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Pre-Market: Dollar Rallies on Hawkish Fed, Turkish Lira Hits Record Low

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It’s been a busy overnight session following the Fed’s scheduled monetary meeting as the Dollar’s strength weighed on risk assets across the globe. While Treasury yields didn’t signal a big change in the market’s perception about the tightening schedule of the Fed, forex markets and equities behaved in line with a hawkish surprise. The reserve currency gained ground on most of its peers, with the already struggling emerging market currencies feeling the pain.

DAX Index, 4-Hour Chart Analysis

European and Asian stocks declined by more than 1%, as measured by the major indices, with the Shanghai Composite getting close to its bear market lows, as selling resumed in earnest and the Yuan slid to a new 12-month low against the Greenback.

Shanghai Composite, 4-Hour Chart Analysis

With all of the China-related assets also being pushed lower, it’s hard to ignore the weakness in the country, as the country was already similar to a fly looking for a windshield before the trade war, and now the credit-fueled growth model is crumbling under its own weight.

S&P 500, 4-Hour Chart Analysis

The great divide between the US and the other major markets is apparent yet again, as the US benchmarks are faring much better amid the broad decline, despite the Dollar’s relative strength. That said, the US markets are also in the red before the bell, and it seems that yesterday’s great Apple report alone won’t be enough to stop the correction in the Nasdaq, with the other tech giants not following in the footsteps of the largest public company.

Commodities and Risk-On Currencies Drifting Towards Lows

USD/TRY, 4-Hour Chart Analysis

The Turkish Lira plunged to a new all-time low against the Dollar and the Euro alike, with the USD/TRY pair bursting through the psychologically important 5 level for the first time in history. The recent rough rhetoric by Turkey towards the US added to the concerns regarding the financing troubles of the country, as political isolation would be a huge problem for the already troubled financial system. The Dollar is also up compared to its major peers, with commodity-related currencies being among the weakest assets.

WTI Crude Oil Futures, 4-Hour Chart Analysis

As for commodities themselves, the whole segment is lower today, as trade worries, the weakness in Asia, and the Dollar’s strength are all weighing heavily. Crude oil is back below the $67 per barrel level following the bounce above $70, and we continue to expect further weakness in the Black Gold, as growth is slowing outside the US.

Gold is holding up near the $1225 price level, but the recent lows are very close, and there is no sign of a trend change despite the deeply oversold long-term momentum readings and the bearish sentiment. Copper is in a similar setup, but the $2.70 support is even more important than in the case of gold, as a clear move below that would cement a larger scale downtrend in the key industrial metal.

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 464 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

3 Things You Need to Know About the Market Today: Extended Trade Talks, Economic Data Dump, National Emergency

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1, Trade Talks to Continue Next Week in Washington

S&P 500 Futures, 4-Hour Chart Analysis

The news of the day, so far, is clearly the unexpected extension of the current round of trade talks between the US and China. The negotiations will reportedly continue next week in Washington, and that could mean that some kind of formal agreement is already in the works. We expected, at least, and extension of the March 1 deadline, and although the rumors were pointing to that earlier on this week, the current state of the talks is even more positive for bulls.

That said, the mature global risk rally only managed to grind on, with the key markets missing real bullish momentum this week. The S&P 500 yet again hit marginal new recovery highs today, but the MACD indicator is clearly showing weakness, despite the week’s positive new flow, and as the Volatility Index (VIX) hasn’t been confirming the move either, we are sticking to our defensive stance towards equities here.

2, British Retail Sales Beat as US Consumer Confidence on Tap

FTSE 100 Index CFD, 4-Hour Chart Analysis

While the Great British Pound has been weak amid the continued Brexit-related uncertainty, with the weakening economic numbers also weighing on the currency, British equities have been outperforming in the meanwhile. Today, we had the first major positive economic surprise in a long-time from Europe, as the British Retails Sales Report was much better-than-expected, coming in at 1.0% vs. the consensus estimate of 0.2%.

The FTSE 100 hit its highest level since early October today, boosted by the weakening but still ongoing global risk rally and the weakening currency. Stock investors don’t seem to be concerned by the prospect of a no-deal Brexit, despite the apocalyptic forecast by the Bank of England and the anti-Brexiters.

The GBP barely budged following the strong retail sales data, and the GBP/USD pair is near its recent 1-month lows amid the Dollar’s broad push higher. US Industrial Production came in at -0.6% missing the consensus estimate of 0.1% by a wide margin, while the Empire State Manufacturing index was slightly better-than-expected. The day’s most-awaited US report is due to come out after the bell and analysts expect a slight uptick to 93.3 after the huge drop in the measure in December.

3, Dollar on the Verge of Break-Out as Trump to Declare National Emergency

Dollar Index, 4-Hour Chart Analysis

After some consideration, the President decided to sign the bill on border security that removes the immediate risk of a government shutdown. On the other hand, Mr. Trump will also reportedly declare a national emergency to secure additional funding for the Wall and the Democrats are already considering legal action to fight that decision.

As for the effects on markets, the fact that a second government shutdown is off the table boosted equities and the dollar today. Even though, we don’t think that the Border Wall saga is over and we are likely already deep into the 2020 campaign. With that in mind, we expect a ‘light’ legislative schedule for the coming two years, with the legislative gridlock giving a great chance to the Democrats to tackle President Trump ahead of the elections.

We have been tracking the Dollar’s rebound ever since the Fed meeting, and while the key resistance zone near 97, which roughly corresponds with the support zone between the 1.1250 and 1.13 in the EUR/USD, is still intact, a break-out to new multi-year highs looks more and more likely. The momentum of the short-term move could lead to a major break-out following the lengthy consolidation period, but we could still see volatility in the current trading range due to the several failed break-out attempts in recent months.

ChartBook

Major Stock Indices

Nasdaq 100 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

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 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 464 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 Bulls are Back as Coinsquare Acquires StellarX

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  • XLM/USD is trading up around 4% on Friday, with the bulls looking to break out of a narrowing daily range.
  • Canadian cryptocurrency exchange has acquired StellarX, a decentralised platform.

XLM: Recent Price Behaviour

Stellar’s XLM has seen a pick-up in bullish momentum in the session on Friday, having jumped around 4% at the time of writing. The price has managed to stabilize somewhat after producing all-time lows down at $0.07318000. XLM/USD had remained within an extremely stubborn trend to the south, following the bears smashing out of a pennant structure. The price had been confined since from early December 2018 up to 20th January, when the breach occurred. As a result, a fresh wave of selling pressure hit XLM, forcing the mentioned new bottom.

Coinsquare Acquire StellarX

Canadian cryptocurrency exchange Coinsquare has acquired the StellarX decentralized exchange. StellarX is a trading platform built by the developers of the Stellar blockchain. The platform was initially launched in July 2018, offering fast transitions, zero costs, and a wide range of asset classes that include crypto, fiat and commodities. XLM is used as the base currency for trading across the decentralized exchange.

The camp at StellarX detailed the announcement via Medium, specifying that they will still be pressing forward with the outlined roadmap noted back in September of last year. StellarX detailed that the reason for the acquisition is to make way for the exchange to maximize its full potential. The platform will be able to leverage the sizeable regulatory experience that Coinsquare has, with their visions to build around the platform. It is worth noting that the Canadian exchange has a network with regulators in Canada, the United States, and Europe. Additionally, Coinsquare also previously managed to secure a relationship with one of Canada’s big five banks, the Bank of Montreal.

Moreover, Coinsquare already has experience with the Stellar network; it previously acquired BlockEQ in the back-end of last year for $12 million. Moving forward, StellarX is going to be led by BlockEQ’s co-founder Megha Bambra, with the sights to continue growing and enhancing the Stellar ecosystem. BlockEQ is a private Stellar wallet which allows users to have total control of their funds via a private key. The wallet is accessible on both mobile and desktop.

Technical Review – XLM/USD

XLM/USD daily chart.

XLM/USD has managed to find its feet after resuming the downside pressure seen throughout 2018 and carried into 2019. This year the price has dropped as much as 45%, due to the crypto market-wide cooling. Should the mentioned bottom area $0.07318000 remain intact, eyes will be on a retest of the breached pennant pattern structure. The bulls must breakdown a small resistance barrier, which is the upper part of the past fifteen trading days range.

Furthermore, the lower part of the pennant is tracking at $0.11150000; a move back here would complete the breakout and retest. Lastly, if this resistance holds firm and rejection occurs, then it could very well make way for another wave of selling pressure.

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 123 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

Binance Coin Price Analysis: BNB Profit-Taking Kicks In as Binance’s Business Continues to Defy Cryto Winter

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  • BNB/BTC produces a double-top pattern formation, leaving the door open to further downside pressure.
  • Binance CFO confirms that the organization is still profitable, despite the ‘crypto winter’.

Binance Coin Price Behavior

The BNB token has been outperforming many of its peers over the past few weeks. Since the week commencing 3rd December, BNB/USDT has rallied a chunky 115%. The price recently pushed to its highest levels seen since June 2018, peaking around $0.0027000. Given the prolonged consecutive run north, it isn’t too surprising to see a cooling.

Observing where the price peaked earlier in the week on 12th February, BNB/USDT produced somewhat of a double-top formation. The high was very much in proximity to the top on 17th June 2018. Playing out to the textbook, the market bears piled in after reaching these heights again, as investors took profits following the strong run north from December 2018. As a result, the price is running at its third consecutive session in the red.

Binance Remains Profitable Despite Crypto Winter

The CFO of Binance Wei Zhou was recently speaking in an interview with CBNC, where he commented on the company’s position within the current market downturn. Zhou said, “To date, even in this bear market, we still run a profitable business”. Binance is known to not publicly disclose its financial performance; however, in the past, it has provided several hints that would suggest the business is financially secure.

Back in the summer of 2018, Binance CEO and Founder Changpeng Zhao (“CZ”) disclosed that the exchange’s revenue for the first half of 2018 was roughly $300 million. He did additionally project at the time that net profit would hit between $500 million to $1 billion by the year’s end.

It has been estimated that Binance achieved $446 million in profit last year. It has also been estimated that the Binance ICO offering back in 2017 saw the company raise $15 million for 100 million Binance Coin (BNB) out of 200 million in total supply. Additionally, as part of maintaining its coin, Binance uses 20% of its net profits to buy back BNB and eventually destroy 100 million BNB tokens, according to the whitepaper.

Technical Review – BNB

BNB/BTC daily chart.

Given the recent price developments, there are a couple of bearish confluences to back the bias south. A bull run occurred in such a short space of time, resulting in the price entering overbought territory. Elsewhere, as earlier detailed, the BNB/BTC is playing to the textbook after the double-top formation. The downside pressure could soon drastically pick up the pace, with eyes looking down towards the possible neckline of the technical pattern.

In terms of support, the range of $0.0014000-$0.0012000, which is the potential neckline of comfort, is part of the double-top textbook pattern. A failure of this area holding could see a fall down to 0.0008410, the low of March 2018.

BNB/USDT daily chart.

Looking at BNB/USDT, the bulls ran into massive supply heading into the big psychological $10.00 mark. The price has not comfortably traded above this level since October 2018. This time last week, BNB/USDT managed to break out to the upside from an ascending wedge pattern. There is room for a potential retest of this level, completing the breakout and retest. Support will be sought just on top of the breached pattern, tracking around $7.4000.

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 123 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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