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Market Overview

Predicting Crypto Market Movements

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One of the most difficult aspects of trading cryptocurrencies is the reactionary nature of the market. Most of the news events that influence prices are the type of things that are difficult to foresee.

In traditional finance, we know in advance when there will be an economic data releasee. Things like inflation figures, GDP data, interest rate decisions are all scheduled in advance and we can even look at an economic calendar to understand the timing and expectations of the event.

Though we may still be a while away from a comprehensive crypto calendar, we are seeing that as we go there is more awareness of future events. For example, on Wednesday we had a Congressional Hearing about cryptocurrencies that traders were able to tune in to.

On Monday and Tuesday, the first of five G20 meetings will be held in Argentina and will be a primary focus of traditional finance players. It has recently been confirmed that representatives from Japan will use this meeting to address cryptocurrencies, specifically to provide ideas on how to limit the use of cryptos for laundering money.

Japan is currently the world’s leader when it comes to cryptocurrency usage and regulations after completely legalizing Bitcoin on March 31st of last year. So their opinions in this matter carry a lot of weight with other world leaders.

More intense crypto talks are expected at the November G20 meeting, and with the price of Bitcoin and other cryptos more than 50% off their all-time highs crypto-skeptics are getting louder, so seeing one of their main concerns being addressed on the largest global financial stage is a very reassuring thought.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Ritual Suicide
  • Therein Lies the Rub
  • Bitcoin Lightening

Please note: All data, figures & graphs are valid as of March 16th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

It’s not often that we lead this section of the update with Japan but it is the world’s third-largest economy and they’re going through a bit of a rough patch which could potentially lead to some market movements that are worth highlighting.

Prime Minister Shinzo Abe is having a bad month right now. A suicide note left by a government official revealed that he was forced to rewrite several official documents to cover up the Prime Minister’s connection with a particular sale of land.

Though political analysts are saying that the Prime Minister himself is safe from the scandal, the Finance Minister Taro Aso is clearly in the thick of it and will be sitting out the above mentioned G20 meetings.

Why this matters to the markets

Abe and Aso, along with the Bank of Japan have been acting since 2012 to proactively devalue the Japanese Yen. A weak Yen policy is considered a cornerstone of ‘Abenomics’.

The idea is to keep the currency weak in order to promote exports. The weaker the Yen, the more foreigners will be able to afford products that are made in Japan. And with Japan exporting more than they import, this policy makes a lot of sense.

In this chart, we can see the Yen’s massive depreciation since Abe was elected in September 2012.

(Remember, this is the USDJPY pair so an upward movement on the graph indicates a weaker Yen.)

So far the Yen has been getting stronger, acting as a barometer of Abe’s dwindling popularity. Any progression in this saga can and likely will have a direct impact on these markets.

Therein Lies the Rub

The current UK investigation into the poisoning of a former Russian spy has brought the Russian Ruble into full focus.

In an unrelated matter, yesterday Donald Trump ended up slapping sanctions on Russia for their alleged meddling in the 2016 elections.

All this adds up to volatility in the USDRUB.

(As before, the chart going up means the Ruble getting weaker.)

Lightning Fast

A huge congratulations to the Bitcoin network for completing a major upgrade!!

Bitcoin scaling is particularly difficult. Due to the decentralized nature of the network, it’s hard to get all the programmers and participants to agree on a path forward but all agreed that bitcoin needs to be more efficient so this was a long time coming.

The new lightening network that was deployed to the bitcoin main-net yesterday allows trusted parties to set up their own private networks to facilitate off-blockchain transactions. These sidechains allow the participants to trade freely among themselves and only upload a periodic summary of the transactions to the main blockchain.

What this means is, fewer transactions will require the approval and confirmation of the energy-intensive miners. Transactions that happen on lightening are also much quicker and are only a fraction of the cost of regular transactions.

As we mentioned in January and many times since, this dip in price should be seen as a good thing for the progression of cryptocurrencies as it allows much-needed breathing space to advance and scale up the technology.

Happening today

One of our top FX traders, @Goodgoing, will be in our London office this morning for a live Q&A on Twitch at 11:00 AM GMT. All things FX and technical analysis will be on the agenda. You can tune in and interact here.

Have an amazing weekend!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation. The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro. Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose. Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Best regards,
Mati Greenspan
Senior Market Analyst

eToro: @MatiGreenspan | Twitter: @MatiGreenspan | LinkedIn: MatiGreenspan | Facebook:MatiGreenspan

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 Comments

4 Comments

  1. embersburnbrightly

    March 16, 2018 at 3:24 pm

    I always enjoy your articles, Mati. The first couple of paragraphs of this one are SO very true. I also enjoy the clever wordplay you use, especially in the outline section where you preview what will be discussed further down below in each article (i.e., “Therein Lies the Rub,” regarding the ruble and its USDRUB pairing). I just wanted to take a moment to acknowledge how much I appreciate the extra thought you put into your articles to keep them both informative and entertaining!

  2. Mati Greenspan

    March 16, 2018 at 3:42 pm

    Wow! Thanks a lot embers. Much appreciated.

  3. Carst

    March 16, 2018 at 9:30 pm

    Hi Mati, same here, always enjoy your views and birds-eye perspective.

    I am confused in the sense what is discussed in the March G20. As you said, more intense discussions about crypto are on the agenda for november. As i read the agenda (first meeting of finance ministers and central bank governors of 2018):

    “The technology behind crypto assets has the potential to promote financial inclusion. At the same time, however, it is important to analyse its implications to financial stability, tax evasion, and financing illegal activities. The issue is an important item on the meeting agenda; delegates will consider a common response that would mitigate the risks without discouraging innovation”..

    This tells me that there is more to be expected (a common response), but maybe its just the start of a (intense) long process ending in november.

    Just wanted to share.

  4. Mati Greenspan

    March 17, 2018 at 6:59 pm

    Thanks a lot carst.

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Analysis

Volatile and Flat US Session Ends a Hectic Week for Stocks

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The major US indices finished virtually unchanged today, despite the positive open, while short-dated Treasuries closed the week near their multi-year lows. The session had several ups and downs, but the uptick in yields and the weakness in Europe proved too much for a sustained move higher to develop, despite the string of better-than-expected quarterly earnings reports.

S&P 500 Index Futures, 4-Hour Chart Analysis

From a broader perspective we can say that another bounce faded in stocks, with small-caps underperforming yet again, so the risk-off trend got one more confirmation.

Russell 2000, 4-Hour Chart Analysis

We have been tracking the main US small-cap benchmark all week long, as it has been precisely leading the broader market in recent weeks, and today the index got very close hitting a new 6-month low. The next week will be crucial for global risk assets, as given the long-term breakdowns in the main European benchmarks, the new bear market lows in Chinese stocks, and the ugly market internals on Wall Street, this might be the last opportunity to avoid protracted bearish period, or even a global bear market.

While Italian assets are under severe pressure, with government bond yields charging higher, decoupling from the “core” of the Eurozone, credit markets in general are not showing signs of broad distress. With that in mind, we don’t expect 2008-like dislocations in financial markets, for now, but investors should watch high-yield corporate bonds, where large excesses built up in recent years.

Forex Markets Turn Choppy as Dollar Pulls Back Again

EUR/USD, 4-Hour Chart Analysis

The China-led rebound in equities, which faded in late trading, and the Dollar’s retreat were the two main drivers in forex markets today. The EUR/USD recovered above the key 1.15 level after reaching as low as 1.1430 in early trading, while the Dollar index also failed to rise above its recent swing high, so the reserve currency could continue to consolidate before re-testing the August lows.

The bounce in the Euro was helped by the rumors regarding a possible new budget proposal from Italy, and as Moody’s downgraded Italy after the US market close, we will likely see further choppy, hard-to-trade action in currencies, especially given the large moves in US Treasury yields.

Gold Futures, 4-Hour Chart Analysis

Commodities had a mostly bullish day thanks to the Dollar’s dip, with copper and crude oil both recovering after yesterday’s selloff. The WTI crude contract bounced back all the way to the $70 per barrel level, while copper avoided a key breakdown out of its lengthy consolidation pattern.

Gold is also consolidating, albeit in a much different technical position, as the precious metal is trying to form a swing low that would confirm a short-term uptrend after last week’s breakout. A move above short-term resistance would likely lead to a test of the $1245-$1250 zone, with a likely rally up to the next major resistance level near $1260.

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 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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Market Overview

Market Update: U.S. Stocks Settle Mixed in Choppy Trade; Cryptocurrencies Endure Modest Pullback

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U.S. stocks traded mixed on Friday, as only one of three major bourses managed to bounce back from the heavy losses incurred in the previous session. Cryptocurrencies showed signs of wobbling early on before a modest recovery kept the market near break-even.

Stocks Lose Steam

The large-cap S&P 500 Index held higher up until the final moments of trade before running out of gas. It settled flat at 2,767.78 following a back-and-forth session. Among the 11 major sectors tracked by the index, five reported gains. Consumer staples were the strongest contributors, surging more than 2% as a whole. Utilities companies and financials stocks also reported firm gains.

The Dow Jones Industrial Average also finished in positive territory, adding 64.89 points, or 0.3%, to close at 25,444.34.

Meanwhile, the technology-driven Nasdaq Composite Index fell further into the red, shedding 0.4% to 7,449.03.

A measure of implied volatility known as the CBOE VIX held near the historic average on Friday, as the recent string of tumultuous sessions eroded risk sentiment on Wall Street. The so-called fear gauge closed just below 20 on a scale of 1-100.

U.S. equity markets pulled back sharply on Thursday as China-induced volatility weighed on investors’ sentiment. Chinese stocks led a global recovery on Friday as policymakers offered soothing remarks on the health of the economy. Still, the benchmark Shanghai Composite Index is down double-digits this month.

Earnings Show Promise

Another batch of upbeat corporate earnings have helped smooth out the recent bout of volatility in U.S. markets. On Friday, Dow blue-chip Procter & Gamble (PG) reported better than expected revenue growth as well as the sharpest rise in quarterly sales in five years. The company posted adjusted per-share earnings of $1.12 on revenues of $16.69 billion.

Other companies to report higher than expected results include Honeywell International Inc. (HON) and Schlumberger Limited (SLB).

As of last Friday, 86% of S&P 500 companies had reported earnings surprises for Q3, according to FactSet. The current blended earnings growth rate for S&P 500 companies is 19.1%.

Crypto Volumes Plunge

Cryptocurrency prices saw limited upside on Friday, as a sharp decline in trading volumes kept investors on the sidelines. The combined market capitalization of all coins bottomed near $206 billion overnight Thursday before recovering near $208 billion. Overall, the market is little changed compared with previous sessions.

Trade volumes are down some 6% over the previous day and nearly 20% compared with a week ago. As CCN recently reported, daily turnover in bitcoin is approaching yearly lows – a clear indication that bullish upside is limited.

Bitcoin posted a quick and dramatic upsurge on Monday as Tether’s USDT token lost its peg to the U.S. dollar. According to Galaxy Digital’s Mike Novogratz, the selloff of USDT is due to a lack of transparency at the parent company.

“I think Tether didn’t do a great job in terms of creating transparency,” he said at a recent conference in Frankfurt, as quoted by Bloomberg. Until now, Tether has refused to provide an audit of its dollar-backed reserves, igniting concerns that it was artificially inflating its stablecoin circulation.

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 647 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Analysis

Pre-Market Analysis And Chartbook: Risk Assets Higher Thanks to Chinese Bounce

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Friday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,797 0.81
DAX 30 11,568 -0.18%
WTI Crude Oil 69.61 1.35%
GOLD 1,230 0.16%
Bitcoin 6,379 -0.24%
EUR/USD 1.1480 0.24%

Risk assets are having an active and already very busy day after yesterday’s tumultuous session, as volatility continues to be high, especially in equities. All eyes were on Chinese stocks and the Yuan today in early trading, as several key economic numbers were published in the country. Chinese officials lived up to the occasion, doing everything in their power to prop up the market verbally and most likely more directly too.

USD/CNH, 4-Hour Chart Analysis

Chinese stocks started the day lower due to yesterday’s broad global selloff, and although they surged higher towards the end of the session, erasing their early losses, the main benchmarks remain in steep downtrends on all time-frames, and the Yuan is also very close to its cycle lows.

Shanghai Composite Index CFD, 4-Hour Chart Analysis

The quarterly GDP and industrial production came in slightly below expected, continuing the deterioration of the recent quarters, while retail sales beat the consensus estimate, as the consumer segment is still outperforming.

 While the official numbers are far from disastrous, it’s hard to trust the government statistics, given the history of “controlled” releases, and looking at the unofficial indicators, the country’s economy and financial system are under larger stress than reported.

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Global stock futures celebrated the Chinese rally for a few hours, but a large chunk of the gains is already gone near the end of the European session, and the focus is back on the Italian budget crisis and the looming Brexit deadline.

The Italian banking sector is under heavy pressure on rumors suggesting increased capital flight from the country and although the Euro is stable, the risk-off trade is well and alive on the Old Continent.

The EuroStoxx 50, which has been performing relatively well form a long-term standpoint failed to leave the vicinity of the spring lows, and the mega-cap index is now threatening to join the long-term breakdown of the DAX after the decline of the past couple of sessions.

US Stocks Rebound as Dollar Rally Pauses

Dow 30 Futures, 4-Hour Chart Analysis

The major US indices opened modestly above yesterday’s closing levels, as Treasury yields settled down following the volatile post-Fed-minutes period. The Dow, the S&P 500, and Nasdaq are all stuck in declining short-term trends, and despite the recent strong bounce, last week’s panic lows are still close.

The Volatility Index (VIX) fell back below 20 today, small caps are performing in line with the broader market, so while we remain bearish form a broader perspective, the immediate outlook for equities is mixed, with no strong divergences before the last session of the week.

Today’s bounce is helped by the better-than-expected earnings report of Procter & Gamble (PG), which opened 6% higher, and the slight pullback Dollar, which got close to its 2-month highs today in European trading. Forex markets, in general, are showing a risk-on bias today, with the Australian Dollar and the Kiwi being helped by the Chinese bounce, and with Pound being stable after yesterday’s selloff.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Nasdaq 100 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

Nikkei 225 Futures, 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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4.6 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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