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Pre-Market Analysis And Chartbook: Dollar Dips on Dovish Powell as Brexit Deal Still in Question

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Friday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,711 -0.83%
DAX 30 11,265 -0.78%
WTI Crude Oil 57.59 1.80%
GOLD 1,221 0.66%
Bitcoin 5,555 -0.53%
EUR/USD 1.1380 0.50%

Today is shaping up to be another wild ride in financial markets after the recent volatile sessions, with currencies, bonds, and equities all experiencing heavy trading. The Brexit process, the confusion regarding the US trade tariffs, and the broad bearish technical shift in risk assets are all contributing to the wild moves, and Fed Chair Jerome Powell also increased uncertainty yesterday.

The central banker hinted on possible pause in the Fed’s tightening cycle next year, citing increased economic headwinds following the open attacks form President Trump regarding the “tight” policies of the bank.

As Mario Draghi confirmed the ECB’s quantitative tightening plans as well, the Greenback lost ground compared to most of its peers, even as the main European currencies continue to be under pressure due to the Brexit chaos.

EUR/GBP, 4-Hour Chart Analysis

The Euro and the Pound, which are trading near their yearly lows compared to the Dollar, are stuck in a very volatile broad trading range against each other. The EUR/GBP pair topped out just above 0.90 this year, and although since the August high it drifted back to 0.86, the Pound remains weak from a long-term perspective.

A no-deal Brexit could hurt the British currency more and even a push above the decade-long high near 0.93 could be ahead. Short-term, we expect volatility to remain high in the pair, and in forex markets in general, and a move out of the range could happen soon.

USD/JPY, 4-Hour Chart Analysis

Another possibly important move started in the USD/JPY pair and in gold in recent days, as the broad risk-off shift helped the Yen, with safe-haven flows favoring the currency and the precious metal again.

Following Powell’s dovish words, the pair could be ready to test the 112 level again, especially should the major stock indices continue lower in the coming week. Below 112, the 111.40 and the 110.70 levels provide support, while strong resistance is ahead near 113.70 and 114.50.

Another Selloff in Stocks as Bearish Pressures Mount

Global stock markets are lower today, despite yesterday’s reversal and late-day rally on Wall Street, which was sparked by renewed trade optimism, following rumors on a possible halt of the US tariffs on Chinese goods.

The rumors were quickly denied, but there is more and more evidence that the Trump administration might be changing its aggressive strategy, while China also seems more flexible in light of the economic slowdown and the turmoil in Chinese assets.

FTSE 100 Index CFD, 4-Hour Chart Analysis

The Brexit chaos is also weighing on equities in Europe and across the globe, with British assets clearly being under pressure, despite the rally attempts on the positive headlines regarding the draft withdrawal plan.

For now, the fate of the plans is still highly uncertain, despite the progress made by Theresa May. The hawkish words of Draghi also added to the bearish pressures today, as the Eurozone CPI was in line with expectations.

Nasdaq 100 Futures, 4-Hour Chart Analysis

The major US indices all opened lower today, despite the continued decline in Treasury yields, with clear weakness in the tech sector and small-caps. Industrial Production missed the consensus estimate in October, with a monthly growth of only 0.1%, and the previous reading was also revised lower.

The key benchmarks are not far above the October lows, the recent rally attempts all failed, so given the bearish global technical picture, conditions in equity markets remain hostile for bulls.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

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

Forex

EUR/USD, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Gold Futures, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

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 468 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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Analysis

Crypto Update: Litecoin Leads Pullback in Majors

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The major cryptocurrencies are all lower today following the test of the recent swing highs. Yesterday, the early leader of the current short-term uptrend, Litecoin hit the key $51 resistance, and today the coin pulled back sharply, triggering a broad correction in the segment. The leaders of the rally are all notably lower, but they are still holding on to the bulk of their recent gains, and the rising short-term trendlines are all intact.

From a short-term technical perspective, the current pullback is orderly, and as the coins clear the overbought momentum readings, traders could re-enter smaller, speculative positions with strict risk management rules. The long-term technical picture continues to warrant caution, and bear market rules still apply despite the consolidation of the recent months.

LTC/USD, 4-Hour Chart Analysis

Litecoin’s performance continues to be an important tell for the whole segment, and after yesterday’s downgrade in our trend model, the coin’s pullback is weighing on the whole market today. That said, volume patterns and price action in general, are still in line with a short-term uptrend, and traders could be looking for re-entry points and the overbought momentum readings get cleared.

The key $51 resistance level, which halted yesterday’s move, could be in focus again in the coming days, while a deeper correction could see the test of the $44 level. For now, our trend model remains on a neutral short-term signal, while the long-term signal is still clearly negative, with further support levels found near $44 and $38, and with strong resistance also ahead near the $56 level.

BTC/USD, 4-Hour Chart Analysis

Bitcoin remained within its short-term consolidation pattern, as the $3850 level provided support, so far, during the broad pullback in the segment. The MACD indicator is now pointing to an ongoing short-term correction, but the relatively weak short-term uptrend is still clearly intact.

Traders could hold on to their positions here despite the pullback, as the momentum indicators haven’t reached extreme overbought levels, leaving our trend model on a short-term buy signal, but we would with entering new positions until the pullback runs its course. While the long-term technical outlook is clearly negative for BTC here, a move above the key $4000-$4050 zone could lead to a test of the next major zone near $4450, while support below $3850 is still found near $3600 and just above $3450.

Ethereum and EOS Remain Stable as Ripple Fails to Show Strength

ETH/USD, 4-Hour Chart Analysis

Ethereum continues to trade in a bullish short-term correction pattern near the $145 resistance level. The uptrend is clearly intact in the coin, and although the short-term momentum indicators continue to show overbought readings the rally could soon continue, with the $160 price level still being in sight. Support levels are still found near $130 and $112, while the next major resistance zone is found near $180, and the long-term downtrend is still in no danger here.

EOS/USD, 4-Hour Chart Analysis

EOS, which has also been among the leaders of the rally, continue to show stability amid today’s pullback, but as it got severely overbought during the recent upswing, our tend model is on a neutral signal. Traders should wait for the correction to run its course before re-entering their positions, since the long-term setup in EOS still warrants caution. Support is found near the current price level at $3.80, at $350 and near $3, while resistance is now ahead near $4 and $4.50.

XRP/USDT, 4-Hour Chart Analysis

Ripple remains the primary concern for bulls here, as the relatively weak coin failed to show signs of stability falling back to the vicinity of the $0.32 level. The coin got stuck below the dominant bearish short-term trendline, and our trend model is now on a short-term sell signal, despite the broad rally in the segment.

With the long-term technicals still being hostile even in the case of a new swing low in the coming week, traders should remain cautious with XRP and focus on the stronger currencies with regards to trading positions. Below $0.32, further support zones are found near $0.30, $0.28, and $0.26, while short-term targets are still ahead near $0.3550, and $$0.3750.

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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4.7 stars on average, based on 468 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

Stellar Price Analysis: XLM/USD Bulls Run into Resistance and Profit Taking Following IBM Boost

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  • Stellar’s XLM price was seen cooling in the session on Thursday, as the bulls ran into a barrier of resistance.
  • IBM detailed it has several letters of intent from banks to leverage IBM-Stellar technology.

Stellar’s XLM price has managed to pick itself up from the recent low area, where it was moving within the total abyss. The decent falling for XLM/USD was pushing it into totally unknown territory, where the price has not traded before. A low was produced down at $0.07330000 before the bulls kick-started the recovery. It has now gained a chunky 30% over the last two weeks, with upside momentum particularly gathering decent pace in the past four sessions.

The most recent jump north came following the price escaping a nine-session range-block formation. The low of the mentioned range was observed down at $0.07590000, with the high up at $0.08330000; the bulls forced a breach of this level on 18th February. Upon the move above, a fresh wave of buying pressure came into play, with XLM/USD moving to its highest level in almost four weeks. At the time of writing a pullback can be observed, which could be potential profit-taking after the decent run.

Several Banks to Join IBM’s Stellar-based Service

According to a representative from IBM, several confirmations have been received from banks on their intent to incorporate digital assets, including their own stablecoins via IBM World Wire and Stellar. The head of Blockchain at IBM Jesse Lund said:

“We’ve got a launch announcement coming out soon. We’re going to be supporting more than 50 countries out of the gate, 30-40 currencies, and enough market makers to drag along 30 or 40 banks. So we’ll have a significant portion of the world covered. Our goal is to continue to expand that network and to provide global coverage within 3-5 years where you can actually send remittances in a consistent way, immediately, at a very low cost, from anywhere in the world to anywhere in the world.”

Several banks have confirmed their plans to release digital assets, including their own stablecoins, based on IBM World Wire and Stellar. According to the IBM representative, the company has already received several letters of intent from a number of banks around the world.

Technical Review – XLM/USD

XLM/USD daily chart.

Given the recent price cooling, eyes will be on a possible return down to the breached range-block area. A move as described would complete the technical breakout and retest of the mentioned zone. Should this fail to provide necessary comfort to the falling price, then eyes will be on another test of the low, $0.07330000. If a further breach is observed here, then this opens the door once again to a move within an unknown territory, moving within the abyss.

Looking to the upside, if XLM/USD completes the break retest scenario and the bulls capitalize on this, then a decent push back north may be seen. A near-term supply area tracks above from around $0.09350000 up to $0.0980000. Should the bulls force a break above the mentioned supply, then a retest of the 2019 high area would be eyed. In other words, a move back within the range of $0.13-0.1400000.

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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4.6 stars on average, based on 125 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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Altcoins

Bitcoin Cash Price Analysis: Bullish Pennant Pattern Confirmed

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  • Bitcoin Cash price remains very much elevated, as the bulls continue to run north.
  • BCH/USD price action has formed a bullish pennant pattern formation, subject to a breakout higher.

BCH/USD: Recent Price Behavior

The Bitcoin Cash price has been a notable out-performer over the past few sessions, with the BCH/USD pair rallying as much as 23% since 17th February. In doing so, it reached its highest levels in over six weeks. The aggressive move north came after a prolonged period of range-bound trading via the daily chart view.

Between 8th – 17th February, BCH/USD was moving within an extremely narrowing range-block formation. This represented a lack of commitment from both camps after being confined within a range low of $117 to a high around $125. On 18th February, the bulls managed to force a breach and daily closure above the confines of the mentioned range.

Coinbase Adds Bitcoin Cash Support to Wallet App

Coinbase, a U.S.-based cryptocurrency exchange and wallet service provider, announced it has added support of BCH to its Coinbase Wallet.

“The new Wallet update with Bitcoin Cash support will roll out to all users on iOS and Android over the next few weeks,” the company said in an official blog post.

The app will facilitate support for both CashAddr and legacy addresses. Private keys will be encrypted on the mobile device by the Coinbase mobile wallet. Last week Coinbase announced the following: “users can now back up an encrypted version of your Coinbase Wallet’s private keys to your personal cloud storage accounts, using either Google Drive or iCloud This new feature provides a safeguard for users, helping them avoid losing their funds if they lose their device or misplace their private keys.”

Technical Review – BCH/USD

BCH/USD 4-hour chart.

At the time of writing, the BCH/USD price is still holding at elevated levels, with gains in the session amounting to 2.5%. Over the last two sessions, between 19-20th February, the price action has somewhat moved within a range. The detailed price behavior has seen a bullish pennant pattern formation, which is subject to a further potential move north.

Near-term resistance is eyed at $145.50, where the upper acting trend line of the pennant is tracking. Should the bulls manage to break this down, then expect a fresh wave of selling pressure to kick in. To the upside, eyes will then be on supply observed up within the $160-$165 price range.

In terms of near-term support, the lower acting trend line of the pennant which is tracking at $140 is the next major target; a breach could then expose critical daily support at $137. Lastly, if neither safety nets protect the price from falling, then there runs the risk of a full reversal of the recent gains.

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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4.6 stars on average, based on 125 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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