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Nasdaq Technical Update: Index Declines but Remains above Key Supports

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Technical Overview

  • Yesterday (May 14), the Nasdaq Composite Index opened higher, continued its ascent for the first 75 minutes of trading, before reversing and closing the day just marginally up. The intraday high of 7,458 came just 5 points away from the bottom of the mid-March island reversal (island reversal – middle red ellipse in Figure 1), and 15 away from filling the down-gap of the pattern (down gap – red arrow).
  • Today, the index gapped down, opening just above 7.360, and oscillated between the 7,320 – 7,360 range throughout the session.
  • The lower boundary of today’s intraday range (7,320) is of great technical significance as:
    1. It marks April’s high (white horizontal trendline and white arrow).
    2. The lower support of the large trading channel is currently sitting at just above 7,323 (green trendline; only lower support shown to avoid overcrowding of the chart).
  • The index finding support at roughly 7,320 on three occasions during the day is considered technically constructive.

Major support levels:

  • The lower support of the large trading channel, currently at 7,323 and rising by roughly 6 points/day.
  • 7,320 (April’s high)
  • The intermediate-term support (ITS – violet trendline), currently at 6,960.

Major resistance levels:

  • The 180-point range spanning from yesterday’s high of 7,458 to the March high of 7,637.

Figure 1. Nasdaq Daily Chart

Implications

  • After logging a more than 450-point gain over 8 trading sessions (since the intraday low on May 3) and reaching the base of the March island reversal, the index was bound to correct. Today’s price action, however, is considered constructive to a degree as the index found support at two major support levels.
  • Long positions in index-tracking ETFs or constituents recommended as long as the index remains above 7,320.

Outlook

  • Short-term bullish above 7,320.
  • Long-term bullish if the index breaks above its March high.
  • Short-term neutral if the index breaks below 7,320 but remains above its ITS.
  • Long-term bearish if the index breaks below the ITS.

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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    4.3 stars on average, based on 16 rated postshttp://www.linkedin.com/in/konstantindimov




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    Altcoins

    Bitcoin Cash Price Analysis: BCH/USD Bulls Have the Potential to Capitalize, Following a Bullish Technical Set Up

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    • BCH/USD broke out and retested a long-running descending trend line, but has failed to capitalize on this further.
    • George Hotz, also known as Geohot, says “Bitcoin Cash is the real Bitcoin.”
    • CoinText.io expands its Bitcoin Cash payment SMS service to Brazil and further European countries. 

    “Bitcoin Cash is the Real Bitcoin”

    George Hotz, also known as Geohot, an American entrepreneur and hacker, was recently commenting on Bitcoin Cash. Following the BCH Devcon in San Francisco he attended, Geohot demonstrated how to generate a BCH private key from scratch using python coding.

    During his python video, George spoke highly of Bitcoin Cash. He said, “I’m using Bitcoin Cash because it’s the real bitcoin.” His reasoning for the preference of BCH over BTC was due to it having significantly lower transaction fees. Stating, “Transaction fees are super low on bitcoin cash.”

    Bitcoin Cash Being Used in Brazil with CoinText.io

    SMS cryptocurrency payment service, CoinText, has launched their services in Brazil and three other European countries – Poland, Romania and Croatia. CoinText doesn’t require apps, logins or Internet, and users can send Bitcoin Cash via SMS. A new wallet is automatically created when people have received Bitcoin Cash via SMS.

    Specifically commenting on the Brazilian expansion, CoinText founder and CTO said, “Brazilians have been suffering from corruption and bad monetary policy,” says CoinText founder and CTO Vin Armani. “Cryptocurrency offers a way for them to peacefully opt out of a corrupt system.”

    A move in which is further helping the adoption of Bitcoin Cash, via the CoinText service, he further noted, “Adding Poland, Croatia and Romania brings us closer to connecting the entire continent of Europe,” Armani added. “CoinText’s end-of-year goal is to enable all 740 million European residents to text money to each other’s phones for pennies.”

    Technical Review – Daily Chart

    BCH/USD daily chart

    BCH/USD price action of late has been very much mundane following a promising breakout from a long-running descending trend line. It had been contained below and rejected on several occasions, from the back end of July. Bulls managed to pull off a decent breakout to the upside, which took place between 26-27th September.

    After observing the break above, then pullback for a retest of the breached trend line, it looked very promising. This as such played out to the textbook, however bulls failed to capitalize and drive further north. Instead, the price remained within a consolidation nature, a lack of commitment in either direction. Perhaps the bulls are sitting on the launchpad, ready to send this into orbit, time will tell here.

    Looking at technical areas of interest, to the upside, resistance has capped upside well into $500 territory. Tracking from $455-80, which has been evident the past few sessions. A firm push higher, will allow $550 region to come back into play. In terms of buyers, they can be found from the current price, all the way down to $400 the round figure.

    Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

    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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    4.5 stars on average, based on 33 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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    Analysis

    Crypto Update: Coins Turn Lower After Choppy Weekend

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    The major cryptocurrencies are slightly lower today in early trading, as Sunday’s modest rally faded away without major technical progress. Most of the coins are stuck in narrow trading ranges, and last week’s spike well above the current price levels, as buyers failed to take control of the market.

    That said, we haven’t seen strong negative momentum either, and although the bearish long-term setups remain intact, there is no immediate danger of new bear market lows in the segment.

    Patience is still the name of the game for crypto investors, since there is no evidence of a broader trend change that would justify a more constructive investment position. Our trend model is on sell signals across the board on both time frames, and the bearish pressures are still apparent on the charts, even considering the lengthy consolidation period. Given the negative long-term trends, odds still favor a test of the lows in most case, particularly in the light of the lack of bullish leadership.

    IOTA/USD, 4-Hour Chart Analysis

    While most of the majors are still above the lows hit just before the Tether-turmoil, there are several relatively weak coins that could lead the market lower in the coming weeks. Especially Ethereum, Liteocin, Dash, and EOS point a negative picture of the market, while Ripple and Bitcoin are still the most encouraging form a bullish standpoint, even as they also failed to signs of bullish momentum.


    BTC/USD, 4-Hour Chart Analysis

    Bitcoin is back near the $6400 level today, after drifting towards the $6500 resistance during yesterday’s rally,  but the coin is still well clear of the $6275 support level, trading clearly within last Monday’s range. Our trend model continues to be on a short-term sell signal, while the long-term picture is still neutral for the largest digital currency.

    Traders and investors still shouldn’t enter positions here with further resistance levels ahead near $6750 and $7000 and with support levels below $6275 found near $6000, $5850 and between $5000 and $5100.

    Altcoins Slightly Lower as Stellar Fails to Break Out

    XRP/USD, 4-Hour Chart Analysis

    Ripple and Stellar have been showing some positive signs last week, but they both failed to make significant technical progress, confirming the segment-wide selling pressure. Ripple is threatening to move below the $0.42-$0.46 level, despite the rally above its triangle consolidation pattern, and a break below $0.42 would likely trigger a test of the $0.355 support.

    For now, the short-term sell signal remains in place due to the lack of follow-through, and traders should be cautious with new positions. Strong resistance is still ahead at $0.51, $0.54, $0.57, while further, weak support is found near $0.375.

    Stellar/USD, 4-Hour Chart Analysis

    Stellar is trading very close to the key long-term support zone near $0.24 that has been dominating trading for several weeks, and despite the rally attempts, the coin is still not out of its bear market. That said, should a broader trend change occur, Stellar would likely be among the leaders of renewed advance, but for now, traders and investors should still stay away from the coin.

    The declining long-term trend is intact, with strong resistance levels ahead near $0.265 and $0.2835, while support levels are found near $0.235, $0.21, and $0.1935.

    ETH/USD, 4-Hour Chart Analysis

    Ethereum is still stuck in a very narrow range after the weekend, with the $200 support/resistance level still being in the center of attention. The bearish broader setup is unchanged in ETH’s market, with the coin still being relatively weak among the majors.

    Traders and investors shouldn’t open new positions her, with further support found near $180, $170, and $160, and with strong resistance zones ahead near $235 and $260.

    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 380 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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    Altcoins

    Litecoin Price Analysis: LTC/USD Developers to Slash Transaction Cost, with Upcoming Core Update

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    • Litecoin fees are set to be largely reduced in the forthcoming upgrade, in an attempt to boost adoption.
    • LTC/USD remains heavily dictated by triangular pattern, behavior suggests a breakout is imminent. 

    Litecoin Fees to lower by 10x in next Core Release

    The Litecoin foundation will be updating the Litecoin protocol to version 0.17, following an announcement via Twitter. This update will ultimately reduce the network’s fees drastically compared to its already nominal costs.

    It is reported that with this upcoming upgrade, the network fee will go down to $0.005. Their goal is to encourage greater adoption of Litecoin. Currently, the average transaction fee is floating around $0.05. Bitcoin’s transaction fee is currently seen around $0.10.

    At the back end of 2017, a large bull market was observed. Bitcoin prices were up at heights around $20,000. Users as an alternative started to use LTC, given its inexpensive nature, in comparison to Bitcoin. It is interesting to note also that Bitcoin transactions were as much as $55 during those highs. However, Litecoin remained by far competitive, facilitating lower transaction fees, less than $1. During the peak, LTC fees reached $1.5.

    Litecoin’s Core lead developer, Adrian Gallagher, was commenting on the upgrade intentions, saying: “To encourage more adoption and usage of Litecoin, I think lowering the fees are a good thing. We’re not even close to block limits and the block size on disk is pretty small (20GB) relative to other coins. Technically people can already adjust their fees right now to the one above, because of the more relaxed min relay/dust relay fee.”

    Elsewhere, he was speaking about the current market conditions, believing that the bear market being observed, will not last. Predicting that in the next three to six months, prices could start to rise again. He stated: “With lower fees, it would be possible to lay down the foundation for a fee rate, that can grow proactively rather than re-actively.”

    Technical Review – Daily Chart

    LTC/USD daily chart

    Looking via the daily time frame, LTC/USD price action remains trapped and dictated by a triangular pattern. This is seen across several of the other cryptocurrencies. The calls of an imminent breakout make much sense, with this type of price behavior seen.

    Over the past few days, upside has been capped around the $55 mark. Further north, resistance is seen at the $56.50-60, the upper part of the triangular pattern formation. A breakout higher should allow a run well into the $60 territory. Testing the 27th September high ($65.85) would be probable. Supply is seen running from that high up until $70, where the price faltered on 4th September.

    In terms of support, $53 has proven to be an area of comfort, over the last five sessions. The lower trend line of the above-mentioned pattern is seen tracking at $51.50. Finally, a demand zone is seen just below running from the big $50 mark, down to $0.47.

    Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

    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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    4.5 stars on average, based on 33 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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