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Technical Analysis: Dow Jones Moves Toward Intermediate-Term Target, Closes above 25,000

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Technical Overview

  • On May 8, the Dow Jones Industrial Average was on the verge of completing a 2-month bottoming pattern. On May 9, the index gave the buy signal with a minimum price target of 26,200 (1,300 points from the point of the breakout – white vertical trendline in Figure 1).
  • Last week’s advance fell less than 5 points short of the 25,000 level. The 8 EMA served as support during the subsequent correction (yellow line).
  • Today (May 21), the index jumped by nearly 300 points to close above 25,000 for the first time since March 13.
  • The Feb 9 & April 2 lows have created a tentative “double bottom” formation. The pattern will be completed if the index breaks above the pattern’s interim high (red horizontal trendline).

Major support levels:

  • The 24,600 level (last week’s base).
  • The neckline of the inverse H&S pattern (white downward-sloping trendline, currently at 24,200).

Major resistance levels:

  • Double bottom interim high at 25,800 (red trendline).
  • Origin of February correction & January high – 26,400 to 26,617 range.

Figure 1. Dow Jones Industrial Average Daily Chart

Implications

  • While the tech-heavy NASDAQ pulled back from its intraday high, DJIA continues to perform strongly, marching towards the upside target obtained from the H&S pattern.
  • In one trading session, the index made up for an entire week of sideways/corrective movement. Such price action is indicative of fast-moving markets, which are leaping towards a specific target. In this case, the completion of the inverse H&S is expected to continue driving the index higher at least until it retests the 25,800 level.
  • If the index moves above 25,800 the double bottom will be completed. A move above January’s high will further strengthen the bullish thesis and shift the long-term outlook to bullish.
  • Long positions in index-tracking ETFs and constituents recommended.

 Outlook

  • Short-term outlook as long as the index remains above its 8 EMA.
  • Intermediate-term bullish as long as the index remains above the neckline of the inverse H&S pattern.

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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    4.3 stars on average, based on 16 rated postshttp://www.linkedin.com/in/konstantindimov




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    Analysis

    Crypto Update: 5 Altcoins to Watch This Week

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    Bitcoin had another rough week. As a result, altcoins that were included on last week’s list either dumped or stayed close to support. Nevertheless, having a clearly defined range enables you to quickly react when an altcoin either goes below the support or breaches the resistance. You can form expectations as to where the market might go next.

    We’ll do more of the same this week. Here are five altcoins to watch this week.

    Waves (WAVES/BTC)

    Waves pumped hard last week. It climbed as high as 0.0005965 on December 4 from a low of 0.0002336 on November 21. If you failed to ride the early stages of a huge rally, the next best thing is to wait for the pullback.

    Daily chart WAVES/BTC

    Waves appears to have retested resistance of 0.0004715. It is also in overbought territory so we can expect a deeper retrace this week.

    A good pick up area would be between 0.000352 and 0.0003835. These are solid weekly support areas. On top of that, the 200-day moving average is moving around those levels.

    If Waves moves below 0.000352, it is likely that there will be a full retrace back to 0.0002336.

    EOS (EOS/BTC)

    EOS breached range support of 0.000697 on December 1. Considering that the market had been relying on this support since August 14, the breakdown sparked panic selling. Participants who bought within the range raced to dump their positions. As a result, the market nosedived to 0.0004721 on December 7.

    Daily chart EOS/BTC

    With this breakdown, EOS is now trading within a new range. The range low is weekly support of 0.0005021, midpoint is 0.0006015, and the range resistance is 0.000697. You know the drill: to trade this range, a trader needs to buy the support and sell the resistance.

    Bitcoin Cash (BCH/BTC)

    Bitcoin Cash (BCH/BTC) has been feeling the effects of gravitational pull after a glorious first week of November. The meteoric rise to 0.098035 on November 7 is now being met by a massive dump. So far, the market is en route for a full retrace. That’s perfect for those who want to play the range.

    Daily chart BCH/BTC

    0.06815 is a good pick up point if you’re looking to bottom pick the market. However, don’t immediately buy the drop because there’s a chance that market makers will push prices further down to liquidate range low buyers. Instead, wait for Bitcoin Cash to retest the support on the 1-hour chart. This should increase the likelihood of a strong bounce.

    Republic Protocol (REN/BTC)

    Republic Protocol (REN/BTC) has the makings of the next Ravencoin (RVN/BTC) in terms of price action. The market skyrocketed to a high of 0.00000838 on December 9 from a low of 0.00000551 on December 8. That was an increase of over 52% within 24 hours.

    As expected, the pump was followed by a pullback. This is where it gets interesting for us.

    1-hour chart REN/BTC

    For REN to continue its bullish sentiment, it must recover support of 0.0000704. That should give the market the momentum to test 0.00000816 resistance. On the other hand, a breach below immediate support of 0.00000672 is bearish. It can lead to a full retrace to 0.00000551. If that happens, you can always bottom pick the market.

    YOYOW (YOYO/BTC)

    YOYOW is the last coin in our altcoins list. From a low of 0.00000290 on September 12, YOYOW (YOYO/BTC) had a beautiful run that saw the market climb as high as 0.00000755 on November 2, 2018. That’s an increase of 160% in less than three weeks. If you see a move like this in a bear market, expect a dump to ensue. That’s exactly what happened.

    Daily chart YOYO/BTC

    With this dump, the market’s current range is between 0.00000290 and 0.00000550 with a midpoint at 0.00000420. YOYO made it on this week’s list because it just retested the midpoint. The price action makes it very likely for the market to revisit the range support. If the support holds, YOYO/BTC would form a triple bottom structure.

    Bottom Line

    With Bitcoin printing new lows last week, this week’s list involved altcoins that are ripe for bottom picking. If you’re planning to trade one or more of these coins, you can follow the range that we’ve put together for you. As always, consider buying the support and selling the resistance.

     

    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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    3.8 stars on average, based on 284 rated postsKiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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    Altcoins

    Litecoin Price Analysis: If Current Demand Zone Fails to Hold Then Next Stop is $3

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    • LTC/USD is at serious danger of another hard fall should the range-block seen be breached.
    • Back in December 2013, the price was at current levels and fell down to $1 over a two-year period.

    Litecoin has been heavily weighted to the downside of late. The selling pressure intensified through the month of November. This month, December, has seen the pace of that bearish trend intensify. As a result, LTC/USD is trading at its lowest levels seen since May 2017. These moves of course are very much in-line with the rest of the market that has been in decline since the back-end of 2017 – start of 2018. Litecoin is down well over 90% from the start of this decline.

    Deadly Range-Block

    LTC/USD 4-hour chart

    LTC/USD was allowed some time to breath after the chunky pressure south, through November. The price stabilized from 25th November, to then move into range-trading. This was the case right up until 6th December. Confined within a range-block, which technically trend to occur after such excessive movement, to then be resumed in that original aggressive trend of direction. The most recent, moving between a low of $29 to a high of $36, ahead of the firm breach lower on 6th December. This resulted in the price moving down to another fresh low of $22.55, on 7th December.

    Once again, a similar observation can be seen via the 4-hour chart view. Since the 7th December, some stabilization has materialized. Currently it is shaping up another range-block, which is subject to a further extensive move to the downside. The low within this new formation, can be seen around the $23 mark; to the upside, this is capped at $28. A breakout south from this block could catastrophic and much more damaging than the prior. There isn’t much in the way of support for quite some way lower, should the price not be able to defy the odds and break higher from the block.

    Downside Targets

    LTC/USD weekly chart

    Should the bears maintain the current course of downside, then the lower support of the current range will be broken. As an extreme target south, eyes could be on a complete reversal of the 2017 bull run. This could see another 500% drop, this of course being a worse case scenario for LTC/USD. Given how fast the bulls ran up to the north, it can come back down just as hard. Back in December 2013, the price was around current levels within the $20 territory. The bears pushed for a hard fall of over 200%, down to $1 territory, over a two year period.

    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 78 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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    Analysis

    USD Has Found Itself Among Outsiders

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    By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets

    There are a lot of factors weighing on the US dollar as of late. EURUSD skyrocketed towards the highs it reached on November 20th, as the currency market was overwhelmed by another wave of “escaping-from-the American-currency” investors.

    It wouldn’t be right to say that there was one particular factor that made USD fall. The major dollar-based currency pairs is being currently driven by several catalysts, which are forcing it to move towards local highs. Apart from other things, we’re talking about the numbers on the US Labor market published last Friday. As usual, investors were focused on some of them, for example, the Non-Farm Employment Change, which was 155K in November. However, in the previous month, the indicator was 237K, while market expectations for this one were 198K.

    Still, the Unemployment Rate in the US remained unchanged at 3.7%. The Average Hourly Earnings added just 0.2% m/m, which is less than expected. However, on YoY, the indicator expanded by 3.1% and that’s a pretty solid number.

    The truce in the American-Chinese “trade war”, even considering the arrest of Huawei Technologies’ top manager, makes investors’ demand for USD as a “safe haven” decrease.

    There won’t be a lot of numbers from the US this week. The ones worth paying attention to are the Consumer Price Index and Retail Sales to be published on Wednesday and Friday, respectively. On Thursday, December 13th, the European Central Bank is scheduled to have another meeting, the last one in 2018, where the regulator will decide on its interest rate and further monetary policy.

    In case of EURUSD, the uptrend is still dominating; this ascending movement may be considered as a correction of the previous long-term downtrend. As we can see in the H1 chart, the pair is getting closer to the upside border of the internal mid-term rising channel, which is the resistance level at 1.1455. If the price breaks it, the instrument may continue growing to reach the key mid-term correctional target at 1.1545. However, one shouldn’t disregard another scenario implying a new decline, which may start if the pair rebounds from the above-mentioned resistance level. To confirm this decline, the price has to break the local support at 1.1405. In this case, the downside target will be close to the support line at 1.1340.

    Disclaimer

    Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

    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 20 rated postsHaving majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.




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