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Nasdaq Hit Hard Despite Afternoon Bounce

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The Nasdaq has been in the center of attention on Wall Street yet again, as the tech benchmark continues to lead the selloff in US stocks. The Nasdaq hit a two-month low today, dipping below last week’s low, while the S&P 500 and the Dow are still faring better from a technical perspective. The industrial average fell to its lowest level since mid-September, while the S&P 500 hit a 6-week low in the thin market, with the US bank holdiay contributing to the large swings in equities.

Nasdaq 100 Futures, 4-Hour Chart Analysis

We pointed out the importance of the move in the US Volatility Index (VIX) during the weekend, and the key risk measure continued to confirm the deterioration in investor sentiment, spiking above 18, the highest level since late June.

VIX (Volatility Index), 4-Hour Chart Analysis

While the fear-index is still below the 20 level, which is considered the line-in-the-sand by the majority of analysts, the behavior of the VIX changed, and although today’s US bank holiday likely contributed to the wild swings, this is something to keep an eye on in the coming weeks.

EEM (Emerging Market ETF), 4-Hour Chart Analysis

The risk-off shift continued in earnest globally, even as emerging markets showed some stability thanks to the post-election rally in Brazilian assets. That said, the EEM ETF is trading at levels last seen last April, and the selloff in Chinese markets suggests that selling pressure will persist, especially if the Dollar continues higher.

The Greenback gained ground compared to the Euro, the Pound, and the majority of emerging market currencies, and although the Yen, the Aussie, and the New Zealand Dollar managed to stay in the green, the uptrend in the Dollar-Index is clear. This week’s US inflation indices will likely be crucial in deciding the fate of the Dollar’s current rally, which in turn could affect trading across asset classes.

Treasury Yields Pull Back From Multi-Year Highs

10-Year US, 4-Hour Chart Analysis

While the surge in US Treasury yields, especially the speed of the move, was the trigger of the current move is stocks, today ’s shallow dip in yields wasn’t enough to reverse the move in equities, although contributed to the late-day rally. Also, market internals were pointing to a correction before the break-out in yields, so until we don’t observe a material improvement in small-caps, bulls shouldn’t put their “buy-the-dip” hats on.

Gold Futures, 4-Hour Chart Analysis

The more than 1% decline in gold was the most important move among commodities today, as together with the Dollar’s rally, the precious metal plunged below the $1200 level again, putting the late-September low near $1180 into play again. Gold formed a possible reversal pattern last week, but it failed to break-out above the key resistance zone near $1220, and a move below the lows would warn of a test of the $1145-$1150 zone.

Crude oil also lost ground today amid the risk-off shift, and the WTI contract continues to trade below $75 per barrel level and the July low, risking a failed break-out reversal. Copper held up relatively well in the face of the Chinese selloff today, and it remains above the strong support zone between $2.70 and $2.75 for now, although the long-term trend is still clearly bearish.

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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4.7 stars on average, based on 444 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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GBP/USD Price Prediction: Bulls Reclaim 1.2900, Eyes Locked on Another Retest of 1.3000

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  • GBP/USD bulls pick up momentum to the upside, following generally positive tone to Theresa May’s Plan B statement.
  • Next upside targets for the bulls should they firmly breakdown 1.2900 again, will be the psychological 1.3000 mark.

GBP/USD throughout the session on Monday remained very much elevated. This came as market participants were somewhat maintaining an optimistic view. All of which heading into the British Prime Minister Theresa May’s speech to the House of Commons, on her Brexit plan b. Of course, this had to be drafted again, given her humiliating defeat at the vote last week, on the initial EU withdrawal plan.

Theresa May Plan B

In terms of her details this time round, she will be going back to Brussels, to seek some amendments to her initial agreement. This needs to be done in order to get a plan through another vote in the commons. Looking at some of the GBP bullish takeaways from this statement; she guaranteed rights for EU citizens at several angles, scraping the application fee EU nationals registering in Britain, discussing the backstop with the DUP this week.

To conclude, PM May appears keen in her language to ensure of a soft-Brexit, rather than one that is hard. All of which supported GBP in its push to session highs, at the time, briefly moving back above 1.2900. The price had given up this area on 18th January, when the bears were reversing the run observed on 17th, where GBP/USD touched to big psychological 1.3000 mark again.

Technical Review – GBP/USD

GBP/USD 60-minute chart. Near-term resistance eyed at 1.2900, with bulls locked in on a retest of 1.3000.

GBP/USD at the time of writing continues to trade around the 1.2900 territory. This price did see a brief period cooling, on touted profit-taking post the statement. Near-term resistance can be seen within this price region, but if convincingly broken down again, then there is decent upside potential. Aside from the supply observed here, there isn’t much in the way of the 1.3000 price region.

Given the renewed optimism around Brexit now, this has assisted in maintaining momentum to the upside for GBP. In terms of support to the downside, a strong area of demand should be noted at 1.2850-25 price region. As can be seen via the 60-minute chart view, this has supported the price since 15th January.

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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4.6 stars on average, based on 111 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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3 Things You Need to Know About the Market Today

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1, Chinese GDP Growth Slows to Multi-Decade Low

Shanghai Composite, 4-Hour Chart Analysis

When even the strongly PR-optimized Chinese economic releases are showing severe weakness, it’s not at all surprising that the local stock market is in a deep bear market, and even the explosive oversold rally on Wall Street combined with the trade optimism of last week is not enough to meaningfully change the technical setup.

While economic growth slowed to an almost 30-year low on a yearly basis, retail sales and industrial production beat the consensus estimates by a hair, but that wasn’t enough to cause a material rally in equities, with the global sentiment leaning slightly bearish. This week’s most important question will be how risk assets will hold on to their recent gains, with a special attention on China and Europe, which continue to lag behind the US from a technical perspective.

The Shanghai Composite is more than 30% below its bull market highs, while the main European benchmarks are also around 20% below their respective highs, and that’s following one of the strongest short squeezes in history on Wall Street, mind you. The next few days could be crucial for markets, and we now advise caution even for short-term bulls.

2, Stocks Retreat after Friday Ramp with Wall Street Closed

German DAX 30 Index, 4-Hour Chart Analysis

Looking at Europe, the major indices failed to extend their gains from Friday, while US stock futures are also modestly lower after the European close. With the US markets being closed in observance of the Martin Luther King Jr. Day, trading volumes and activity has been predictably low, and things will likely get heated tomorrow, as the earnings season will also continue.

Johnson & Johnson (JNJ) and IBM (IBM0 will report earnings tomorrow, and all eyes will be on their overseas numbers and guidance amid the global economic slowdown. We had some negative reports regarding the US-Chinese trade talks, concerning the sensitive issue of Intellectual Property, and we still think that even though an agreement is likely in the coming months, implementation and enforcement will be borderline impossible.

3, Oil Tests December High

WTI Crude Oil, 4-Hour Chart Analysis

While risk assets, in general, had a slightly bearish half-session crude oil kept on pushing higher following Friday’s move to new correction highs, with the WTI contract entering the resistance zone that capped the December consolidation. The crucial commodity, which has been slightly lagging US stocks from a technical perspective is still squeezing late shorts, but we expect a short-term top very soon, possibly after a stop hunting rally above the $55 per barrel level.

What’s sure, is that we wouldn’t be buyers at these levels, even in light of the OPEC production cut, since over-supply remains a major issue, and the increase in US output continues. That said, the short-term uptrend is intact and the topping process could take a while, but we will keep a close eye on the day-to-day price action following the 25% rally off the December lows.

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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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4.7 stars on average, based on 444 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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Crypto Update: 5 Altcoins to Watch This Week

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Four out of five of the altcoins that we included on last week’s list moved within our expectations. Ethereum (ETH/BTC) and NEM (XEM/BTC) have managed to stay above key support areas. In addition, Binance Coin (BNB/BTC) and 0x (ZRX/BTC) have maintained their bullish tone. Only Bitcoin Gold (BTG/BTC) disappointed as the market took out its key support.

For this week’s edition, we look at altcoins that are prime candidates for buying on dips. Here are the five altcoins to watch this week.

TRON (TRX/BTC)

TRON started the year on a high note as it breached 0.0000056 resistance on January 3, 2018. This triggered a strong rally that sent the market to as high as 0.00002047 on January 5, 2018. Although the market has been correcting since, we now have an idea where TRON might be headed. A look at the 12-hour chart shows that it is forming a falling wedge.

TRX/BTC 12-hour chart

If our read is correct, TRON might bounce off 0.0000056. This would allow the market to flip the resistance into support. Otherwise, a move below this level will likely send TRON down to 0.0000045.

Steem (STEEM/BTC)

Steem had a strong week as it rallied from near the range low of 0.0000675 on January 14, 2019 to take out the range high of 0.0001 on January 18. The market then flipped the resistance into support on January 20. This is awesome bullish price action.

However, the market looks overextended as the 12-hour RSI is flashing a bearish divergence. This should give you the chance to buy on dips.

STEEM/BTC 12-hour chart

If the market corrects, you can rely on the 200-MA on the 12-hour chart as a possible bounce area. Should the market move below the indicator, it has a support level at 0.0000888.

WAVES (WAVES/BTC)

To say that Waves ended 2018 strong would be an understatement. It grew by over 400% rallying from the low of 0.0002336 on November 21 to as high as 0.001209 on December 19. The market has been pulling back since. However, we are starting to see signs of a possible bounce.

Currently, Waves appears to be finding support at 0.0006842, which is the 61.8% Fibonacci level of our range. Also, the market has printed a double bottom pattern on the shorter time frames. Plus, we can see a bullish divergence on the 12-hour chart.

WAVES/BTC 12-hour chart

A bounce at the 61.8% Fibonacci level might send Waves all the way up to the range high of 0.0009645. Otherwise, it might fall back to the range midpoint of 0.0005979.

Dash (DASH/BTC)

Dash is one of our two bottom picking targets this week. It is currently creating a falling wedge on the 12-hour chart. It appears to be on its final wave down.

DASH/BTC 12-hour chart

If our read is correct, Waves will establish a bottom around 0.016. Put tight stops if you’re planning to go long on the market because there’s no known support below 0.016.

Wanchain (WAN/BTC)

Our second bottom-picking target is Wanchain. Just like Dash, it is forming a falling wedge on the 12-hour chart. It also appears to be on its last leg down.

WAN/BTC 12-hour chart

We expect Wanchain to bottom out at 0.0000775. Use tight stops as well if you’re considering to bottom pick Wanchain. Similar to Dash, WAN/BTC has no known support below 0.0000775.

Bottom Line

While Bitcoin continues to trade sideways, this gives many altcoins the opportunity to pump. TRON, Steem, and Waves have done so and that’s why we’re looking at them this week. On the other hand, Dash and Wanchain appear ready to bottom out. As always, use tight stops when buying on dips.

 

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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3.8 stars on average, based on 311 rated postsKiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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