $30? I did not see that on coinbase.

    • Jim Fredrickson

      May 8, 2017 at 11:01 am

      Apparently, this massacre was limited to Kraken. This is the exchange I trade on and monitor, so I did not realize this aberration occurred on a smaller scale. I am surprised that arbitrage did not arrest this massacre, if it was not happening elsewhere at the same time – but there it is.

      • ryepdx

        May 8, 2017 at 8:27 pm

        Poloniex was also down during the Kraken DDOS, which probably hindered arbitrage. This was pretty clear market manipulation.

  9. thoth

    May 8, 2017 at 9:41 am

    “We suggested that ETH might correct to the $5.50 area. At this writing we have a low of $5.17. It seems like a low might be in, but it is hard to say.”

    You mean ETC?

    • Jim Fredrickson

      May 8, 2017 at 11:02 am

      Yes, thank you for correcting my error.

  10. thoth

    May 8, 2017 at 10:16 am

    And those ETH sells on Kraken looks like fat fingers, nowhere else went near that low in USD

    • Jim Fredrickson

      May 8, 2017 at 11:04 am

      Could have been, but it does not matter if it was fat fingers or thin. The result is the same.

  11. titaniumdave

    May 8, 2017 at 11:49 am

    KRAKEN froze yeserday. Volume dried up during the freeze, dropping price and triggering calls. The drop in price of ETH had nothing to do with actual market sentiment and everything to do with their glitch, which is why it was localized to Kraken and didn’t occur on any other exchanges. ETH sentiment is still strong.

    • Jim Fredrickson

      May 8, 2017 at 3:35 pm

      That’s quite relevant information from a technology point of view. But from a traders point of view, it is irrelevant what caused such a price fluctuation. I write this column from a trader’s point of view, to help traders.

      • Joshnj82

        May 9, 2017 at 9:24 am

        The massacre began around 6:00p EST with a large sell order dropping ETH price on Kraken. Sh-t really hit the fan as the market went down from a DDoS attack and traders were unable to manage their positions causing plenty of liquidations and triggered SL’s. The selloff was seen across all markets but the bottom was significantly lower on Kraken.

        • Jim Fredrickson

          May 9, 2017 at 10:28 pm

          That is interesting, from an intellectual point of view. But I don’t buy DDoS as a “reason”, since the damage was limited pretty much to ETH (that day). It was chart-specific. Anyways, speaking for myself, as a trader, I don’t care all that much about “why” a chart makes a significant move. I mean, does it really matter? Not to me. There are million pieces of news events every day. Some bullish, some bearish. The charts give warnings of danger in advance, most of the time. I will likely address this issue in my next column. Thank you…

          • Joshnj82

            May 9, 2017 at 11:59 pm

            I mentioned the DDos attack in regards to losses and liquidations on Kraken only. I agree with your overall statement and wasn’t trying to speculate with a broad brush. I believe ETH bottomed at $26 on Kraken vs ~mid 70s elsewhere. To your point, the “why’s” are besides the point

  12. octave

    May 8, 2017 at 3:29 pm

    Are you on drugs? Many mistakes in this article

  13. And

    May 8, 2017 at 8:54 pm

    Jim, do not pay any attention to inappropriate comments. Your articles are simply fantastic! Thank you Jim!

  14. [email protected]

    May 8, 2017 at 9:02 pm

    I always follow and appreciate your suggestions. But always check few basics before actions. Mistakes happens but you are quick to rectify and update on twitter.

    Keep up the good work Jim. Thanks again.

  15. jedadoo

    May 8, 2017 at 10:03 pm

    Should rename this to “Monday Afternoon Ripple Massacre” — nearly 40% drop in mere minutes.

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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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