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Split on Both Ends

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3 people have been killed in a tragic and cowardly act in Barcelona. Hours later Spanish police shot and killed five more terror suspects, some of which may have been wearing explosive vests.

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More than 100 people have been killed in terror attacks over the past year in Europe and the United States and more than 1000 in the rest of the world. Every one of them is a tragedy and a sin, a harsh reminder that pointless hatred exists in a world which is otherwise very peaceful in many ways.

Most of these incidents have very little affect on financial markets. Institutional investors have grown callous as the real economic implications of such events has waned. Retail investors have all but forgotten that such events used to move markets and so have ceased to trade them.

This attack is somehow different. This attack was claimed directly by the Islamic State. After the West’s numerous victories against ISIS many were starting to think it a thing of the past. The fact that they were able to coordinate this type of attempt, even if it did mostly fail, is a chilling sign that terrorism is probably not going away anytime soon.

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@MatiGrenspan
eToro, Senior Market Analyst

 

Please note: All data, figures & graphs are valid as of August 18th. All trading carries risk. Only risk capital you can afford to lose.

Market Overview

Though the terror streak in Spain may have had something to do with the losses in the stock market most financial media is pointing to a rumour that was running around Wall Street yesterday that Trump’s top economic advisor Gary Cohn quit his post.

Even though the myth was quickly debunked, it managed to ignite an inner fear on Wall Street. What if Trump’s top advisers, the sane ones, all start walking out on him.

After all, most Americans who don’t fully believe in the President’s abilities at least believe that he will surround himself with good people. What if those good people, many of whom are currently cringing at Trump’s comments over the past few days, started to disappear? Then what would we be left with? Steve Bannon, Kellyanne Conway, and Chris Christie.

This thought alone was enough to send the markets tanking on Thursday and send the VIX volatility index to close near it’s highest levels of the year.

The Dow Jones awoke from it’s slumber and indeed a deep slumber it was in. This was the first session that the DJ30 has moved more than 1% in either direction in 63 trading sessions.

Metals Thrive

Perhaps due to all the market uncertainty and drive to safety or maybe for some other reason, the precious metals are moving forward, many of them coming close to the breakout zone.

The number one mover by far is Platinum, which has gained more than 4% since the start of the month. Here is a graph with several different important metals. Make of it what you will.

Gold has been trading cautiously around $1,300 for a while now. At the moment though, we’re less than $6 short of that mark. After testing this psychological level in April, and in June, will it be able to break through in August?

Inline image 2

European Minutes

The meeting minutes from the ECB yesterday revealed some rather large cracks in the “let’s normalize monetary policy” push that was so apparent around the world last month.

Many central banks were saying that it’s time to start tightening money by raising interest rates and reduce/reverse quantitative easing. Well, the United States seems divided on that front. Though the ECB doesn’t seem divided just yet, they did express concern that the Euro is too high for it’s own good.

The Euro very politely declined after these comments as many thought the ECB might now be inclined to do something about it.

Still, after the massive gains in the EURUSD that we’ve seen so far this year, the pattern on the chart does seem to be a classic bullish shaped flag.

 

Wishing you a wonderful 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.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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1 Comment

1 Comment

  1. Andie

    August 18, 2017 at 8:19 pm

    While annoying terrorist attacks is really not that big a deal. In fact, the amount of money defending all of us from terror attacks is out-sized relative to the threat. No to diminish the horror. But I make this point to put this problem in its proper context…Attention bias by those with the most power does not necessarily reflect reality. Of course the temptation is to dismiss this information, which of course proves the point. I’ve translated the stats below into a bias free format so that we can all see a far larger problem that we accept as “normal.” This is STILL a savage planet.

    Three (3) = The number of X murdered every day by Y in the U.S.

    4.8 Million = The number of X in the U.S. who experience physical violence by “Y” every year.

    Meanwhile, the number of American troops killed in Afghanistan and Iraq between 2001 and 2012 was 6,488. The number of American X who were murdered by Y during that time was 11,766. That’s nearly double the amount of casualties lost during war.

    X and Y used to abbreviate mammalian gonosomes

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Cryptocurrencies

Trade Recommendation: Syscoin

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The price bounced from the support zone formed by the uptrend line and SMA50. MACD and DMI support upward movement. If the price breaks the resistance level and the previous swing high, we’ll get a signal confirming that the market is going to move higher. Pending orders for buy can be placed at 0.00002550 level with stop orders at 0.00002150 level. Profit targets are 0.00003000 and 0.00003800 resistance levels. If you don’t use leverage, trading volume for this trade is up to 5% from your deposit.

Market: SYSBTC
Buy: 0.00002550
Stop: 0.00002150
Profit Targets: 0.00003000 and 0.00003800

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The trading signal is based on Poloniex chart.
Disclaimer: The analyst does not have investments in Syscoin.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Bitcoin

Trade Recommendation: Ride the Next Rally of Bitcoin

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The profit taking period that saw the Bitcoin market fall from 19,697 to a low of 13,501 in a matter of a few days is almost up. The market appears to have generated a new higher low and will use that level to make its next move up.

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Technical analysis reveals a large reversal pattern in the hourly chart that could signal the end of the correction. In addition, volume has been steadily decreasing. On Coinbase, volume spiked by as much as three times its average value in the hourly chart during the height of selling. In the last seven hours, however, volume has been way below its average indicating that bears have lot ammunition. More importantly, RSI in the hourly chart is far from overbought territory. This gives the market a lot of room to breach resistance at 18,000.

The strategy is to buy the market when it goes above 18,000. With signs of selling exhaustion, bears may not put up much of a fight the next time the pair breaches 18,000 on Coinbase. Also, the market has no stiff resistance above 18,000 so it has a clear path to our target of 22,500.

Hourly Bitcoin Chart on Coinbase

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As of the time of writing, Bitcoin is trading at 17,200.

Summary of Strategy

Buy: breach of 18,000

Support: 17,200, 16,800, and 16,450

Target: $22,500

Stop: Move below 16,450

 

Disclaimer: The writer 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 money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Cryptocurrencies

Ethereum Just Broke $700 for the First Time

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Ethereum caught a tailwind higher on Wednesday, as prices broke above $700 for the first time ever amid general optimism in the cryptocurrency arena.

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ETH/USD Price Levels

The ETH/USD exchange rate was trading at session highs at press time, rising 18% to $721. Trade volumes surged, with 24-hour turnover exceeding $5.2 billion. That’s equivalent to around 301,779 bitcoin.

Trading activity was spread out across the major exchanges, with Coinbase’s GDAX accounting for more than 11% of total transactions. South Korea’s Bithumb also accounted for roughly 11% of the daily transactions.

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At present values, Ethereum’s market cap is $68.7 billion, according to CoinMarketCap. Ethereum is the world’s second largest cryptocurrency by overall market capitalization, outshined only by bitcoin.

Ether’s surge appears to have originated Tuesday afternoon, when prices first broke $600. By the early evening, ETH/USD was trading near $670. A sharp correction back down to $600 would soon follow before prices resumed higher over the next 12 hours.

Prior to the latest rally, ether found itself in a prolonged rut as prices struggled to rise above $500. Some analysts say ether’s transaction woes are limiting its upward momentum. The platform currently supports around 15 transactions per second. By comparison, Visa processes 45,000 per second. For ether to generate mainstream appeal, it will likely have to increase its transaction capacity. Discussions on the best way of doing so are ongoing.

Swiss Banking Giants Leverage Ethereum

Ether’s newfound strength comes on the heels of a new partnership announced by Swiss financiers UBS, Barclays and others to advance data collection and reconciliation tied to upcoming MiFID II regulations. The consortia, which also includes KBC, SIX and Thomson Reuters, is relying on Ethereum’s smart contracts to allow financial institutions to identify and sort out data-related anomalies. By leveraging smart contracts, the banks will be able to reconcile sensitive reference data without compromising sensitive information.

By using smart contracts, the banks hope to bring down costs associated with data collection and storage.

A UBS analyst heralded the partnership as an important step in advancing blockchain’s benefits beyond the obvious clearing and settlement market. MiFID II regulations will come into effect Jan. 3.

The cryptocurrency’s use cases have grown since the Enterprise Ethereum Alliance (EEA) was established. EEA boasts an impressive collection of Fortune 500 companies, startups and subject matter experts converging on smart contract research and development. The goal of the Alliance is to “define enterprise-grade software capable of handling the most complex, highly demanding applications at the speed of business.”

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 money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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