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Analysis

These Stocks Have Bullish Chart Patterns

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The S&P 500 had its second weekly closing above the 2500 levels. However, it formed a doji candlestick pattern on the weekly chart last week, which shows that the bulls and bears are in equilibrium.

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Key points

  1. Though the S&P is losing momentum, it remains in an uptrend
  2. Buy MOG.A
  3. Buy SMMF
  4. Buy MODN
  5. Buy PSTG

While the bulls have not been able to sustain the momentum above 2500, the bears have not been able to sink the index. As long as the index trades above 2480, it remains bullish and we can expect select individual stocks to outperform.

It is difficult to call a top in the market. Therefore, until the market breaks down, we shall look for stocks that are likely to continue their uptrend.

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However, as the markets are due for a correction, traders should reduce their position size to less than 50% of normal. As the market moves higher, the stop losses should be trailed higher to lock in the paper profits, because the market can turnaround quickly from these levels.

MOG.A – Buy 83.63, SL 76, Target 100

Weekly chart

The stock has broken out to new lifetime highs with strength. We find a V-shaped recovery after the fall from the highs in October 2014. We believe that the stock has started a new uptrend and is likely to continue higher towards its first target objective of $100, though the pattern target is $120.

However, if the stock again falls below the breakout levels of $79, it will signal a failed breakout. Therefore, we shall keep a close stop loss to protect our position.

Daily chart

On the daily chart, we find that the stock is trading inside an ascending channel since February of last year. The stock has mostly traded close to the middle of the channel, barring two occasions.

Once, in November of last year, it attempted to breakout of the channel but failed. From there, it fell to the lower end of the channel by end-March of this year. The current leg of the up move is likely to carry the stock at least to the upper end of the channel, close to $90 levels, post which, it will either breakout of it or return to the middle of the channel and continue its uptrend.

As the stock is at lifetime highs, we shall buy it at the current levels and on any dips to $80. Our stop loss is $76, because we don’t want to hang on to the stock if it doesn’t sustain the new lifetime highs. Our profit objective is $100 and long-term objective is $120, as long as the stock sustains above the trendline support of the channel.

The risk on the trade is $7.63, whereas, the reward is $14, if the stock moves according to our expectations.

SMMF – Buy 25, SL 22, Target 30

Weekly chart

The stock is in an uptrend because it continues to make higher highs and higher lows. It made a high of $30.06 in December of last year, after which it corrected sharply. However, the correction ended around the $20 levels, post which the stock remained range bound. Last week, the stock broke out of the range with force. We expect a retest of the highs once again.

Daily chart

The daily chart shows the momentum behind the stock. It has quickly risen from $22 to $25 levels. It has a small resistance at $27, post which it is likely to retest the highs. Therefore, we shall buy the stock at the current levels and on dips to $24 levels. Our SL will be $22. The risk is $3, whereas, the reward possibility is $5.

MODN – Buy 14.5, SL 12, Target 18.5

Weekly chart

The stock had been range bound for the past four years. It has formed a nice base around the $7.5 to the $13 mark. Though the stock broke out of the range in May of this year, it could not rally higher. It remained stuck in a tight range for more than three months. However, last week, the stock broke out of the range, which should start a new uptrend in it. Our target objective is $18.5, which is equal to the depth of the range.

Daily chart

In end-May of last year, the stock had broken out of the range, however, it faced stiff resistance at the $14 levels, from where it turned down once again in early-August. From then to early-June of this year, the stock remained within the range.

This year, the stock broke out of the range in early-June, but could not gain momentum. It was stuck in a tight range for almost four months. However, on Thursday of last week, the stock broke out of the tight range and followed it up with further gains on Friday.

With the breakout above $14, the stock has started a new uptrend, which should carry it to $18.5 levels. Therefore, we can buy the stock at the current levels. Our bullishness will be invalidated if the stock falls below $12, which should be the stop loss. In this trade, the risk is $2.5, while the reward possibility is $4.

PSTG – Buy 15.65, SL 14, Target 20

Weekly chart

The stock has been range bound between $9.65 and $15.15 since 2016. Last week, the stock broke out and closed above the range. We, therefore, expect the stock to start a new uptrend and move towards its target objective of $20. However, if the stock again falls back into the range, it will signal a failed breakout and it will invalidate our bullishness.

Daily chart

The stock broke out of the range on Thursday, however, it could not sustain the gains and closed at $15.02 levels. Nevertheless, on Friday, the stock again broke out of the overhead resistance, which shows the buying support for the stock at lower levels. The stock has a minor resistance at the $18 levels, post which it is likely to rally towards its pattern target of $20. However, if the stock again falls below the range, it will become negative. Therefore, we shall keep our stop loss at $14 levels. In this trade, we risk $1.65 to earn a possible reward of $4.35.

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

Market Update: Bitcoin at $10,000, Ripple at $1, Ethereum below $1000 as Carnage Continues

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Yesterday’s China induced technical breakdown led to an unmitigated disaster in the crypto segment, as all of the majors crashed, erasing hundreds of billions of market cap in the process. The collapse of the alleged Ponzi scheme of Bitconnect added insult to injury and caused another wave of selling in late trading, driving the price of Bitcoin to $10,000, a bit earlier than expected.

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BTC/USD, 4-Hour Chart Analysis

The most valuable digital currency rebounded as much as 15% after the late-session crash, but the selling pressure remained strong and today BTC briefly traded below yesterday’s low, with most of the majors holding up above the crash low.

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That said, the sell-off is unlikely to be over and volatility is probably here to stay for the week, with violent swings in both directions. The coin is still likely to push lower, with a possibly lengthy bottoming phase, so a quick recovery to the record highs is unlikely, but strong support is found below $10,000 at $9200, $8200, and $7650.

Traders should be aware of the elevated risk in short-term positions here, while long-term investors could slowly accumulate positions on the sell-offs, as the coins are headed to oversold territory.

A Little Perspective

(more…)

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

Long-Term Cryptocurrency Analysis: Broad Correction Enters Next Phase

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The overbought BTC-led correction that has been the dominating technical process in the cryptocurrency segment in the last month or so continued in earnest today, amid the intensifying regulatory steps concerning the sector. The three-week-long consolidation that followed the initial mini-crash concluded with a sharp sell-off overnight rearranging the long-term charts, while likely kicking off another volatile period.

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While most of the crash lows held up today in early trading in the majors, especially in the case of the late leaders like Ethereum and NEO, some of the relatively weaker coins are already trading below the December minimums. We expect most of the majors to follow Dash and LTC, the weakest of the largest coins, lower and trade below the previous lows, as sentiment will likely swing to a bearish extreme.

The $11,300 level has been in the center of attention throughout the session today and the most valuable coin experienced heavy trading around the level as expected. As the daily MACD is still in neutral territory, the coin could be in for another leg lower, but after the 40% correction and the rather lengthy consolidation, investors could be looking for entry points during the move near the key support levels at $10,000, $9000, and the stronger levels at $8200 and $7700.

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BTC/USD, Daily Chart Analysis

As Ethereum is in a different part of its cycle the long-term momentum readings are still overbought, and that could mean a more protracted correction for the second largest coin. That said, following a multi-month consolidation like the one in Ethereum before, we still expect the token to outperform BTC from a long-term technical standpoint. ETH is now below the short-term trendline, and it’s likely to dip below $1000, and the prior top at $850. Further key levels are found at $740, $625, $575, and near $500.

ETH/USD, Daily Chart Analysis

Let’s see the outlook for the other major altcoins after today’s bloodbath.

(more…)

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: Chinese Crackdown Triggers Next Leg of Correction

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The cryptocurrency segment is crashing again, with double-digit losses across the board, and with several coins shedding around 30% in one day amid the widespread and heavy selling. The sell-off was triggered by reports on a new set of measures by the Chinese authorities limiting crypto trading, which added to the still looming South Korea related regulation worries. Bitcoin tested the mini-crash lows at $11,300 today in early trading, dipping slightly below that level before a strong bounce started.

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The most valuable coin is now between two crucial support/resistance lines, with the other ahead at $13,000, and as the downtrend is entering its more mature phase the $10,000 and $9,200 levels could come in play, with a possible dip to the support zone near $7,650.

BTC/USD, Daily Chart Analysis

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Interestingly, the coin is still hovering within the daily range of the crash of December 22nd, and that points to a very active and volatile period ahead near the low at $11,300, as automatic orders will likely get triggered on both sides of the market.

The short-term setup is bearish, and although it’s possible that the primary support level will hold, odds still favor another leg lower, following the exponential run-up at the end of last year that pushed sentiment into bullish extremes.

BTC/USD, 4-Hour Chart Analysis

Altcoins

(more…)

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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