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Technical Analysis: Ethereum Leads Altcoin Rally as Bitcoin Dominance Fades

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The first full trading day of the year jump-started the cryptocurrency market, as all of the major coins are higher after a hectic holiday season. Ethereum is the strongest of the most-traded coins, as it built upon its recent relative strength and rallied to test its all-time high today. Most of the altcoins followed ETH higher, although only NEO and Ripple are close to their prior highs.

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Ethereum breached its record high thanks to the rally, but it failed to extend the advance to durable new highs for now. The move triggered a short-term buy signal, but with the long-term momentum still being stretched, the long-term setup remains unchanged, and further consolidation is likely, but we still expect the coin to outperform the other majors in the coming period. Traders could still play the short-term move, with support levels found at $740, $625, $575, between $480 and $500, and near the prior all-time high at $400.

ETH/USD, 4-Hour Chart Analysis

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Bitcoin lagged the rest of the market until a late rally that carried the most valuable con above the $15,000 level following a period of strong selling pressure. The coin’s dominance is near its all-time low despite the late-day move, and while the short-term picture is now neutral, the long-term chart still suggests another leg lower in the correction. Primary support is still found near $13,000, with further levels at $11,300, $10,000, $9000, and stronger levels at $8200 and $7700.

BTC/USD, 4-Hour Chart Analysis

Litecoin

LTC/USD, Daily Chart Analysis

Litecoin is still among the weaker majors despite the recent rally, and it’s hovering near the primary resistance zone between $250 and $260. The coin is neutral from a short-term perspective while still being bearish from an investment standpoint. We expect the correction to continue with a likely re-test of the mini-crash low, and further strong support at $125 and $100.

Dash

DASH/USD, 4-Hour Chart Analysis

Dash left the short-term downtrend thanks to the rally in the last couple of days, and although the long-term setup is still negative, the short-term picture is now neutral. The coin is likely headed below the correction lows in the coming weeks, with support levels still found at $1000, slightly above $800, at $650, and near $600.

Ripple

XRP/USD, 4-Hour Chart Analysis

Ripple is trading inside a short-term correction pattern after its recent exponential break-out, and the coin is still in a rising trend despite the extreme long-term momentum readings. While we expect a deep correction in the coming weeks, traders could still speculate on another leg higher once the short-term overbought readings are cleared. Primary support is now at $1.50 with further levels at $1.25, $0.85, $0.68, and $0.42.

Ethereum Classic

ETC/USD, 4-Hour Chart Analysis

Ethereum Classic is neutral from a short-term perspective after bouncing off the $25 level yet again. The coin remains in a bearish long-term setup and more corrective price action is likely in the coming weeks, with a move below $23 in the process. Major support below $23 is at $18, while resistance levels are ahead at $34 and $40.

Monero

XMR/USD, 4-Hour Chart Analysis

Monero is relatively weak in the current rally after exiting its dominant uptrend, as a deeper correction is likely underway. The coin is still severely overbought from a long-term perspective, and traders should also remain cautious following the trend break. Primary support is still found at $300 and further important levels found at $240, $200, $180, and $150.

NEO

NEO/USDT, 4-Hour Chart Analysis

NEO built on its encouraging long-term setup and hit a new all-time high, just shy of our long-term target at $100. Now the long-term setup is overbought, but there is still room for further gains, while the short-term trend remains bullish. We expect volatile conditions to persist, given the broad correction in the segment, but the coin remains one of the most encouraging from a technical perspective. Support levels are now found at $80, $64, and $56.

IOTA

IOTA/USD, 4-Hour Chart Analysis

IOTA bounced higher together with the rest of the majors, although it still shows relative weakness, and the long-term overbought readings are still not yet fully cleared. That said, the coin remains ahead in the cycle compared to the other majors and an earlier bottom is  likely, with strong support still at $3 and $1.5, with a Fibonacci support between those at $2.35.

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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4 Comments

4 Comments

  1. ridge195

    January 2, 2018 at 11:56 pm

    So there were recommendations to buy monero, dash, iota, and etherum classic on site within last day. Are you feeling different? Its good to have a few different points of view but also a bit confusing.

    • MinerMatt17

      January 3, 2018 at 3:53 am

      All of their analysis is regularly contradictory and they have never addressed it. I have pointed it put on numerous occasions so as to try and make the right trade and all i get is crickets.

  2. jhmblvd

    January 3, 2018 at 12:06 am

    You folks seem to be bearish on most coins lately. Is the market that overbought?

  3. saxonlucius

    January 3, 2018 at 1:58 am

    The most recent market adjustment was not as bad as I thought. jhmblvd is right. All of your analysis says things are bearish. You are probably right, but over the last few years, crypto has always overturned my expectations. Bitcoin does look and feel unstable and another correction there does seem likely; but, what do you do with your money when Bitcoin goes down? I put it in well performing Altcoins. I was surprised to see your recommendation to Short Bitcoin. Shorting Bitcoin has been my biggest cause of loss. I hope you are wrong on the long term. I hope that Bitcoin stays horizontal and the others rally. This is happening now, and if Bitcoin can stay like this for another couple weeks, then Ether and other Altcoins will do very well. I don’t understand how or why Ripple is so high. I don’t even understand why its traded. It shouldn’t be traded at all.

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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.

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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: Altcoins Lead Markets Lower as Bitcoin Still Looks Strong

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All of the largest digital currencies are in the red today, following heavy overnight selling, a bounce in European trading, and another round of losses around the US market open. Ethereum is still in the worst short-term shape among the giants of the segment, and that’s in line with the slightly delayed cycle of the coin that we have been monitoring.

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The technical divergence between the leaders of the market and the laggards yesterday is still dominant with the 6 coins that spearhead the rally, BTC, LTC, NEO, Dash, Monero, and ETC, are still in much more bullish setups than the rest of the majors.

Bitcoin is also well below its recent rally highs after breaking down under the key $11,300 level, and a test of the $10,000 support now looks likely, while a move to the $9000-$9200 zone would still keep the rising trend intact.


BTC/USD, 4-Hour Chart Analysis

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The overbought short-term momentum readings are being cleared, and despite the slightly bearish volume patterns, we expect the coin to continue its new bullish cycle after the correction, with targets above $11,300 ahead at $13,000 and $14,250.

ETH/USD, 4-Hour Chart Analysis

Ethereum is now trading below the key $845 level as the correction continues, as we expected, and the coin remains stuck in the dominant declining trend, for now. We still expect a breakout in the coming weeks, but a test of the $740 level is possible before another rally. Further support below that is at $625 and $575 and we don’t expect a new low in the coin, so investors could still accumulate the coin near the main levels.

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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: All Eyes on the FED and the Dollar (Again)

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FED-Days usually bring very special sessions with a choppy illiquid environment before the “big announcement”, an almost usual stop hunting spike in both directions right after the release, and a rather random, but strong trend in the close that usually defines trading for the next days.

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For this reason, a lot of traders like to take the day off until the FED-decision, and only trade after the event. Why are we talking about this today? Because although there is no interest rate decision this month, the meeting minutes of last month will be published this evening, and what moves the market in this period is rate expectations, not actual decisions.

And by the market, we mean basically all traditional asset classes, and through the rising trend in yields and the consequences of that, rate expectations arguably affect the cryptocurrency segment as well. So what do we expect from the FED? Nothing. We will leave that to the rest of the players, and trade upon the reaction of the market; after all that is what counts. At the end of the day, central banks will try to prop up the market, we can take that for granted.

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S&P 500, 4-Hour Chart Analysis

The overnight session in stock futures was in line with the above-mentioned expectations for a quasi-Fed day, with no clear trend in Asia or Europe, and very choppy price action across the board. Yesterday’s late-session decline is still weighing on investors sentiment, but there are clearly positive signs as well, even as we remain bearish for the coming weeks.

The key levels to watch are still the same, the 2735 and 2700 levels in the S&P 500 (25350 and 24800 in the Dow), and the Nasdaq could remain crucial to keep the hopes of bulls up, should it retain its relative strength.

Dollar-Yield Correlation Switch?

EUR/USD, 4-Hour Chart Analysis

Currency traders might have noticed a subtle shift between US Treasury Yields and the Dollar since the Volatility-Armageddon (actually a bit later than that). In the “old regime” the rise in yields was through the changes in rate-expectations was actually hurting the value of the Dollar, while lately, that negative correlation disappeared and even reversed briefly.

Why is that so important? Because the previous correlation helped the rally in US equities as yields rose, while the new regime could mean that European and Asian stocks will finally gather relative strength, should yields continue to rise. Tonight we might get closer to the solution of this puzzle, as the reaction to the FED-minutes will show how correlations are shaping up now.

Currencies and commodities are also little changed today, although the Dollar continued to edge higher overnight, while enduring a small sell-off as we approached the US open, despite the largely negative European PMI indices.

So watch the Dollar, the Nasdaq, and most of all Treasury Yields today in late trading, and expect choppy conditions until the very end of the US session.

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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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