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Technical Analysis: Coins Suffer Blow on Chaotic Session, Ethereum and NEO Hold Their Ground

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It has been a controversial session in the cryptocurrency segment as the day seemed like the replay of the pre-Christmas mini-crash, and most of the majors traded sharply lower compared to Sunday’s prices. While the news regarding a hardline approach towards crypto-trading was what started the decline, and the picture turned from bad to worse later on.

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Apparently, a significant change in the pricing methodology of the widely used Coinmarketcap website played an important role, as it triggered a wave of panic-selling after signaling a sudden move lower in several of the largest coins. (*our analysis haven’t been relying on price data from the website, but the whole market was affected by the reaction)

That said, the initial sell-off ended in a bounce, but most of the majors didn’t recover the losses, and the technical setup remains in line with the continuation of the broad correction. Bitcoin spiked below the $14,000 level during the move, and it recovered above $15,000 later on, but the digital currency remains under pressure. Key support is still found near $13,000, with further levels at $11,300, $10,000, $9000, and stronger levels at $8200 and $7700.

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BTC/USD, 4-Hour Chart Analysis

Ethereum, on the other hand, continues to show relative strength, as it recovered most of its losses and it is trading near its all-time highs that were set in the morning. The coin is still within a short-term uptrend, but the overbought momentum readings point to a coming pull-back soon, with the long-term picture also being stretched. That said, short-term gains still possible, but investors shouldn’t enter new positions here. Key support levels below $1000 are found at $850, $740, $625, and near $575.

ETH/USD, 4-Hour Chart Analysis

Litecoin

LTC/USD, Daily Chart Analysis

Litecoin is among the weaker majors following the turmoil, as it is still trading in the key zone between the $250 and $260 levels. As the long-term setup remains bearish, we expect further downside in the coming period, with a likely test of the lows from the mini-crash near $180. Key support levels are found at $125 and $100, with a weaker zone around $170, and primary resistance is near the current price range.

Dash

DASH/USD, 4-Hour Chart Analysis

Dash is also trading well below the weekend levels, near $1100, and it remains far off the record highs of mid-December. Given the still negative outlook after the run-up to the all-time high, the correction will likely continue, and the currency is expected to drop below the previous low just above $850. The primary support zone is still found at $1000 and further important levels are still are near $600, at $500, $470, and near $410.

Ripple

XRP/USD, 4-Hour Chart Analysis

Ripple has been in the epicenter of today’s market anomaly, as the coin traded with the largest premium on the South Korean exchanges. The currency briefly dropped below the $2 level thanks to the domino-effect of the sell-off and although it recovered back to the levels before the flash crash, it remains well shy of the recent highs, as the correction is still ongoing. The dominant trendline of the previous advance is now broken, and support levels are still found at $2.10, and  $1.50, and with further levels at $1.8, $1.25, $0.85, $0.68, and $0.42.

Ethereum Classic

ETC/USD, 4-Hour Chart Analysis

Ethereum Classic is still trading near the key $34 level, as the coin is among the stronger majors since the early sell-off.  That said, we expect another leg lower in this cycle, with a likely dip below the previous all-time high at $23. We still Strong support levels are still found at $30, $23, and $28, while resistance is at $34 and $40.

Monero

XMR/USD, 4-Hour Chart Analysis

Monero is back above $400 after the brief dip, and the coin is even stronger relatively speaking than Ethereum, trading on an almost 3-week high after the bounce. The coin is still likely to continue the broad correction, as the long-term picture remains overbought, but the short-term strength could signal another test of the December high. That said, investors should remain patient and wait for the overbought readings to get cleared before entering new positions. Support levels are still found at $300,  $240, $200, $180, and $150.

NEO

NEO/USDT, 4-Hour Chart Analysis

NEO fell almost to the dominant rising trendline today, but the coin recovered well, and it is testing the all-time highs yet again. While the long-term picture is now not favorable for new investment positions, traders could still play the short-term trend with smaller positions, with support now found at $100, $80, $64, and $56.

IOTA

IOTA/USD, 4-Hour Chart Analysis

IOTA also spiked lower together with the broader market, and although the coin bounced back heavily, it remains stuck in a broader correction pattern. While the continues to trade ahead of the rest of majors in the cycle, investors should still stay away from opening new positions, as volatility is expected to remain high. Strong support levels are still found at $3 and $1.5, with a Fibonacci support between those 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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4.6 stars on average, based on 257 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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  1. MinerMatt17

    January 9, 2018 at 2:20 pm

    Every single coin has a long term unfavorable… why? Why wouldn’t it perhaps have a short or mid term correction, but long term, the crypto space is growing at 50 billion a week. Nothing you have shown suggests this will stop, and if it doesn’t stop, long term, the majors will grow.

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Analysis

Long-Term Cryptocurrency Analysis: Correction Deepens but Leaders Remain Stable

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As the major cryptocurrencies got hit hard this week, losing around 20% on average, the long-term picture in the segment got close to an entry point for investors. The overbought readings that developed during the late-April rally are now cleared and although the short-term trends are still clearly negative, we still expect the coins to resume the recovery. With that in mind, long-term investors could start accumulating the relatively stronger coins.

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On a negative note, even the leaders violated key support levels during this week’s selloff, but the secular long-term trends are not yet in danger. The prior leaders Ethereum, EOS, and IOTA are still in the center of attention, as we expect them to form a bottom soon. Bitcoin and the other relatively weak coins, like Litecoin, Monero, Dash, and NEO are still lagging the form a technical perspective, but they are also well above the support levels that would indicate an end of the secular bull market.

BTC/USD, Daily Chart Analysis

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Bitcoin is below the key $7650-$7800 support level and it remains the biggest drag on the market, despite a brief period of relative strength this week. The upper boundary of the base pattern that we identified in April is found near $6150, with a weaker zone around $6500, and with the short-term trend clearly being negative, the latter might be tested before a bottom forms. Further resistance is ahead at $8400, $8700, and between $9000 and $9200, and traders and investors still shouldn’t enter positions here.

ETH/USD, Daily Chart Analysis

Ethereum is testing the $555-$575 support zone after violating the $625-$645 range, with the declining short-term pattern being intact. A bottom near the $500 would still keep the recovery intact, but the correction low might already be in, and investors could already add to their holdings here. Further resistance zones are ahead between $735 and $780 and near $845, while support is found near $450.

(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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4.6 stars on average, based on 257 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

Pre-Market: Oil Plunges Below $70 as Markets Mixed Before Long Weekend

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Financial markets are relatively calm today, despite the hectic week that was highlighted by the Turkish currency crisis, wild swings in bonds, and a step back in US-North Korean relations. Stock markets turned lower globally, with US equities outperforming the rest of the world, essentially drifting sideways all week long, thanks to the slight correction in the Dollar’s rally, and the dip in Treasury yields that was triggered by the dovish Fed meeting minutes.

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S&P 500 Futures, 4-Hour Chart Analysis

Today, the durable goods report came out before the opening bell and although the headline number was a tad worse than expected the more important core figure beat the consensus estimate, helping the slightly dampening economic outlook, even as yields continue to fall, especially with regards to long-dated Treasuries.

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EUR/USD, 4-Hour Chart Analysis

Although emerging market currencies are way less volatile today than recently, despite the rebound in the Dollar, equities shed their early gains and are now slightly in the red. The all-important EUR/USD pair hitting yet another 6-month low near 1.1650, and the test of the key long-term 1.1450-1.15 zone looks more and more likely in the coming weeks, even as the pair is a bit oversold.

Energy Markets in Turmoil as OPEC Signals Production Increase Again

WTI Crude Oil, 4-Hour Chart Analysis

It seems that the crude oil market is in for a strategic switch yet again, as the OPEC, together with Russia made it clear today that the price of the Black Gold finally reached a desirable level. The cartel will be targeting a higher level of output later on this year in order to keep the US shale players under pressure by capping the advance in the key commodity’s market.

The WTI contract reached a 4-year high at $72 per barrel recently and the Brent contract which is more exposed to Middle East woes rose as high as $80 per barrel after trading below the $30 level just two years ago. The last phase of the advance extended above the level where a large portion of the shale plays turn profitable, and as global growth worries also surfaced, the commodity entered a selloff this week.

Gold Futures, 4-Hour Chart Analysis

Safe haven assets continue to be bid despite the relatively calm environment, and gold hit a two-week high today despite the bounce in the Greenback as buyers are back after the wash-out plunge below $1300. With the long-term setup and fundamentals still being favorable for the precious metal, the short-term downtrend line is in danger here.

As US markets will be closed on Monday, which usually favors an active session, volatility might remain high throughout the day.

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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 257 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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Recommendations

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.

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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4.8 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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