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Stock Markets Mixed as Turkey Hikes Interest Rate Again

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Another day, another eventful session in financial markets, as volatility remained elevated, especially in currencies today in European trading. Equities are having a relatively quiet day following a very hectic period, as bulls are still in control in the US, while Europe and most of Asia continues to lag behind from a technical perspective.

DAX Index, 4-Hour Chart Analysis

Another rally attempt faded in the DAX index today, and the relatively weak European Indices are still well below their January highs, despite the weakness of the Euro and the rally in the US. Given the deterioration in the financial segment, we are leaning bearish towards European assets for the coming weeks.

Nasdaq 100 Futures, 4-Hour Chart Analysis

The Nasdaq, which has been leading the way higher ever since late April is showing signs of weakness after breaching its all-time high recently, and with the momentum indicators in overbought territory, a correction could already be underway. The S&P 500 and the Dow are performing slightly better today, but the negative divergences suggest that a risk-off shift could is likely ahead.

The Dollar continued its correction today, as the Euro climbed above 1.18 for the for the time since mid-May, and the Yen also gained some ground against the Greenback. That said, risk-on currencies are not shining, as the Dollar cleared the overbought momentum readings we expect a bounce in the reserve currency before the Fed meeting next week.

Clouds Gather Over Emerging Markets

BRL (Brazilian Real)/USD, 4-Hour Chart Analysis

The rising global rates and the strengthening Dollar put several vulnerable countries in danger, and emerging market currencies are still under pressure. The Brazilian Real is defying the ongoing central bank intervention and it’s threatening with new multi-year lows, being down by more than 20% this year against the USD.

USD/TRY (Turkish Lira), 4-Hour Chart Analysis

Another “weak link”, Turkey is back in focus today too, as the Turkish central bank made headlines in early trading, raising its most-watched benchmark rate by 1.25% to 17.75% in a desperate move to stop the renewed depreciation of the currency. With the early elections in the country a bit more than two weeks away, the move supposed to calm markets and voters alike, while still none of the structural problems have been issued.

On a positive note, the Dollar’s recent broad correction gave a breather to the country, but despite the positive initial reaction by the Lira, the currency remains at dangerous levels. We don’t know how much time the central bank bought with the hike, but technically speaking, the uptrend is intact and the USD/TRY pair held up above the levels hit following the previous emergency rate hike.

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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Analysis

Forex Update: Boring Means Long-Term Sustainability for EUR/INR

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Billionaire investor George Soros once said, “If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.” As an experienced investor, I couldn’t agree more. There’s a lot of waiting and sitting involved but that’s how money is made in investing. The Euro/Indian Rupee (EUR/INR) pair seems to be the perfect embodiment of this quote.

Looking as far back as 1999, it appears that EUR/INR has been in an unstoppable bull run since the second half of 2002. If you invested in the pair a decade and a half ago, you would have more than doubled your money. Chances are you didn’t, but don’t fret because you can always invest today. EUR/INR looks as strong today as it did back then.

In this article, we show how EUR/INR is looking strong on all counts despite being boring.

Healthy Ascending Channel on the Daily Chart  

EUR/INR dropped to as low as 67.9819 on April 10, 2017 and it was nothing but blue skies since. It is trading within an ascending channel as it generates higher highs and higher lows in a sustainable manner. The ascending channel looks healthy, too, as the trading range is not significantly contracting or expanding.


Daily chart of EUR/INR

If you look at the technical indicators, everything is fairly clear. EUR/INR rallies when it flashes oversold readings. On the other hand, it corrects when it is overbought. You won’t find excitement here and that’s good news for long term investors.

Concluded Corrective Wave on the Weekly

EUR/INR started showing signs of weakness in September 2013 when it posted a shooting star weekly candle. The ensuing pullback drove the pair down to the 65 levels in March 2015 (A-wave). The market has not visited that price area since. It managed to generate a bullish higher low setup at 68 (C-wave). This was a clear signal to investors that the correction was over.

Weekly chart of EUR/INR

With a higher low in place, EUR/INR took out resistance of 76. The new support level was tested and retested before the pair mounted a strong rally. On top of that, we can see a hidden bullish divergence on the weekly RSI, hinting that the uptrend is in a good shape.

Even in the weekly chart, the market is not pulling any surprises. There are no false breaks and no shakedowns. You don’t have to look close to see where the market is headed. EUR/INR is boring and that’s why it is strong.

Major Support Line on the Monthly Intact

Conventional wisdom says to buy low and sell high. The problem with this is that you don’t really know when is the market low. The market can go down as there’s always the possibility that a key support can break. That’s just not the case for EUR/INR.

Monthly chart of EUR/INR

Buying low is fairly simple in this case. All investors have to do is to wait for the price to hit the long-term support. Investors can be confident in doing so because the trend line has been intact for over 15 years. More importantly, it bounces every time it hit the support. It’s not really exciting but it works.

Bottom Line

A famous billionaire trader once said that good investing is boring, and I agree. Look at the charts of EUR/INR and you’ll see why boring investing is good.

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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3.6 stars on average, based on 201 rated postsKiril is a financial professional with 4+ 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: China Tries to Support Markets as Global Stocks Slide

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Yesterday’s risk-off shift continued today in early trading with nervous and choppy trading in Asia and Europe, as global financial markets are still haunted by trade war fears and emerging market weakness. The major US indices rolled over after another period of apparent relative strength, with the Nasdaq being the most robust market once again, while most of the key European benchmarks continue to lag behind.

S&P 500 Futures, 4-Hour Chart Analysis

Chinese assets are still in focus before the weekend, as the Yuan’s recent steep devaluation sparked fears of a credit meltdown in the country. With the largest credit bubble in human history casting its shadow on China, some analysts think that with Trump’s trade war, the bug finally found its windshield and the bubble already started to burst.

USD/Yuan, 4-Hour Chart Analysis

All eyes are on the USD/Yuan pair as Chinese authorities are reportedly intervening in the market of the currency, and most likely local equities as well, trying to prevent a serious run on the most important assets.

With the Chinese stock market already in a bear market, and the Yuan trading at fresh 12-month lows against the Dollar, it might be a bit late to stop the slide, but the intervention could cause spectacular short squeezes.

Italy also made headlines today during the European session, as Italian government bonds got slammed lower, as the future of the new finance minister is uncertain, with another round of political turmoil possibly ahead for Europe’s most vulnerable country.

Unicredit (UCG), 4-Hour Chart Analysis

Looking at the charts of Italian banks, it’s clear that the spring turmoil had a lasting effect on the financial system, as Unicredit is on the verge of hitting a new low, and the other large players also remain under pressure, in part explaining the general weakness in European equities.

Europe Still Far Behind amid Mixed Economic Numbers

USD/CAD, 4-Hour Chart Analysis

The economic calendar is almost empty today with regards to the key markets, as the Canadian Retail Sales and CPI reports are the most important releases. The Canadian Dollar rebounded when the USD entered a correction June, but now the currency edging lower again, as the weakness in commodities and the Greenback’s rally are taking their toll. New highs are likely in the USD/CAD pair in the coming weeks, although strong resistance is just ahead at 1.33.

Commodities are little changed today after yesterday’s volatile session, as the bounce in China helped to stabilize the segment. Notably copper is back above the key $2.70 level, while WTI crude oil is trading at $68 per barrel again, and gold is hovering around $1225.

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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Analysis

Crypto Update: Bitcoin Holds $7350 as Altcoins Show Weakness

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It has been another two-faced session so far in the cryptocurrency segment, as Bitcoin’s strength was in stark contrast with the widespread weakness among altcoins. Besides BTC only Dash is slightly in the green among the top 20 coins, and most of the majors are back in their previous trading ranges after the failed break-out, with still only Bitcoin sporting a short-term buy signal according to our trend model.

The mixed, but dominantly still bearish short-term picture means that traders should still be cautious with new positions, as, despite Bitcoin’s ongoing rally, a test of the June lows is still likely with regards to most of the majors, and new lows are also possible in the coming weeks.

For now, the trading ranges that developed after the June lows are still intact, and the previously negatively diverging coins should still be closely monitored for signs of weakness. On the contrary, should a distinct bullish leadership emerge, a trend change would be more likely, but for now, the technical evidence suggests that the segment-wide downtrend is still intact.

BTC/USD, 4-Hour Chart Analysis

Bitcoin avoided a breakdown below its break-out levels yesterday despite the widespread altcoin weakness and it managed to recover above the $7350 support/resistance level, keeping the bullish move intact. That said, the coin failed to trigger any form of follow-through among the majors, and that makes the break-out suspicious. Further support is at the line-in-the-sand $7000 level, at $6750, and $6500, while primary resistance is ahead at $7650.

Weak Bounce in Altcoins Following the Failed Break-Out

ETH/USD, 4-Hour Chart Analysis

No altcoins triggered a short-term buy signal and most of the currencies experienced a failed breakout, but today the segment stabilized and for now, the June lows are safe. Ethereum continues to be relatively weak from a short-term perspective, as the coin settled down near the $475 level, failing to rally back towards $500.

A move the lower end of the range is likely now, with primary support found at $450, with other levels at $420, $400, $380, and $360, and with further resistance ahead between $555 and $575.

DASH/USD, 4-Hour Chart Analysis

Thanks to its scarce liquidity, Dash turned very volatile during yesterday’s wild session, but despite the spikes on several exchanges, the coin remained in a similar technical setup as Litecoin, NEO, and Monero, the other relatively weak coins. These coins failed to recover above the structural breakdown levels, and remained on a long-term sell signal, despite Bitcoin’s encouraging rally. Dash should durably recover above $265 to trigger a short-term buy signal, but a move back to $215 seems more likely now.

XRP/USDT, 4-Hour Chart Analysis

Ripple is also among the weaker coins today and it failed to stay above the $0.49 resistance level, despite the intraday rally. Now XRP is still above the key long-term level which coincides with June low, but a test of that zone is likely in the coming weeks, as the short-term setup is still bearish. Further resistance is ahead at $0.54 and at $0.575, while primary support is now found at $0.45.

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 296 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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