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Technical Analysis: Cryptocurrencies Consolidate after Powerful Rally

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The advance that catapulted the major coins off the recent lows by 30-50% stalled out today in the second half of the session, as the major coins settled down somewhat following the highly volatile period. As stock markets had a choppy and ultimately flat day after the crash and the subsequent bounce, and that helped the crypto segment in reducing volatility.

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That said, the downtrend that started in Bitcoin at the end of the last year is still intact, although a major cycle low is likely already in. Correlations remained elevated as a sign of the still bearish sentiment, but on a positive note, the previously strong coins mostly held on to their gains, while staying well clear of the previous lows.

BTC hit an intraday high at $8650 before entering the consolidation phase, and the largest digital currency is now back to neutral from a short-term momentum perspective. The $7650 is still in the center of attention, and with the long-term picture being deeply oversold, a durable rally is likely. Primary resistance is ahead between $9000 and $9200, with further levels at $10,000 and $11,300, while support is found at $7650, between $6750 and $7000, and at $6150 and $5750.

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BTC/USD, 4-Hour Chart Analysis

Ethereum also recovered quickly off its lows, and it’s holding up strongly above the prior low near $740. With the long-term now being oversold, albeit not as much as in the case of the majority of the coins, investors could 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.

ETH/USD, 4-Hour Chart Analysis

Litecoin

LTC/USD, Daily Chart Analysis

Litecoin is hovering near the $150 level after the lofty gains of the last couple of days, and the coin got very close to the key $170-$180 zone before today’s consolidation, being among the strongest majors. While the bottoming process could be lengthy and further volatile periods are possible, investors could still add to their holdings during the short-term sell-offs, while aggressive traders could also be looking for entry points, despite the still intact downtrend.

Dash

DASH/USD, 4-Hour Chart Analysis

Dash is still one of the strongest major altcoins from a short-term perspective, although it trades in a clear downtrend despite the healthy bounce. That said we expect the current correction low to hold up in the coming period, with a durable rally in the coin being likely. Resistance levels are ahead between $600 and $650 and around the $825 level, while support is found at $500, $410, and $360.

Ripple

XRP/USD, 4-Hour Chart Analysis

The rally in Ripple halted near the $0.85 resistance, as the broader market entered the consolidation phase. XRP has been among the leaders of the rally so far and we expect the coin to hold up above the prior low, as the cycle likely ended. Resistance above 0.85 is ahead at $1, $1.25, and $1.5, while below support is at $0.68 and $0.56.

Ethereum Classic

ETC/USD, 4-Hour Chart Analysis

Ethereum Classic is trading just below the $20 level, slightly lagging the broader market from a technical standpoint, although the coin is well above the key $18 level. Despite the weakness, the coin likely set a durable cycle bottom, and we expect a rally above $23 in the coming weeks. Investors could still add to their holdings on the short-term sell-off, with support below $18 found at $16 and $14.50.

Monero

XMR/USD, 4-Hour Chart Analysis

Monero is consolidating together with the other majors, slightly below the $240 level, in line with the technical setup in BTC and ETH. The coin is unlikely to re-test the lows near $150, but a pull-back below $200 is possible, even as a major low is now likely in. Resistance levels are ahead at $240, $280, and $300, while support below $200 is at $175 and $150.

NEO

NEO/USDT, 4-Hour Chart Analysis

NEO is still only neutral regarding long-term momentum despite the deep correction that we expected, and the coin might be in for a longer consolidation period than the rest of the segment before a durable rally. That said, the final low is likely in, and investors could add to their holdings near the main support levels, although traders should wait before entering positions in the currency. 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 remains one of the strongest majors regarding short-term technicals, but the rally in the coin halted near the $1.9 level, similarly to the dynamics in Ripple. We expect the coin to enter a new bullish cycle soon, but only aggressive traders should enter new positions, while investors could still add to their holdings on the short-term sell-offs, with primary support found at $1.5.

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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

Bitcoin Bears Running Out of Gas, According to Price Manipulation Theory

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A group of researchers at The Crypto Fam have linked price manipulation to bitcoin’s bear market, suggesting that the arrival of institutional trading allowed investors to dump oversized holdings of digital currency.

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Bitcoin Price Manipulation?

According to a new theory, it is no coincidence that bitcoin’s long unwind began on Dec. 17, the same day that bitcoin futures were launched. Over the next several months, the bitcoin-dollar exchange rate would fall from a high near $20,000 to a low of $5,980.

The rapid decline was aided by futures trading, which allows traders to short assets much more easily. As we’ve written before, shorting bitcoin was practically impossible prior to the launch of futures.

The theory posits that institutional money was stocking up on bitcoin well before Dec. 17, likely in anticipation of the CBOE/CME futures contracts. The bear market that ensued consisted of three major down moves, with the third leg beginning earlier this month.

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Each down move follows a similar pattern: (1) a fake-out dump, (2) a failed rally and (3) a major dump. Each leg down is driven by lower selling volume with each drop less severe than the previous.

The compelling study was presented this week in a series of tweets by The Crypto Fam, which describes itself as “a community of crypto enthusiasts bridging the gaps.” The group’s stated goal, according to its website, is to “make crypto not so cryptic.”

In describing the pattern, the researchers concluded that “the bear market is running out of gas” because their supply of bitcoin has declined since the pump culminated on Dec. 17.

“This is a very simplified explanation of how markets work. A great deal of the total BTC supply is not traded. Some is lost forever in idle or forgotten wallets. Other Bitcoin is hodled by strong hands who never sell. This gives [market makers] greater power with their share of BTC.”

End of the Downtrend?

With the bears and market makers running low on supplies, the researchers concluded that the end of the downtrend is near. Bounces are more shallow than before while bottoms aren’t nearly as low.

Bitcoin prices fell below $7,300 earlier this week but have since recovered to the $7,500 range. Since bottoming below $6,000, prices have failed to test new lows. On the opposite side of the ledger, rallies have also been limited to $12,000 and $10,000, respectively.

Institutional adoption is widely viewed as a positive development in the evolution of cryptocurrency trading, though the latest study sheds light on the downside risks of derivatives trading. A similar conclusion was drawn earlier this month by the San Francisco Fed, which compared the launch of bitcoin futures to innovations in securitization in the mortgage market. However, this model has been criticized heavily for mistaking correlation with causation.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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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4.5 stars on average, based on 415 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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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.

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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

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.

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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4.6 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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