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Pre Market: Euro Slumps on Dovish ECB-Minutes as Trump Trolls Markets

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US stocks continue to go nowhere in a very choppy fashion, as trade war fears and the Syria-related tensions continue to cause wild swings in equities around the clock. While we have been expecting a hard-to-trade period thanks to the conflicting short- and long-term signals, the recent days made our head spin too.

S&P 500 Futures, 4-Hour Chart Analysis

We still think that defense is the name of the game for short-term traders until a clear momentum move out of the current range, but looking under the hood, could help us anticipate the direction of the coming swing.

To spoil the result, we are leaning towards a bullish resolution of the current setup, as sentiment is still clearly negative, and good short trades are usually initiated in calm, confident markets. What also makes us slightly positive here, is the fact that the leaders of the correction (European and Asian stocks, commodity currencies) didn’t break down despite yesterday’s dip, holding on to most of their recent gains.

DAX 30, 4-Hour Chart Analysis

That said, we wouldn’t go all in here, and a clear breakout to a new swing highs by the major indices would be needed for a trend change, while another failed move would be a bearish sign. Today’s session could bring some clarity, as equities are trading near the upper boundary of their ranges after the dovish ECB meeting minutes, and those who fancy shorts, could a good entry point in the case of a failed breakout.

Meanwhile, the POTUS is definitely enjoying the spotlight, as his often contradicting war- and trade-related tweets are in the center of attention. Trump kick-started today’s bounce when he took a step back after yesterday’s “the missile’s are coming” stance, and tweeted that it’s there is no decision on an attack, it might not happen at all. We just have to wait and see when the next tweet-missile will be launched, as we are quite sure that it will be soon.

Risk Assets Mostly Positive

EUR/USD, 4-Hour Chart Analysis

The weakness of the European common currency is the most important trend in forex markets so far today, as, despite yesterday’s rate hike rumors, the minutes of the latest meeting of the central bank showed considerably doubts regarding growth and inflation.

The EUR/USD pair pulled back to 1.23 again, as it continues to trade in the trading range that we have been monitoring for months now. As the current moves still qualify as noise, we still urge traders to remain patient concerning the most popular currency pair.

USD/JPY, 4-Hour Chart Analysis

The Japanese Yen and gold are both trading lower after yesterday’s safe haven rally, as the imminent threat of the widening of the Syrian conflict eased, but we wouldn’t rule out another quick change in sentiment, even as early as today, and the precious metal remains one of our favorite bets in the current environment.

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 396 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

Ethereum Price Analysis: ETH/USD Has Big Opportunity to Fly Again

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  • ETH/USD is running at seven consecutive sessions of losses, dropping as much as 25%.
  • Price action is moving within a strong demand area, which could very well see the price rocketing again.

Current Price Action

ETH/USD is stuck within a stubborn downward trend. The price is running at a seven consecutive session losing streak. During this time period, ETH/USD has dropped as much as 25%, falling from $226, down to recent lows of $171.95. This is the biggest weekly loss seen since the bear market back in September.

The price was trading in a consolidation manner; this had been the case after the above-mentioned bear market drop. ETH/USD at the time had dropped as much as 45%, before finally staging a recovery. Since the bounce on 12th September, price action began to form a bearish pennant pattern, which was then firmly broken on 14th November.

ETH/USD daily chart

Buying Opportunity  

At the time of writing, ETH/USD is seen trading deep within a known demand area. Buyers last pilled in and drove the price north, back on 12th September, as detailed above. It had gone on to gain a whopping 50%, following the hammer candlestick reversal confirmation. The demand can be eyed around the $170 territory.

Eyes should be on indications of a reversal, the potential for a signal from a candlestick formation, similarly to the prior mentioned recovery. In terms of the RSI via the daily time frame, ETH/USD is very much in oversold territory. The index seen around the 27 level at the time of writing, which could see the price soon bottoming out.

Upside Targets

Should life be kicked back into the bulls, another retest of the breached pennant pattern would likely be seen. Resistance underneath the pennant should be noted at the psychological $200 mark. The bears firmly ran through this price level on 14th November. Further north, another barrier can be observed at $230 area, a known supply zone.

There has been much debate over the past couple of months, as to whether the cryptocurrency market has hit the bottom. Many believed that this was the case, after the deep September drop. While some were still calling another corrective fall. Once some stabilization from the bulls is seen and recovery picks up momentum, this may be the last of the bears for 2018.

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 54 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

Bitcoin Update: Bull and Bear Scenarios

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To say that the last two days in crypto have been a bloodbath would be an understatement. Many altcoins have broken critical support areas. Some cryptos even registered new yearly lows. One of those is Bitcoin (BTC/USD).

Bitcoin dropped to as low as $5,188 on Coinbase and lost as much as 20% of its value within 48 hours. The move forced numerous retail traders and long term hodlers to give up their digital assets. It also reinvigorated bears who felt ecstatic that $6,000 support crumbled into pieces. Their renewed confidence gave them the voice to spread fear, uncertainty and doubt (FUD). The chatter of Bitcoin trading at $2,000 – $3,000 has been the noisiest in the last 48 hours.

If you’re an ordinary investor who believes in the revolutionary power of Bitcoin, the amount of FUD out there might shake your beliefs. However, is there a grain of truth in what bears are yapping? In this article, we reveal the possible bull and bear scenarios to prepare you for whatever comes next.

The Bullish Scenario

Bulls have a simple task ahead in the next few days. They just need to take Bitcoin above $5,800 before the week closes to preserve the weekly support. This has the potential to invalidate the descending triangle breakdown and create a bear trap. However, with heavy bearish pressure, this is easier said than done.

With that being said, the key levels to watch in addition to $5,800 are 5,500, 5,300, and 5,190. The line in sand is 4,800. Below that, we’ll very likely experience a full-blown and painful bear winter.

As of this writing, Bitcoin is working really hard to establish support at $5,500. This is a positive signal. It works well with our bullish scenario of an inverse head and shoulders reversal pattern on the 15-minute chart.

BTC bullish scenario

In this scenario, bulls have two great chances to make this work. They can create a bullish higher low setup at $5,500 or at $5,300 to complete the right shoulder.

Another play would be a quick relief rally between $5,600 to $5,700. From there, we would likely experience a heavy volume dump to prices between $4,800 – $5,190. With this scenario, we’ll get a solid double bottom structure in the 15-minute chart where bulls can stage a reversal.  

BTC double bottom

This double bottom scenario is where many hodlers would capitulate and at the same time, it would exhaust many sellers. For this to manifest, however, bulls must show that they’re ready to battle to the bitter end so they can close the week above $5,777. Otherwise, bears will continue to rampage unchecked.

The Bearish Scenario

From a technical perspective, the descending triangle breakout has an ultimate target of $2,800. In addition, Bitcoin has firm weekly and monthly support levels at $3,000. These are the reasons that fuel calls for Bitcoin trading at $3,000.

Bitcoin bear scenario

It’s safe to say that this is not a pretty sight.

For this to happen, Bitcoin must close below $5,800 this week and then retest $5,800 – $6,000 next week. This price action would confirm that $6,000 is now a resistance. Therefore, bears would be able to use all the strength of $6,000 as support and flip it into a heavy resistance area.  

If this happens, there’s a strong possibility of a long and painful Bitcoin bear market that can extend for many months. During this period, the market may range trade between $3,000 – $6,000. This is not the scenario that we’re looking for. However, it is always better to prepare for such possibilities.

Bottom Line

Richard Wyckoff said: “The more compact the trading range is, the more likely the stock is under control by professionals, and the greater the possibility for the swift explosive move upward following a spring or a shakeout…watch for them”. This is why we remain bullish in Bitcoin despite the massive dump. After the compact trading range in the last few months, we believe that this is the spring or the shakeout before the explosive move upward.

At this point, we are rooting for the bull scenarios mentioned above but we’re also seriously considering the bearish case. In short, we’re hoping for the best but also preparing for the worst.

 

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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3.7 stars on average, based on 271 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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Analysis

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 396 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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