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Technical Analysis: Tug of War between Bears and Bulls

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Despite the weekend sell-off, the cryptocurrency market is having another quiet and mostly positive session, although the large-scale setup in the segment is still a declining trend. That said, the rally of the now one-week-old lows has been encouraging, and we still expect a new bullish cycle to begin, with the final lows likely being already set.

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Correlations between the majors remained muted compared to the levels seen during the steep sell-offs, and the coins have been diverging substantially today as well, as the market is back a normal, non-panicky state. While we are positive regarding the long-term outlook, short-term traders should remain cautious, as volatility might still return to the segment before a confirmed trend change.

Bitcoin has been among the leaders of today’s early rally, and although the momentum faded away, later on, the largest coin is still trading not far off the intraday highs, with the total market cap of the sector topping $425 billion again.

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BTC/USD, 4-Hour Chart Analysis

BTC is still stuck below the key $9000-$9200 zone, and further consolidation is possible before a move above the strong resistance. Further levels are ahead at $10,000 and $11,300, while primary support is still $7650, with other important zones between $6750 and $7000, and near $6150 and $5750.

The third largest digital currency, Ripple is consolidating its recent lofty gains near the $1 level, giving up the leadership of the rally, for now. The coin is still almost 100% up since bottom, and even as the downtrend is still intact, and further volatile dips are possible, investors could still add to their positions during the sell-offs as we don’t expect new lows in the cycle. Further support levels are found at $0.85 at $0.68 and $0.57, with key resistance ahead at $1.25 and $1.5.

XRP/USDT, 4-Hour Chart Analysis

Ethereum

ETH/USD, 4-Hour Chart Analysis

Ethereum is hovering around the $850 support/resistance level, as it easily held up above the $740 support during the weekend dip, and recovered together with the broader market. The price of the token shows encouraging stability, as the long-term setup is still oversold, while the short-term momentum readings are neutral. Despite the positive signs, we expect the bottoming process to continue after the steep correction, and even a re-test of the ows is possible before a trend change. Support levels below $740 are found at $625 and $575, while further resistance is ahead near $1000.

Litecoin

LTC/USD, Daily Chart Analysis

Litecoin is still trading below the $170-$180 resistance zone, as the weekend left the technical setup unchanged. We expect the coin to regain its relative strength after the consolidation period, and remain well clear of the prior lows during the bottoming process. Investors could add to the positions near the main support levels, while aggressive traders could also look for entry points. Further resistance is ahead near $200 while support is at $140, $125, and $100.

Dash

DASH/USD, 4-Hour Chart Analysis

Dash has been among the laggards today, as the coin is consolidating after a period of relative strength, similarly to Litecoin. The currency is trading in the key $600-$650 support resistance zone, while being relatively close to the domain declining trend thanks to the prior strength. Investors could still add to their positions on the short-term dips, with key support levels found at $500, $410, and $360.

Ethereum Classic

ETC/USD, 4-Hour Chart Analysis

Ethereum Classic entered a sharp short-term during the weekend as expected, but the coin quickly regained momentum and it’s now likely headed for a test of the $30 level after confirming the pattern of higher highs and higher lows and surpassing the $25 and $27 resistance levels. Short-term traders should remain cautious with leveraged positions, but investors could still add to their holdings on the dips. Key support is now found at $27, $25, $23, and while resistance is ahead at $25.

Monero

XMR/USD, 4-Hour Chart Analysis

Monero is among the laggards today from a technical perspective, but the coin remains in a position of strength regarding the long-term outlook, being close to breaking the declining trendline. Investors could still use the current consolidation to boost their holdings, while aggressive traders could also look for entry points. Primary support is found near $240 level, with further levels at $200, $175, and $150, while resistance is ahead at $280 and $300.

NEO

NEO/USDT, 4-Hour Chart Analysis

NEO is trading in a holding pattern after testing the $100 level during the weekend, and the coin is still likely to lag the segment in the coming weeks, as it concludes its correction. With that in mind, traders should wait with entering new positions, while investors could add to their positions on the short-term dips. Resistance levels are still ahead at $125 and just above $150, while support is at $100, $80, and $64.

IOTA

IOTA/USD, 4-Hour Chart Analysis

IOTA is lagging is relatively weak today, staying well below last week’s high, but we expect the rally to continue after the consolidation. The technical setup is unchanged with the key support/resistance level still ahead near $1.9, and the dominant downtrend being intact.  Primary support is found at $1.5, while further resistance is ahead near $2.2 and $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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Analysis

Pre-Market: Bulls Try to Fight Back after Ugly Overnight Session

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Following the steep late-day downturn on Wednesday, which followed the not-to-hawkish FED meeting minutes, Asian markets and US equity futures continued lower with a vengeance. The very active overnight trading is another sign of the regime change in traditional financial markets that we have been monitoring for the last two weeks, ever since the “Black Monday of 2018”.

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Dow Futures, 4-Hour Chart Analysis

EUR/USD Changing Behavior

The European session brought about an oversold bounce that stabilized markets from stocks to currencies. The EUR/USD pair that has started acting “normally” considering its relationship with US Treasury yields lately, is headed south once again, trading only 0.5% above its recent correction lows after clearly breaking below the rising trendline.

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EUR/USD, 4-Hour Chart Analysis

The bull-trap that we identified a few days ago was the start of the current leg lower, and if the regime change will be persistent, the most traded forex pair could be back to the role of the “risk-on/risk-off” indicator that has been the privilege of commodity currencies in the last couple of weeks.

USD/JPY, 4-Hour Chart Analysis

The Japanese Yen is showing notable strength after its overbought dip, and the primary safe-haven currency could be in for more gains, should the risk-selloff continue. The Yen also gained ground on the common European currency, following the dovish ECB meeting accounts and the misses in the German IFO business climate indicator and the British GDP, which all question the European growth-monetary tightening narrative.

Canadian Dollar in for a Wild Ride

USD/CAD, 4-Hour Chart Analysis

With the Canadian retail sales report and the US crude oil inventory data coming out soon, forex traders should expect sizeable moves in the recently weak currency, while the USD should also be very active during the US stock market session.

All eyes are on Treasury yields again, with the slight correction today helping the bounce in stocks and other risk assets. The Nasdaq could be the motor of a stronger rally on Wall Street, but we wouldn’t bet the house on that, as the short-term technical setup remains bearish, and a re-test of the correction lows is still the most likely scenario for the coming weeks.

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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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4.7 stars on average, based on 109 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

Crypto Update: Bitcoin Tests $10,000 amid Correction

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The altcoin-triggered correction continued in the segment overnight amid the renewed sell-off in global stocks, with a slight bounce in Asian trading and a subsequent dip after the European open. The major coins are all down by more than 5% since yesterday, but for now, the momentum of the move is not worrying, and most importantly the leadership of the rally is holding up relatively well.

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Bitcoin bounced off the key $10,000 level, the $200 support zone held in Litecoin, Monero is still in its consolidation pattern above $280, and only Dash showed deterioration since yesterday, but the long-term picture remains encouraging even in Dash’s case.

LTC/USD, 4-Hour Chart Analysis

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The above-mentioned levels in the technically strongest coins are not even the last line of defense for bulls, as the preceding strong rally left several key levels behind which could serve as the basis of the next leg higher.

Also, we expect the currently negatively diverging coins, led by Ethereum and Ripple, to start showing strength as the short-term momentum reaches oversold territory, and good entry points might be close both for traders and long-term investors.

BTC/USD, 4-Hour Chart Analysis

BTC touched the $10,000 support level, but for now, the technically more important $9000-$9200 zone is not in danger, and the short-term momentum indicators are already neutral thanks to the correction.

That said, more downside is likely in the coming days, but investors and traders should be looking for reversals to enter new positions, as we expect the uptrend to continue, with targets ahead at $11,300, $13,000 and $14,250.

Ethereum Provides a Glimmer of Hope

ETH/USD, 4-Hour Chart Analysis

Although bears are still in control regarding the short-term picture in the second largest coin, this morning ETH didn’t hit a significant new swing low, and that could be the first sign of relative strength, with the $845 support not far above the current price level, and the MACD indicator is already near oversold territory.

Despite the slightly positive sign, short-term traders should remain defensive concerning the weaker coins, while long-term investors should still accumulate the currencies on the dips.

Stay tuned for our detailed technical analysis later on today.

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 109 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

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.

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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4.7 stars on average, based on 109 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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