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Analysis

Pre Market: Stocks Rally, Euro Jumps as Trade Wars Still In Focus

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US Stocks extended their late-Friday bounce before the opening bell and in the first hour of trading today, as the main US and global indices are all trading modestly in the green, with Europe notably underperforming. On a bullish note, the Nasdaq is performing better than the rest of the market, and from a day-trading perspective that could justify a slight bullish bias today.

S&P 500 Futures, 4-Hour Chart Analysis

The Euro hit a one week high against the Dollar above the 1.23 level, but the most traded pair is still in a broad range pattern with no clear directional momentum, so for now, we wouldn’t bet on a continuation of the move.

DAX, 4-Hour Chart Analysis

The media and investors are still clearly focused on the US-Chinese tariff war, but with no major announcements over the weekend (besides the rumors regarding a possible devaluation of the Yuan), the market is awaiting a speech by Xi Jinping tonight, with a likely response to the latest round of tariffs by the President. Meanwhile, the technical setup is little changed on Wall Street with the most important benchmarks hovering slightly above the February low, in a volatile range.

The overall picture remains mixed, but still oversold after the deep correction, so traders should still be cautious with both long and short positions as the consolidation will likely continue. A clear break below the lows could point to a huge change in the technical structure of the market, but given the still bearish sentiment, we still expect a rough ride for shorts, and the long-term uptrend remains intact in equities.

Risk-On Assets Slightly Higher Across the Board

AUD/USD, 4-Hour Chart Analysis

As the Dollar retreated against most of its peers, and the Yen remained under pressure too, risk-on currencies gained ground although the changes are not meaningful, and we expect cautious trading in currencies up until Wednesday, the Fed releases its meeting minutes, right after the US CPI report, with both events having the potential to stir up financial markets.

WTI Crude Oil, 4-Hour Chart Analysis

Commodities are also still range-bound, with crude oil pushing higher following the alleged Israeli air strike in Syria, while gold is virtually unchanged despite the Dollar’s weakness as the slightly better sentiment is weighing on the precious metal.

All in all, until the short-term range in equities is intact, around 2550-2675 concerning the S&P 500, all bets are off regarding the next big momentum move, and choppy trading will likely continue.

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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4.6 stars on average, based on 398 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

Forex Analysis And Chartbook: Tech Selloff Resumes, Dollar Dips Again, as Yields Hit 2-Month Low

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Monday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,697 -1.62%
DAX 30 11,244 -0.85%
WTI Crude Oil 56.76 -0.12%
GOLD 1,224 0.21%
Bitcoin 4,989 -10.26%
EUR/USD 1.1452 0.32%

While all eyes were on the cryptocurrency segment today, as the major coins continue to fall sharply, traditional financial markets have also been very active before Thanksgiving. The last days have been dominated by the strong rally in US Treasuries (a dip in yields, in other words) which carried the yield curve to a 2-month low today, due to Jerome Powell’s dovish words, global growth worries, and European worries regarding the Brexit process and Italy.

EUR/USD, 4-Hour Chart Analysis

The Dollar has also been feeling the effects of the falling Treasury yields, and after hitting a more than one-year high against the Euro this month, the Greenback fell to its lowest level in almost two weeks.  The long-term uptrend is not in danger in the pair and in the broader Dollar index, and with no higher swing high in the EUR/USD even the short-term downtrend is intact. That said, should the pair remain above the 1.1440 level, a short-term trend change could be ahead.

Nasdaq 100 Futures, 4-Hour Chart Analysis

US stocks had an ugly day despite a quiet overnight session which was helped by the continued optimism in China, in the face of the diplomatic disaster on the APEC summit. The meeting ended without a formal communiqué for the first time ever, due to the US-Chinese spat that took another turn when US Vice President Mike Pence attacked China on several issues, dampening hopes of a quick resolution to the dispute before the looming Trump-Xi meeting.

The major indices finished sharply lower after a steep morning selloff on Wall Street and the Nasdaq got very close to its October lows due to the weakness in some of the largest tech names such as Apple (AAPL) and Facebook (FB).

While both stocks fell on bearish news, with the report on a significant iPhone production- cut being the most worrying one, the selloff in the key momentum names is a more structural problem, which is likely the sign of the broader bearish shift that we have been following in recent months.

While the year-end cold still holds a stronger bounce, thanks to seasonality and a possible positive turn in the US-Chinese relations, we will still view all rallies as selling opportunities in equities.

Gold and Copper Edge Higher Amid Dollar-Dip

Gold Futures, 4-Hour Chart Analysis

Commodities had a bullish session thanks in part to the Greenback’s weakness, but gold, copper, and oil were also helped by very different reasons too. While gold benefited from the bearish intraday shift in risk assets, crude oil continued its oversold bounce after a brief spike towards last week’s low, while copper was boosted by the stability in Chinese assets.

The precious metal is holding above the key short-term $1215 level, and although bulls are still not out of the woods following this year’s selloff, a move above the October highs would be a very positive sign for the commodity, which we still view as one of the top picks for the coming years.

Copper Futures, 4-Hour Chart Analysis

Copper is still trading in a broad consolidation pattern, despite the rally of the past days, which was sparked by trade optimism. The long-term fundamentals remain hostile for the industrial metal, given the global slowdown, and especially the state of the Chinese economy, so even in the case of a move above the formation long positions should only be considered for trading.

That said, the short-term outlook is rather neutral, as the year-end could see feel-good risk rally (with copper possibly bouncing as high as $3), even as we expect the commodity to continue its broader downtrend.

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

FTSE 100 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

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

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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4.6 stars on average, based on 398 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: One Last Safety Net Ahead of $20 Territory

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  • Litecoin has been further slammed, dropping 35% over the past two weeks of trading.
  • Should near-term demand area of $35-33 fail to hold, it will be very punishing.

The Litecoin price remains firmly on the back foot, one of the standout under-performers in this current bear market, against some of the other major altcoins. LTC/USD has dropped a chunky 35% over the past going on 2 weeks now. Market bears have been pilling in since the big rejection, after trying to escape out of a bearish pennant pattern. This was attempted on 7th November, the upper trend line of the pennant proved to be too tough.

LTC/USD daily chart

Just a few sessions ago, LTC/USD collapsed through the lower support on the above-mentioned pattern. This was seen around the $49 mark, where the bears came pilling through to further crumble Litecoin. The price plummeted through a strong prior acting demand zone. It was tracking from the big psychological $50 area, down to $47 territory. Bulls had propped LTC/USD on occasions in August, September and October, leading the price on to make decent gains from the noted zone.

LTC/USD 4-hour chart

Between 15-18th November, price action did enter a temporary form of consolidation. As mentioned in the previous article , LTC/USD was trading within a range block, which was very much vulnerable to a breakout south, having since proved to be the case. It was eyed also as a bearish flag pattern set up, where sellers took a deep breather, ahead of the continued deep move south. LTC/USD lost over 15% from that consolidation area to current levels.

Key Support

LTC/USD weekly chart

Looking to the downside, eyes are locked in on the price range of $35 down to $33. The LTC/USD pair had consolidated within this area from June to August 2017, before being off on its journey north. In September 2017 this demand area proved required support for the bulls to continue their stampede higher. A failure to hold here will be very punishing to say the least. LTC/USD could be forced back down to $29 territory. The price was last seen here in June 2017.

Upside Barriers

There are now some big challenges ahead for LTC/USD, if it wants to return to heightened levels. During this bear market observed throughout this year, price action has formed new areas of resistance. It has all been uncharted territory, and unlike the 2017 bull run, there will be barriers that need to be broken for greater upside. The gains seen last year were not too challenging to achieve, as there was no history there for the bulls to deal with.

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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4.4 stars on average, based on 55 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: New Bear Market Lows Across the Board

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The key long-term breakdown in the cryptocurrency segment that we observed last week continued in earnest today, with most of the majors hitting new bear market lows amid another wave of heavy selling. Bitcoin dropped below $5200 for the first time since last October, Ethereum violated the key $160 level, Litecoin plunged below $38, with only Ripple and Stellar.

The post-breakdown bounce faded as we expected, and today’s broad selloff took the total value of the market below $175 billion, and for now, our trend model still shows and overwhelmingly bearish picture. With that in mind, traders and investors should still not enter new positions, with both the short- and long-term downtrends clearly being intact in the segment.                

BTC/USD, 4-Hour Chart Analysis

Bitcoin is testing last week’s spike low currently after giving back all of its post-crash bounce, and spiking to a marginal new low in the process. The most valuable coin is down by 5% today, and although percentage-wise BTC is outperforming the smaller coins (which are down by 10% on average), from a technical perspective, it’s also in a highly negative setup.

Bitcoin will likely test the key support zone just above the $5000 level soon, and given the segment-wide trends, a push below that is likely in the coming weeks, with the next key support zone found between $4450 and $4500, and with short-term resistance now ahead near $5650.

ETH/USD, 4-Hour Chart Analysis

Despite the weak positive sings last week, Ethereum is now under heavy selling pressure, and the coin has been leading the whole segment lower today, plunging below the key $160 level, and testing the $150 level too. The bearish long- and short-term trends are intact, and traders and investors should still stay away from the coin, as a move towards the next key support zone near $130 seems likely in the coming weeks.

Ripple Holds on Above Key Long-Term Support

XRP/USDT, 4-Hour Chart Analysis

Ripple continues to withstand the segment-wide selling pressure, and it remains the only major coin not on a long-term sell single in our trend model, while firming its spot as the second most valuable coin due to the persistent weakness of Ethereum. That said the short-term picture remains negative, even with the coin trading clearly above the key $0.42-$0.46 long-term support zone.

For now traders and investors shouldn’t enter new positions, but long-term investors should still hold on to their coins, even considering the strong bear market in the other top coins. Further support levels are still found near $0.375 and $0.355, while resistance is ahead at $0.51, $0.54, and $0.57.

LTC/USD, 4-Hour Chart Analysis

After being stuck below the $44 support/resistance level during the bounce, Litecoin, one of the leaders of the bear market, quickly violated the next major support level near $38, once again confirming its weakness. Now, a move to the next support zone near $34.50 seems likely, and given the coin’s relative weakness, traders shouldn’t try to catch the falling knife yet.

XMR/USD, 4-Hour Chart Analysis

While Monero has been holding on above its prior bear market low near $80 until today, the coin was already on a sell signal on all time-frames, and today, it plunged below the key level, due to the sharp selloff in early trading.

Should the breakdown hold, the re-test of the $60 support would be very likely as there is now other support level between the two major zones. With that in mind, traders and investors shouldn’t enter new positions here, and the declining trend is firmly intact in the coin’s market.

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 398 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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