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Technical Analysis: Coins Stabilize amid Positive Divergences

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A hectic and bearish overnight session was followed by a strong bounce in the cryptocurrency segment, as the stock market, which experienced the largest sell-off in years, also rebounded. Bitcoin recovered above $7500 after hitting a low near $6000, and while most of the majors followed the largest coin, several currencies showed relative strength again.

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Despite the strong correlation between the coins, Litecoin, Dash, IOTA, Ripple, and Stellar are all trading above last week’s lows and that leadership points to a weakening of the selling pressure, despite the new lows in most of the coins.

Bitcoin, on the other hand, is still stuck the previous low near $7650 following the widely watched SEC and CFTC hearings, as the long-term picture in the coin is now clearly oversold. While the downtrend is still intact the cycle low is likely in or very close, and investors could continue to accumulate the coin near the major support levels, although traders should still wait with opening new positions. Above $7650, primary resistance is between $9000 and $9200, while support is found between $6750 and $7000, and at $6150 and $5750.

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BTC/USD, 4-Hour Chart Analysis

Ripple is among the relative stronger coins, as it only fell to a marginal new low during yesterday’s sell-off and now it is back above the $0.68 level following the bounce. The coin is oversold from a long-term perspective and we expect a durable rally to start soon, so investors and aggressive traders could enter positions near the main support levels. Resistance levels ahead at $0.85, $1, $1.25, and $1.5, while below $0.68, significant support is found at $0.42.

XRP/USDT, 4-Hour Chart Analysis

Ethereum

ETH/USD, 4-Hour Chart Analysis

Ethereum is trading right at the previous low near $740 after testing the $575 level yesterday. The coin is now getting oversold from a long-term perspective, but we expect the correction to continue, and a re-test of the lows is likely. That said, investors could be looking for early entry points near the main support levels on the short-term sell-offs, while traders should still wait before entering new positions. Support levels are still found at $625 and $575, while resistance above $740 is ahead near $850.

Litecoin

LTC/USD, Daily Chart Analysis

Litecoin has been the strongest major for several days now, and the coin maintained its relative strength during yesterday’s selloff and during today’s bounce as well. The digital currency recaptured the key $125 level again, and it’s likely headed above the next major level at $140. Long-term investors and aggressive traders could still enter new positions on the short-term sell-offs, as the long-term picture is still oversold, with further resistance ahead between $170 and $180.

Dash

DASH/USD, 4-Hour Chart Analysis

Dash is trading near the $500 level after the strong rebound today, and the coin only briefly fell below the prior low, and the encouraging recovery means that a bottoming process is likely underway. With the long-term picture being oversold investors could still add to their holdings. Resistance is head between $600 and $650 and around the $825 level, while support is found at $410 and $360.

Ethereum Classic

ETC/USD, 4-Hour Chart Analysis

Ethereum Classic is only a tad stronger than Bitcoin from a technical perspective, trading right at the $18 level after hitting a new low near $14 during yesterday’s plunge. While the downtrend is still intact, the long-term picture is oversold, and we expect a durable rally soon, with further strong support at $16 and resistance ahead at $23.

Monero

XMR/USD, 4-Hour Chart Analysis

Monero bounced back above the $200 level after testing the previous key break-out level at $150, and the coin is now oversold from a long-term perspective. The currency likely hit a cycle low yesterday, and investors should add to their holdings near the main support levels, while traders should wait for a trend change before entering new positions. Resistance levels are ahead at $240, $280, and $300, while support below $175 is found at $150.

NEO

NEO/USDT, 4-Hour Chart Analysis

NEO turned higher right off the $64 support yesterday and it’s now trading back at the $100 level, with the long-term picture being neutral after the correction. We still expect the correction to continue, although the final low might be in, and long-term investors could already add to their positions near the main support levels. Resistance levels are ahead at $125 and just above $150, while support is at $80 and $64.

IOTA

IOTA/USD, 4-Hour Chart Analysis

IOTA recovered quickly above the key $1.50 level, and it’s among the relatively strong coins yet again. The long-term picture is deeply oversold and a durable rally could be imminent. While the downtrend is intact, investors could still accumulate the coin, with resistance ahead just below $2, near $2.2, and at $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

Pre-Market: Bulls Try to Fight Back after Ugly Overnight Session

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Following the steep late-day downturn on Wednesday, which followed the not-to-hawkish FED meeting minutes, Asian markets and US equity futures continued lower with a vengeance. The very active overnight trading is another sign of the regime change in traditional financial markets that we have been monitoring for the last two weeks, ever since the “Black Monday of 2018”.

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Dow Futures, 4-Hour Chart Analysis

EUR/USD Changing Behavior

The European session brought about an oversold bounce that stabilized markets from stocks to currencies. The EUR/USD pair that has started acting “normally” considering its relationship with US Treasury yields lately, is headed south once again, trading only 0.5% above its recent correction lows after clearly breaking below the rising trendline.

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EUR/USD, 4-Hour Chart Analysis

The bull-trap that we identified a few days ago was the start of the current leg lower, and if the regime change will be persistent, the most traded forex pair could be back to the role of the “risk-on/risk-off” indicator that has been the privilege of commodity currencies in the last couple of weeks.

USD/JPY, 4-Hour Chart Analysis

The Japanese Yen is showing notable strength after its overbought dip, and the primary safe-haven currency could be in for more gains, should the risk-selloff continue. The Yen also gained ground on the common European currency, following the dovish ECB meeting accounts and the misses in the German IFO business climate indicator and the British GDP, which all question the European growth-monetary tightening narrative.

Canadian Dollar in for a Wild Ride

USD/CAD, 4-Hour Chart Analysis

With the Canadian retail sales report and the US crude oil inventory data coming out soon, forex traders should expect sizeable moves in the recently weak currency, while the USD should also be very active during the US stock market session.

All eyes are on Treasury yields again, with the slight correction today helping the bounce in stocks and other risk assets. The Nasdaq could be the motor of a stronger rally on Wall Street, but we wouldn’t bet the house on that, as the short-term technical setup remains bearish, and a re-test of the correction lows is still the most likely scenario for the coming weeks.

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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4.7 stars on average, based on 107 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

Crypto Update: Bitcoin Tests $10,000 amid Correction

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The altcoin-triggered correction continued in the segment overnight amid the renewed sell-off in global stocks, with a slight bounce in Asian trading and a subsequent dip after the European open. The major coins are all down by more than 5% since yesterday, but for now, the momentum of the move is not worrying, and most importantly the leadership of the rally is holding up relatively well.

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Bitcoin bounced off the key $10,000 level, the $200 support zone held in Litecoin, Monero is still in its consolidation pattern above $280, and only Dash showed deterioration since yesterday, but the long-term picture remains encouraging even in Dash’s case.

LTC/USD, 4-Hour Chart Analysis

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The above-mentioned levels in the technically strongest coins are not even the last line of defense for bulls, as the preceding strong rally left several key levels behind which could serve as the basis of the next leg higher.

Also, we expect the currently negatively diverging coins, led by Ethereum and Ripple, to start showing strength as the short-term momentum reaches oversold territory, and good entry points might be close both for traders and long-term investors.

BTC/USD, 4-Hour Chart Analysis

BTC touched the $10,000 support level, but for now, the technically more important $9000-$9200 zone is not in danger, and the short-term momentum indicators are already neutral thanks to the correction.

That said, more downside is likely in the coming days, but investors and traders should be looking for reversals to enter new positions, as we expect the uptrend to continue, with targets ahead at $11,300, $13,000 and $14,250.

Ethereum Provides a Glimmer of Hope

ETH/USD, 4-Hour Chart Analysis

Although bears are still in control regarding the short-term picture in the second largest coin, this morning ETH didn’t hit a significant new swing low, and that could be the first sign of relative strength, with the $845 support not far above the current price level, and the MACD indicator is already near oversold territory.

Despite the slightly positive sign, short-term traders should remain defensive concerning the weaker coins, while long-term investors should still accumulate the currencies on the dips.

Stay tuned for our detailed technical analysis later on today.

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 107 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

Daily Analysis: The Usual Post-Fed Pump and Dump…

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Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2700 -0.51%
DAX 12,470 -0.14%
WTI Crude Oil 61.28 -0.83%
GOLD 1325.00 -0.43%
Bitcoin 10480 -8.71%
EUR/USD 1.2336 0.61%

The script that we laid out for the FOMC meeting minutes has worked almost perfectly, with the major US indices completing a roundtrip that triggered most of the “weak” stop-losses, before a powerful move lower into the close.

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The predictable late-session intraday volatility aside, markets were quiet and choppy for most of the day, and the Dow, the Nasdaq, and the S&P 500, all closed just slightly lower, while covering 2% during the session, with the tech-index’s relative strength evaporating in late trading.

S&P 500 Futures, 4-Hour Chart Analysis

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Forex Markets and Commodities

What drove the decline in equities was the renewed rise in US Treasury Yields, and to answer the most important question of the day; yes, in fact, the yield-Dollar correlation of the past few months broke down, and today the Greenback rallied together with bond yields.

10-Year Treasury Yield, 4-Hour Chart Analysis

While that is how it should work according to common sense and economic theory, the recent inverse correlation helped a lot of trends in reaching extremes, and those extremes now might reverse.

The outperformance of US markets, the Euro strength, and the weakness in European equities were among those trends, and it’s interesting to see that the bullish technical setup in the EUR/USD is crumbling and the US indices are in the deepest correction since the Brexit.

EUR/USD, 4-Hour Chart Analysis

While there is no assurance that these changes are permanent, for now, we remain short-term bearish on US equities, and continue to look for upside in the battered Dollar.

At the end of the day, the Dollar finished higher against all of the major fiat currencies, although the Yen showed notable relative strength amid the stock rampage near the closing bell. Interestingly the USD vs. risk-on pairs trend continues to lead the other asset classes, as we have noted several times, and that could be something to monitor in the coming days and weeks.

Commodities had a mixed but ultimately bearish session, with oil and gold suffering both suffering losses amid the risk-off shift, although crude already traded lower before the FOMC release, while gold traded in close correlation with the Euro throughout the day.

Cryptocurrencies

The segment had a decisively bearish session, with only a few coins showing considerable relative strength amid the sell-off. Bitcoin, Litecoin, Dash, and Monero are still the leaders of this cycle, while Ethereum is the most notable laggard, pulling most altcoins lower as well.

ETH/USD, 4-Hour Chart Analysis

On a positive note, the majors held up relatively well amid the stock turmoil, but the next few days will be crucial, as important support levels could be tested. That said, most of the coins are well clear of the crash lows, and there is more than enough support below that, combined with the still present bullish signs should keep investors confident that a new uptrend is underway and new rally highs are ahead.

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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11 votes, average: 4.73 out of 511 votes, average: 4.73 out of 511 votes, average: 4.73 out of 511 votes, average: 4.73 out of 511 votes, average: 4.73 out of 5 (11 votes, average: 4.73 out of 5)
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4.7 stars on average, based on 107 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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