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Technical Analysis: Consolidation Continues as Weekend Rally Fails but Support Levels Hold

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The choppy, hard-to-trade period that we expected after the crash two weeks ago is still ongoing, as most of the major coins are trading sideways inside the range of the initial rally off the January 17th low. That said, the broader declining trend in the segment is clearly intact, and the continuation of the correction is still the most likely outcome, even as the long-term charts are looking more and more constructive.

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Bitcoin started the day in a clearly negative fashion, while altcoins also got sold across the board, and the most valuable coin breached the $crucial $11,300 level in the process. Although the decline stopped, later on, the coin is trading near its intraday lows, and the weak rising trendline of the bounce is also close to the current price levels.

We still expect a move towards the crash lows with a possible dip below $9000 before the end of the cycle, but investors could still add to their long-term holdings near the main support zones. Above $11,300 strong resistance is found at $13,000 while support below $9000 is at $8200 and $7650.

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BTC/USD, 4-Hour Chart Analysis

As correlations are still elevated in the sector, most of the altcoins are also in the red today, but Ethereum is holding up above the $1175 level, being the strongest major from a short-term perspective together with NEO.

Primary support is found at $1000, and with the long-term picture still being overbought, we expect a move below that and the prior correction lows in the coming weeks, so traders and investors should wait for better opportunities before entering ETH’s market. Below the $740-$750 zone, further support levels and found at $625, and $575.

ETH/USD, 4-Hour Chart Analysis

Litecoin

LTC/USD, Daily Chart Analysis

Litecoin is still among the relatively weaker majors, and the coin is now back near the key zone between the $170 and $180 levels after staying below the strong $200 resistance during the weekend rally. The coin is stuck in a dominant downtrend, while momentum is now neutral on both the 4-hour and daily time-frames, but we still expect a drop below the crash lows with a possible test of the $125 and $100 levels.

Dash

DASH/USD, 4-Hour Chart Analysis

Dash is showing weakness again, as the coin remained below the key support zone around the $8225 price level, despite the broad rally in the segment during the weekend, while it joined the decline today in early trading. As the declining short-term trend in the coin is still clearly intact, we expect the correction to continue with at least a test of the prior lows, with further strong support found at $500.

Ripple

XRP/USD, 4-Hour Chart Analysis

Ripple drifted out from the steep declining trend but the rally attempt failed in the coin yesterday, and the coin is now back near the $1.25 support, despite the brief spike higher. We still expect a dip towards the $1 level soon, with a possible test of the crash low near $0.85 before the end of the current cycle. Strong resistance is ahead at $1.50, while further support is at $0.68, with a short-term zone just above $1.10.

Ethereum Classic

ETC/USD, 4-Hour Chart Analysis

Ethereum Classic has been relatively strong throughout the weekend but the rally in the coin stalled near the declining trendline, and today’s sell-off carried it back to the vicinity of the key $30 level. The currency is now neutral form a long-term perspective, and although we expect the correction to continue, investors could add to their long-term holdings near the $25 and $23 levels on the short-term sell-offs.

Monero

XMR/USD, 4-Hour Chart Analysis

Monero could reach over the $330 level, as it continued to show relative weakness compared to the other majors, but it remains above $300 today. The technical setup is negative from both short- and long-term perspectives, and a drop to $240 and possibly $200 is still likely.

NEO

NEO/USDT, 4-Hour Chart Analysis

NEO has clearly been the leader of the weekend rally, although the coin remained below the prior rising trend channel. The long-term picture is still overbought, and the coin will likely continue its correction soon, and a dip below $100 is expected before the end of the cycle. Further support levels are still found at $80, $64, and $56, while the coin is trading right in a strong resistance zone now.

IOTA

IOTA/USD, 4-Hour Chart Analysis

IOTA is finally showing some relative strength today after being under heavy selling pressure for almost a week. The long-term momentum is headed towards oversold readings, and although we still expect a move below the crash lows, a durable bottom might be close in time. Strong support levels are found at $2.35, just below $2, and at $1.5, and long-term investors could still add to their holdings near those zones.

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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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.

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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