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Technical Analysis: Coins Recover from Sell-Off as Bulls Remain in Control

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Following yesterday’s brief but deep correction, the major cryptocurrencies seem to be back on the bullish track, as Bitcoin is leading the segment yet again. With the most valuable coin’s dominant currently near 56%, trading in BTC dwarfs the other crypto markets. That said, most of the majors recovered well after yesterday’s rout, while Bitcoin itself reached as high as $5730 today in early trading, only a few percents off its all-time high.

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The short-term setup is encouraging for bulls, as the coin cleared the overbought short-term momentum readings while remaining inside the rising trend. A rally towards the long-term target at $6000 is still likely, despite the stretched long-term picture. Support levels are found near $5400, around the $5000 level and at $4650.

BTC/USD, 4-Hour Chart Analysis

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Ripple settled down somewhat in early trading but it turned volatile again later on, and the coin is still underperforming the broader market, while Ethereum bounced back well above the $300 level, remaining well below its recent highs. The rest of the market is modestly higher today, although NEO and IOTA are slightly lower still showing a negative correlation with the other majors. Let’s see the short-term charts after the short volatile period.

Ethereum

ETH/USD, 4-Hour Chart Analysis

Ethereum dipped below the $300 level amid the broad move lower and it got close to the key $285 support yet again before the bounce. The coin is now getting short-term oversold, with the long-term uptrend being in no danger. The long-term MACD is still neutral, and a rally towards $380 is likely in the coming weeks, with primary resistance ahead at $330.

Litecoin

LTC/USD, Daily Chart Analysis

Litecoin is back in neutral territory regarding short-term momentum after the correction and the correction looks set for a re-test of the $64 level and a likely break-out to new rally highs in the coming days. The long-term setup is still positive, and we expect the coin to resume its long-term uptrend. Support is still found near the $56 level, around $51, and below the at $44.

Dash

DASH/USD, 4-Hour Chart Analysis

Dash continues to be one of the least volatile majors as it trades firmly inside the long-term consolidation pattern, hovering around the $300 price level. With the strong long-term uptrend still being intact, we expect the coin to break-out from the formation in the coming weeks, but until a bullish confirmation, short-term traders should still wait with opening new positions. Resistance levels are ahead near $330 and $360 with the all-time high just above $400 and strong support at $265.

Ripple

XRP/USD, 4-Hour Chart Analysis

XRP is still one of the most active majors after finding support near the $0.20 level, following the freefall that started off the $0.30 resistance. The short-term MACD is signaling a recovery for the coin, but it needs to rally above the key zone around $0.225 level to return to a bullish short-term signal. The long-term picture is still clearly positive, but strong resistance is still ahead near $0.24, and $0.26, and especially between $0.30 and $0.32.

Ethereum Classic

ETC/USD, 4-Hour Chart Analysis

Ethereum Classic holding up above the $11 support level, but it’s still the weakest major, and it fails to show the relative strength that a short-term buy signal would require. For long-term investors, the current levels are still attractive, but the coin still faces resistance at $12.50, with further supply around the $13.50 level, and support at $9.

Monero

XMR/USD, 4-Hour Chart Analysis

Monero is trading in a range between the $100 and $83 levels, even after exiting the lengthy declining correction pattern last week. While the coin remains bullish on both time-frames, more sideways price action is possible before a durable move higher. The long-term MACD is neutral, and the currency is confidently above the previous long-term top, pointing to strong underlying strength. Support is still found near the $80 level and around $68, while further resistance is ahead at $125.

NEO

NEO/USDT, 4-Hour Chart Analysis

NEO is drifting lower after yesterday’s surge above the key $30 level, still trading inside the broad range that developed after the post-crash recovery. The long-term picture is encouraging, but more time might be needed before the next test of the $40 level, with strong support below the current price at $27 and $25.

IOTA

IOTA/USD, 4-Hour Chart Analysis

IOTA is still stuck below the $0.45 level, as the short-term selling pressure remains dominant, and before a durable recovery above $0.48, short-term traders are still advised to wait with opening new positions, although investors could add to their positions here. Long-term support is found at $0.35, while resistance is ahead at $0.56 and $0.64.

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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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Trade Recommendation: Intact Financial

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Technical Overview

  • Since double-bottoming in 2008 and 2009 at $26 (violet horizontal trendline in Figure 1), Intact Financial (IFC.TO) has enjoyed a four-fold increase. During the 2013, 2016 and 2018 corrections, the stock found support at a long-term trendline (support – green trendline; retests – green arrows).

Figure 1. IFC.TO Weekly Chart

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  • Zooming in, after topping in November’17, IFC completed a H&S pattern (tops – yellow ellipses, neckline – yellow trendline in Figure 2).
  • In January, March, April, and May, all up-moves halted at a well-defined short-term resistance (red trendline). Yesterday (May 25), the stock managed to break and close above the resistance.
  • Today, the stock closed in positive territory, whereas the Financial sector (TTFS.TO) declined by over 0.5%.
  • The $95 level had served as support on multiple occasions in 2018 (purple horizontal trendline and arrows).

Figure 2. IFC.TO Daily Chart

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Implications

  • The bounce off of the long-term support and the break above the short-term resistance are considered constructive.
  • The stock is expected to find support in the $95 – $96.50 range during pullbacks (i.e. at the red and purple trendlines).
  • The downward target from the H&S pattern was nearly met during the May decline (target – $92.25 – white vertical trendline in Figure 2, May 9 low – $92.65 – last purple arrow).

Outlook

  • Short-term bullish as long as the stock remains above $95
  • Long-term bullish as long as the stock remains above its long-term support (green trendline in Figure 1).

 Trade Recommendation

  • Buy the stock at current levels ($97.50 at EOD on May 24).
  • Target: Half at $101 (the January low which served as resistance in March – second red arrow). Other half at $108 (origin of the late 2017 decline).
  • Stop: Half upon a close below $95. Other half upon a close below the long-term support (currently at approximately $93.50).

Disclosure: No position yet but may initiate at any time. Will likely recommend the stock to my clients as a potential play within the financial sector.

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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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4.8 stars on average, based on 12 rated postsPublished author of technical research. In his work on price “gaps”, published in the 2018 International Federation of Technical Analysts’ Annual Journal, he developed a new technical tool for analyzing and trading the “gap” phenomenon – the “K-Divergence” (http://ifta.org/public/files/journal/d_ifta_journal_18). Besides obtaining a Master in Financial Technical Analysis, he has completed a BBA and an MBA from the Schulich School of Business in Toronto and has completed all exams for the CFA, CMT and CFTe designations. Currently, providing research to investment management and financial advisory firms. http://www.linkedin.com/in/konstantindimov




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Stocks Suffer Hit as Trump Cancels Summit, Turkey Hikes Rate

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After yesterday’s late-day bounce, stocks got close to their two-week lows yet again today in early trading, as risk assets got sold across the board after Donald Trump canceled the much-awaited summit with North Korea’s Kim Dong Un. Safe haven assets spiked higher on the news, with gold getting back above $1300, and the Japanese Yen also gaining significant ground on its peers.

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NASDAQ 100 Futures, 4-Hour Chart Analysis

US equities are still not in a terrible short-term position, as the key support levels are holding up, and the trading range is intact, but most European indices gave back all of this month’ s gains, and the cracks on the synchronized global growth narrative are clear.

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Emerging markets are still under pressure, even as the Turkish central bank finally did what we have been expecting, raising its benchmark rate by 3% after an emergency meeting yesterday, but for now, it seems that the this might have been too little too late.

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

The Lira recovered more than 8% off its intraday lows, but today the currency has been plunging again, and it is still dangerously close to its all-time low, and a run on the Lira is still not out of the question. Mr. Erdogan told the Turkish citizens not to exchange their Lira to foreign currency, but the President might need more than “verbal capital controls” to stop the collapse.

Dovish Fed Minutes Cause Slight Dollar Pullback

Dollar Index, Daily Chart Analysis

The US Dollar is lower compared to the Euro, the Pound, and the Yen today, even as the Greenback gained ground against the Canadian Dollar. While the Yen’s advance is due to the risk-off sentiment, the Dollar’s broad pullback started after the release of the FOMC meeting minutes yesterday, as the central bank expressed that it would allow inflation to overshoot the 2% target temporarily.

US 2-Year Yield, Daily Chart Analysis

This caused a drop in Treasury yields across the yield curve, as investors removed their rate hike bets. The 2-year yield briefly hit a level not seen since mid-April, while the 10-year yield got back to the key 3% level. The European Central Bank also released its minutes today, and the bank also cited downside economic risk, capping the dip in the Dollar and helping the pullback in yields.

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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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4.6 stars on average, based on 256 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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Crypto Update: Coins Spike Lower amid Regulatory Woes, Technical Breakdown

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Following a period of directionless range trading in the segment, cryptocurrencies got hit hard yesterday, on a very busy day in financial markets. The largest coins and small caps are down by 20% in two days on average, with the total value of the market declining by around $70 billion. The Indian tax plan, and the continued rise of the Dollar were among the triggers of the losses, and the move accelerated when key initial support levels were broken in the majors. The current selloff could be the last phase of the correction of the April run-up, as sentiment volume patterns and sentiment point to an approaching durable bottom.

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While the market managed to bounce in late trading, which extended to the Asian session today, now the coins are generally trading on new short-term lows after another wave of selling hit them. Correlations are very high, with only a few coins, Ethereum, Ripple, EOS, Tron, and Stellar showing some signs of resilience amid the rout.

BTC/USD, 4-Hour Chart Analysis

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Bitcoin plunged lower together with the broader market despite showing some relative strength in the beginning of the week, and it violated the key support zone between $7650 and $7800 in the process, Now, BTC is trading just above the $7300 support, with the short-term momentum indicators in oversold territory.

The coin is still not a buy from a short-term perspective, and traders shouldn’t enter new positions yet. Further resistance is ahead in the key $8400-$8600 zone and between $9000 and $9200, while support is found at $7000 and $6750.

ETH/USD, 4-Hour Chart Analysis

Ethereum continues to be in a better technical position than BTC and the coin is trading in the strong support zone between $555 and $575 after falling below the $625-$645 zone. We still expect the uptrend to resume, and as the daily momentum indicators are also headed towards oversold territory, a long-term buy signal is close. Further support is found near $500 while above $625 the next main zone is between $735 and $780.

Ripple Holds $0.575, as Altcoins Trying to Find Footing

XRP/USD, 4-Hour Chart Analysis

XRP is showing the most short-term promise among the top coins, holding up above yesterday’s low, while showing a positive divergence with regards to the 4-Hour MACD indicator. The recently rallying Tron is also relatively strong today, although it fell back into its previous trading range, while the other leaders of the April surge, IOTA and EOS are also stuck in declining patterns.

There are still no cons on a short-term buy signal and Bitcoin Cash, Monero, Litecoin, NEO, and Dash are among the laggards, but for now, the long-term picture remains promising for the whole segment.

Stay tuned for our long-term technical analysis coming out later on today.

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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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4.6 stars on average, based on 256 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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