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Technical Analysis: Coins Hold Gains amid Stock Turmoil

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As volatility and uncertainty continue to reign supreme in financial markets, the cryptocurrency segment is an island of relative calm, which is a huge change compared to the previous weeks and months, when cryptocurrencies were the most volatile asset class by a mile.

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Bitcoin and the rest of the majors have been trading in relatively narrow ranges, consolidating the previous rally’s gains. Correlations are way lower than before, underlying the positive tendencies in the market besides the obvious decline in volatility. Despite the bullish signs, the downtrend that has been decimating the coins is still intact, and given the several strong overhead resistance levels ahead, a choppy and lengthy bottoming process wouldn’t surprise us.

BTC continues to trade below yesterday’s high at $8650 after the scary overnight dip that pushed the most valuable coin briefly below the key $7650 level and the subsequent rally. The technical setup remains unchanged with oversold long-term momentum readings, and a setup that is favorable for long-term investors to accumulate the coin.  Primary resistance is still ahead between $9000 and $9200, with further levels at $10,000 and $11,300, while support below $7650 is found between $6750 and $7000, and at $6150 and $5750.

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BTC/USD, 4-Hour Chart Analysis

As the rotation that we pointed out this morning continued, a new batch of coins is leading the market higher now, with only Dash remaining strong from the early leaders while Monero, Bitcoin Cash, and Ethereum Classic pushed forward today. Monero surged above the $240, and it’s now close to the bounce high from last week, and the dominant declining trendline.  Further resistance is ahead at $280 and $300, while support below $240 is at $200, $175, and $150.

XMR/USDT, 4-Hour Chart Analysis

Ethereum

ETH/USD, 4-Hour Chart Analysis

Ethereum is consolidating just below the $850 support level, while being well clear of the $740 support that stopped the overnight decline. The coin is oversold form a long-term perspective while being back to neutral regarding the short-term momentum. Long-term investors could still add to their holdings on the short-term sell-offs, while traders should wait for a confirmed trend change before entering new positions. Support levels below $740 are found at $625 and $575, while resistance is head near $850 and $1000.

Litecoin

LTC/USD, Daily Chart Analysis

Litecoin is still hovering near the $150 level as it lost its relative strength after the strong rally. That said, the coin remains in an encouraging long-term position, and it’s expected to enter a bullish cycle soon, with the cycle low likely already being set. With that in mind, investors should still keep adding to their holdings on the short-term dips while aggressive traders could also enter positions near the main support levels. Primary resistance is ahead between $170 and $180, while support is at $125 and $100.

Dash

DASH/USD, 4-Hour Chart Analysis

Dash continued to lead the rally today, reaching above the $600 level yet again. The coin is well clear of the $500 level, while still being in a declining trend despite the recent strength. A short-term consolidation is now likely that could still be used by investors to add to their holdings. Traders should still wait for a trend change before entering positions, although a final cycle low is likely already in. Resistance levels are ahead between at $650 and near the $825 level, while support is found at $500, $410, and $360.

Ripple

XRP/USD, 4-Hour Chart Analysis

Ripple is drifting lower along the short-term trendline as the coin lost its relative strength similarly to Litecoin. The currency is still well above the $0.68 support, despite the pull-back, and as the long-term setup is favorable, investors could add to their holdings here. Resistance is ahead at $0.85, $1, $1.25, and $1.5, while support is found at $0.68 and $0.56.

 Ethereum Classic

ETC/USD, 4-Hour Chart Analysis

Ethereum Classic showed strength today, although the coin is still shy of the $23 level, and the downtrend remains intact in line with the broader market. We expect a lengthy bottoming process in the coin, with a likely re-test of the $18 level before a confirmed trend change. Investors could still add to their holdings on the short-term sell-offs, with support below $18 found at $16 and $14.50, while further resistance is ahead at $25.

NEO

NEO/USDT, 4-Hour Chart Analysis

NEO has been lagging the segment today following the strong rally in the coin after the Monday sell-off, and with the long-term picture still only being neutral, the $100 level could be in focus in the coming week. Despite that, we don’t expect a new low in the currency, even as the correction will likely continue and investors could add to their holdings near the main support levels, although traders should wait before entering positions. Resistance levels are ahead at $125 and just above $150, while support is at $100, $80, and $64.

IOTA

IOTA/USD, 4-Hour Chart Analysis

IOTA lost some of its relative strength today, as it is consolidating its recent gains, and the coin remains below the key resistance zone surrounding the $2 price level. As the downtrend is still intact, further volatility is expected before a stable downtrend, even though the final cycle low is likely already set. Primary support is found at $1.5, while resistance is near $1.9, $2.2, and $2.35.

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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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Analysis

Daily Analysis: Oil Extends Rally as Nasdaq Leads Stocks Higher

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Friday Market Recap

Asset Current Value Daily Change
S&P 500 2749 1.38%
DAX 12,483 0.18%
WTI Crude Oil 63.58 1.29%
GOLD 1330.00 -0.16%
Bitcoin 10,14 -0.09%
EUR/USD 1.2295 -0.28%

US equities built up some bullish momentum towards the end of the week, ignoring the technical damage that the volatility-crash caused, and the major US indices rallied into the close today, squeezing the shorts. The Nasdaq, which led the rally as we expected, took out the key 6850 level in late trading and added another percent to, incredibly enough, finish only a hundred point of the all-time high.

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NASDAQ 100 Futures, 4-Hour Chart Analysis

Should the tech benchmark retest the high next week, it will be amid very strong negative divergences, but hey, those divergences have been building for months now. The rally in equities was boosted by the dip in Treasury yields, especially at the long end of the curve, while Amazon continued ot lead the charge, closing right at the historic $1500 per share level.

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Russell 2000 (Small Cap) Index, 4-Hour Chart Analysis

The advance in the Dow and the S&P 500 is much less convincing and with small caps also lagging the tech-behemoth juggernaut, we remain skeptical regarding the sustainability of the move. That said, if the broader indices stay above the key levels, we will be trading the long side in equities, even as from an investment standpoint, valuations are still way above acceptable.

Forex Markets and Commodities

The lackluster performance of European and Asian stocks adds to the negative divergences, especially as the Euro stopped appreciating against the Greenback, and that should be helping stocks of the old continent. Of course, the DAX and the EuroStoxx 50 could play catch-up next week, barring another surge in the common currency.

EUR/USD, 4-Hour Chart Analysis

The most-traded forex pair remains in a short-term downtrend, as it failed to recapture the previously broken rising trendline, and the commodity related risk-on currencies also remained under pressure. The Canadian Dollar did bounce back off yesterday’s 8-week lows, boosted by the much hihger than expected inflation release and the jump in the price of crude oil.

USD/CAD, 4-Hour Chart Analysis

Oil benefited from the positive shift in sentiment, while the Syrian situation, which took a backseat in the headlines, still supports the rally. The Japanese Yen and gold were stable amid the risk-rally and that adds to our suspicions regarding the upside potential form these levels.

Cryptocurrencies

The segment started out the day with a strong bounce that carried the major coins higher by around 10%, but given the recent steep short-term pullback, even that wasn’t enough to turn the tide, and the day ended with an (almost usual) sell-off after the US close. Despite the recent volatility, the overall picture is still encouraging, with most of the majors being safely above the crash lows, likely in a new bullish cycle that has the potential to last for several more weeks or even months.

While new all-time highs are it guaranteed following the 60-70% declines among the largest coins, but even without those, plenty of upside potential is left for investors. With that in mind, investors should hold on to their coins and even add to their holdings on the short-term dips like the current one.

ETH/USD, 4-Hour Chart Analysis

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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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Analysis

Technical Analysis: Majors Stage Rally but Strong Levels Still Ahead

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The cryptocurrency segment has recovered from a broad correction today in early trading, with the most valuable coins all turning into green during the session, despite the bearish start to the overnight session. With bottom-to-top gains of up to 15%, the rally helped in easing the worries of bulls, especially in the case of the relatively weaker coins.

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Bitcoin and most of the largest altcoins remained stable during the selloff, and BTC recaptured the $10,000 level quickly after trading as low as $9600 overnight. The initial rally topped out near $10,400, and the coin is trading back near the $10,000 level, as the bullish momentum faded away somewhat.

BTC/USD, 4-Hour Chart Analysis

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That said, we expect the uptrend to continue even if the correction could still carry Bitcoin lower. Further strong support is found between $9000 and $9200, while targets are ahead at $11,300, $13,000, and $14,250.

ETH/USD, 4-Hour Chart Analysis

Ethereum showed strength during the bounce again after yesterday, together with the early leaders of the rally, and although the coin dipped below the $845 level in the second half of the session, the signs remain positive for bulls. Support levels are now found at $780, $740, $625 and $575, while resistance is ahead near $910 and $1000.

(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

Pre-Market: Stocks Refuse to Fall Even as China Takes Over Key Insurer

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Although it should have been a very quiet week in China, thanks to the New Year celebrations, the recent surge in volatility and the plunge in equities didn’t pass without consequences in the key market. Just shortly after effectively shutting down the Chinese version of the Volatility Index (VIX) (presumably to calm the markets…), one of the main actors of the monstrous financial web, Anbang, of the country had to be taken over to avoid a systemic event and stop the “creative” financial engineering that involved criminal activity (the shadow of 2008).

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China will likely need many more duck-tapes like this one if it wants to stop the largest credit bubble in human history to collapse, but for now, the solution could work. Equity futures edged higher since yesterday’s volatile close, and as the major US indices are holding up well, not far off last Friday’s highs, our bearish short-term view might have to be revised.

Nasdaq 100 Futures, 4-Hour Chart Analysis

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As we discussed before, the long-term uptrend is intact, and we expect at least a re-test of the highs even if we are in a large-scale top formation, but we thought that the technical damage caused by the crash three weeks ago would require more healing.

We are not turning bullish just yet, but today’s session could finally decide if we the BTFD-crowd is strong enough to turn the tide after the choppy drift lower this week. We are still focusing on the Nasdaq, as the broader market seems to be following the lead of the tech benchmark, and a move 6850 (in the Nasdaq 100 futures, and still the 2735 level in the S&P) would be a very positive sign for bulls.

DAX Index, 4-Hour Chart Analysis

The German DAX index is also showing some tentative short-term relative strength although it remains almost 10% below its all-time high, and it remains a strong negative divergence to be monitored.

Forex Markets Quiet

EUR/USD, 4-Hour Chart Analysis

The main pairs are trading in a choppy narrow range today after the strong move in the Yen and the drop in the USD yesterday. US Treasury Yields are edging lower today, helping the calm in equities and currencies, but on a bearish note, commodity currencies failed to rebound so far, and they were providing good signals since the crash. Day-traders should note that the Canadian Dollar will likely be very active again, with the Canadian CPI report coming out pre-market.

To sum the outlook up, we are still leaning on the risk-off side here regarding the short-term outlook, but we wouldn’t bet the farm on that, as there are mixed signals before the weekend.

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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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