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Stocks Pull Back From Highs as Pound Plunges

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After yesterday’s record-breaking session, US stocks once again broadly opened at all-time highs, even as the momentum of the global rally waned. Chinese stocks kick-started the day by extending their relief rally off their 4-year lows and Europe also ticked higher, although the major indices couldn’t hold on to their early gains. Since the US open stocks are drifting lower, but with no major events scheduled for today, a calm afternoon session is likely on Wall Street.

GBP/USD, 4-Hour Chart Analysis

The slight weakness came on the heels of the weaker than expected European flash Manufacturing and Services PMIs, while Theresa May’s Brexit ultimatum also weighed on local equities. The Great British Pound fell sharply on the news too, erasing yesterday’s lofty gains and briefly getting close to the 1.30 level, as the Dollar rallied across the board.

NASDAQ 100 Futures, 4-Hour Chart Analysis

The Nasdaq has been lagging the Dow and the S&P 500 from a short-term perspective and the tech benchmark is once again leading the way lower today. The worse than expected guidance by Micron (MU) from yesterday is weighing on the segment and the market-leading tech giants are also weaker than average.

10-year US Treasury Yield, 4-Hour Chart Analysis

All eyes are still on the bond market, as Treasury yields are near multi-year highs concerning almost all maturities, and with the 10-year yield being very close to signal a trend change in the multi-decade structural downtrend.

While next week’s rate hike by the Fed is near certain, the outlook for the next year will likely be crucial, and given the positive US economic trends and the trade wars’ contained impact, the market’s rate hike expectations are rising across the curve.

Futures and Option Expiries Lead to Choppy Trading

Today is an important day for futures and options traders, as the quarterly contracts are expiring across asset classes, and that has a huge effect on stock and commodity markets as well, with high volumes and volatile trading especially around the key strike prices. Strong trends are rare on these sessions and day-traders should be cautious of sudden volatile spikes in even the most traded assets.

Copper, 4-Hour Chart Analysis

Commodities already experienced volatile swings throughout the day, with especially gold being tossed around the $1200 level that has been in the center of attention in the past weeks. Shorts in copper have been squeezed heavily before the end of the week, with the crucial metal surging above key support with the rally in Chinese stocks, while WTI crude oil retreated from a more than two-month high above the $71 per barrel level as the Dollar rallied.

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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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4.7 stars on average, based on 468 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

Bitcoin Cash Price Analysis: Bullish Pennant Pattern Confirmed

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  • Bitcoin Cash price remains very much elevated, as the bulls continue to run north.
  • BCH/USD price action has formed a bullish pennant pattern formation, subject to a breakout higher.

BCH/USD: Recent Price Behavior

The Bitcoin Cash price has been a notable out-performer over the past few sessions, with the BCH/USD pair rallying as much as 23% since 17th February. In doing so, it reached its highest levels in over six weeks. The aggressive move north came after a prolonged period of range-bound trading via the daily chart view.

Between 8th – 17th February, BCH/USD was moving within an extremely narrowing range-block formation. This represented a lack of commitment from both camps after being confined within a range low of $117 to a high around $125. On 18th February, the bulls managed to force a breach and daily closure above the confines of the mentioned range.

Coinbase Adds Bitcoin Cash Support to Wallet App

Coinbase, a U.S.-based cryptocurrency exchange and wallet service provider, announced it has added support of BCH to its Coinbase Wallet.

“The new Wallet update with Bitcoin Cash support will roll out to all users on iOS and Android over the next few weeks,” the company said in an official blog post.

The app will facilitate support for both CashAddr and legacy addresses. Private keys will be encrypted on the mobile device by the Coinbase mobile wallet. Last week Coinbase announced the following: “users can now back up an encrypted version of your Coinbase Wallet’s private keys to your personal cloud storage accounts, using either Google Drive or iCloud This new feature provides a safeguard for users, helping them avoid losing their funds if they lose their device or misplace their private keys.”

Technical Review – BCH/USD

BCH/USD 4-hour chart.

At the time of writing, the BCH/USD price is still holding at elevated levels, with gains in the session amounting to 2.5%. Over the last two sessions, between 19-20th February, the price action has somewhat moved within a range. The detailed price behavior has seen a bullish pennant pattern formation, which is subject to a further potential move north.

Near-term resistance is eyed at $145.50, where the upper acting trend line of the pennant is tracking. Should the bulls manage to break this down, then expect a fresh wave of selling pressure to kick in. To the upside, eyes will then be on supply observed up within the $160-$165 price range.

In terms of near-term support, the lower acting trend line of the pennant which is tracking at $140 is the next major target; a breach could then expose critical daily support at $137. Lastly, if neither safety nets protect the price from falling, then there runs the risk of a full reversal of the recent gains.

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 125 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: Coins Test Swing Highs Litecoin Runs Into Resistance

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The major cryptocurrencies continue to trade with a bullish bias after establishing a new short-term uptrend this week. The top coins are all holding on to the bulk of their recent gains, even as most of them entered consolidation patterns on the heels of the strong rally in the segment. With still only Ripple lagging the broader market notably, the immediate outlook remains positive, despite the still bearish long-term picture.

LTC/USD, 4-Hour Chart Analysis

Today, the initially leading Litecoin shined again, pushing past the $50 level and hitting the long-term resistance zone near $51. As LTC is overbought due to its recent lofty gains, the coin is now only on a neutral short-term signal in our trend model, since the bearish long-term setup continues to warrant caution for bulls here.

That said, the rising short-term trend is intact, and should the coin clear the overbought momentum readings, traders could enter small, speculative positions using strict risk management rules. Support levels are now found near $47, $44, and $38, while the next major resistance zone is ahead near the $56 price level.

BTC/USD, 4-Hour Chart Analysis

Bitcoin entered a consolidation pattern today, as we expected, after touching the longer-term zone resistance zone between $4000 and $4050. The momentum indicators hint on further consolidation, and in light of hostile long-term setup, traders should wait for the overbought readings to be cleared before entering new short-term positions.

Below the initial level $3850 support, further levels are found near $3600 and just above $3450, while the next resistance zone above $4050 is ahead near $4450. The short-term uptrend is intact in BTC, and our trend model remains on a short-term buy signal.

Ethereum Tries to Form Swing Low while Ripple Fights Trendline

ETH/USD, 4-Hour Chart Analysis

Ethereum entered a shallow correction after hitting the resistance zone near $145, but the price action and the volume patterns continue to support the bullish short-term case. The $160 price level remains a viable target for bulls but the momentum indicators continue to show overbought readings. The short-term uptrend is intact and our trend model is still on a short-term buy signal as well. Support levels are found near $130 and $112 while above $160 resistance is ahead near $180.

EOS/USD, 4-Hour Chart Analysis

Only a few of the major altcoins managed to follow Litecoin to a new swing high today, but EOS slightly extended its rally, despite being severely overbought from a short-term perspective. While the new high is a positive sign for the coming period, EOS remains only neutral in our trend model, and traders should wait for the oversold readings to be cleared before entering new positions.

XRP/USDT, 4-Hour Chart Analysis

While the leadership of the rally is still healthy, Ripple continues to lag the leaders, still fighting with the declining trendline that stopped the recent rally attempt in the coin. XRP is holding up above the $0.32 level, but it’s stuck below the recent swing high, and traders should still focus on the relatively stronger coins despite the short-term buy signal in our trend model.

From a long-term perspective, technicals remain negative, and a move towards the $0.28 and $0.26 levels remains likely. Further support zones are found near $0.32 and $0.30, while short-term targets are still ahead near $0.3550, and $$0.3750.

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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4.7 stars on average, based on 468 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

Bitcoin Update: Reversal Right on Track

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On our February 13, 2019 update, we argued that Bitcoin’s (BTC/USD) bottom is likely in. While many crypto participants were heavily bearish about Bitcoin’s prospects, the market broke out of a continuation pattern and climbed over the $4,000 mark yesterday on Bitfinex. This left some in disbelief, which is exactly the reaction that we were expecting.

Nevertheless, many still hold on to their bearish stance. After all, it could also be argued that last week’s rally was nothing but a dead-cat bounce. They will probably laugh out loud if we say that Bitcoin’s reversal is underway. They can laugh all they want but recent events tell us that the reversal is right on track.

Multiple Resistances Breached

The price action on February 18 caught many market participants by surprise. That’s because it’s been a long time since Bitcoin followed through with a strong rally after a bullish move. Since February 2018, every bull rally was met by a stronger bear selloff. This resulted to four lower highs and eventually, the breakdown from $6,000.

Bitcoin lower highs from Feb 2018

With this trend, it seems logical that Bitcoin would once again post another lower high and continue its downward spiral. However, for the first time in a long while, Bitcoin defied bearish expectations. It rallied to $4,021 on Bitfinex on February 18 and breached multiple resistances in the process.

One major resistance that was taken out used to be the diagonal support that kept the market above $6,000. When Bitcoin breached this diagonal support, it acted as a heavy resistance. The February 18 rally enabled bulls to reclaim this support.

Diagonal support turned resistance and then turned support

On top of the diagonal resistance, Bitcoin also managed to go above our range midpoint as well as the 100-day moving average.

Bitcoin trading above range midpoint

It’s not just the price that enjoys multiple bullish breakouts. The daily RSI managed to print two breakouts in the last couple of months. The first one involves the breach of the diagonal resistance on December 18, 2018. At that time, Bitcoin flipped this resistance into support and relied on it to take out RSI resistance of 56. The move above 56 triggered the inverse head and shoulders breakout on the daily RSI. This tells us that momentum has swung to the side of the bulls.

RSI breakouts

Without these layers of resistances in terms of price and technical indicators, the bulls’ chances of winning the fight to reverse the market’s trend has significantly increased.

Toughest Resistance Ahead

While these technical developments can be really exciting, it is important to not give in to our emotions. Bitcoin’s biggest challenge is on the horizon.

Bitcoin is approaching our range high of $4,300. This resistance is unique because bears enjoy three layers of protection. The first one is the horizontal resistance, the second is the long-term diagonal resistance, and the last is the 200-day moving average.

Bitcoin resistances

Bulls need to generate tremendous momentum and volume to go above $4,300. A move above this level solidifies Bitcoin’s road to reversal.

Bottom Line

Even after the February 18 rally, many still hold firm to their bearish stance. However, a closer analysis of Bitcoin reveals that last week’s rally enabled bulls to take out multiple resistances. The breach of these resistances increases the chance of bulls to finally reverse the trend.

 

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 (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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3.9 stars on average, based on 330 rated postsKiril is a CFA Charterholder and financial professional with 5+ 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 funds, as he does his own crypto research and is a Product Manager at Mitre Media. 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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