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Technical Update: Gold Continues Sliding, Falls Below Key Support

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On May 17, we discussed gold breaking below the lower boundary of its 4-month, 70-dollar trading range (trading range – $1,300 to $1,370 in Figure 1 and horizontal trendlines in Figure 2 – GLD shown).

Figure 1. Gold Daily Chart

Technical Developments

  • After the initial break below the horizontal trading range, gold found support at the trendline connecting the December 2016 & December 2017 lows (support – green trendline; retest – last green arrow).
  • Over the next couple of weeks, the commodity staged several attempts to move back within the horizontal range however it halted at two major resistances:
    1. Its 200 SMA (white line in Figure 2 and blue line in Figure 1).
    2. The support-turned-resistance horizontal trendlines (lower bright blue and purple trendlines in Figure 2).
  • On Friday (June 15), gold moved below the trendline that had served as support in May and June (green trendline).
  • This week, the commodity has continued to slide, so far, giving no indications that it will quickly recover and move above its broken support.

Figure 2. GLD Daily Chart

Implications

  • Gold’s sharp decline on June 15 confirmed the importance of the green trendline. The break below it is deemed significant, at least in the short-term.
  • Given the break below the 1.5-year support (green trendline) and the lack of major support levels in the $1,240 – $1,280 range, the target obtained from the trading range breakdown is likely to be met (target – $1,230 obtained by projecting the $70-dollar height of the pattern from the point of the breakdown).

Outlook

  • Short-term bearish as long as the commodity remains below the lower of the green trendline and its 200 SMA (currently at $1,308).
  • Neutral with a bullish bias if gold quickly moved back above the green trendline and subsequently above its 200 SMA.
  • Short- and long-term bullish above $1,380, as a break above 2016’s high will activate the previously discussed longer-term upward targets.

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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    Altcoins

    Stellar Price Analysis: XLM/USD Pullback Means Bulls Can Run Free

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    • XLM/USD has seen the required retest of the broken pennant pattern, leaving the door open to greater upside.
    • Technically the price developments appear to be stacked in the favor of the bulls.

    Recent Price Developments

    XLM/USD daily chart

    Stella’s XLM is on its way back up to the north. XLM/USD is running at two consecutive sessions in the green. The price having gained over 17% in the past three sessions, moving back into a bullish trend. Given the recent technical price developments, this current push higher could prove to be sustainable in efforts for a longer-run.

    XLM/USD had initially been moving within a pennant pattern structure; this was the case from June until early November. The price was contained within for 19 weeks, a long period of consolidation, after the heavy sell off from April up to June. Furthermore, as seen from the daily chart view, bulls managed to break free and close above the mentioned pattern on 4th November.

    The market bulls went on to drive the price to its highest level seen since 24th September, jumping above the $0.28 territory. XLM/USD found its somewhat exhausted, after running into some known strong resistance. This was and still is notable at the 61.8% Fibonacci, the price had also faltered here during the run seen at the back end of September.

    Given above-mentioned rejection at the 61.8% Fibonacci, XLM/USD was sent back south. The price was forced to retreat on top of the breached pennant pattern. This move, as described, playing out to the textbook. A breakout to the upside was seen from the pennant, which the retest having now been seen. As a result, a move which is now very likely to invite further buying pressure.

    Upside Targets

    The first major challenge for the bulls, will be to break down the $0.28 price territory. As mentioned above, the area that has caused an issue the past two occasions, where the price has met with the resistance. Should the bulls manage to gain enough momentum, a break will likely be seen. This could bring in play a return to $0.30.

    Further to the north, eyes will be on the $0.35 area and beyond. XLM/USD was last seen up at these heights in the back-end of July. It had peaked here on 26th July, before then entering quite a steep bearish trend. The price had fallen a chunky 45%, up until the early part of August, where some stabilization then formed.

    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 54 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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    Altcoins

    Ethereum Price Analysis: ETH/USD Has Big Opportunity to Fly Again

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    • ETH/USD is running at seven consecutive sessions of losses, dropping as much as 25%.
    • Price action is moving within a strong demand area, which could very well see the price rocketing again.

    Current Price Action

    ETH/USD is stuck within a stubborn downward trend. The price is running at a seven consecutive session losing streak. During this time period, ETH/USD has dropped as much as 25%, falling from $226, down to recent lows of $171.95. This is the biggest weekly loss seen since the bear market back in September.

    The price was trading in a consolidation manner; this had been the case after the above-mentioned bear market drop. ETH/USD at the time had dropped as much as 45%, before finally staging a recovery. Since the bounce on 12th September, price action began to form a bearish pennant pattern, which was then firmly broken on 14th November.

    ETH/USD daily chart

    Buying Opportunity  

    At the time of writing, ETH/USD is seen trading deep within a known demand area. Buyers last pilled in and drove the price north, back on 12th September, as detailed above. It had gone on to gain a whopping 50%, following the hammer candlestick reversal confirmation. The demand can be eyed around the $170 territory.

    Eyes should be on indications of a reversal, the potential for a signal from a candlestick formation, similarly to the prior mentioned recovery. In terms of the RSI via the daily time frame, ETH/USD is very much in oversold territory. The index seen around the 27 level at the time of writing, which could see the price soon bottoming out.

    Upside Targets

    Should life be kicked back into the bulls, another retest of the breached pennant pattern would likely be seen. Resistance underneath the pennant should be noted at the psychological $200 mark. The bears firmly ran through this price level on 14th November. Further north, another barrier can be observed at $230 area, a known supply zone.

    There has been much debate over the past couple of months, as to whether the cryptocurrency market has hit the bottom. Many believed that this was the case, after the deep September drop. While some were still calling another corrective fall. Once some stabilization from the bulls is seen and recovery picks up momentum, this may be the last of the bears for 2018.

    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 54 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

    Bitcoin Update: Bull and Bear Scenarios

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    To say that the last two days in crypto have been a bloodbath would be an understatement. Many altcoins have broken critical support areas. Some cryptos even registered new yearly lows. One of those is Bitcoin (BTC/USD).

    Bitcoin dropped to as low as $5,188 on Coinbase and lost as much as 20% of its value within 48 hours. The move forced numerous retail traders and long term hodlers to give up their digital assets. It also reinvigorated bears who felt ecstatic that $6,000 support crumbled into pieces. Their renewed confidence gave them the voice to spread fear, uncertainty and doubt (FUD). The chatter of Bitcoin trading at $2,000 – $3,000 has been the noisiest in the last 48 hours.

    If you’re an ordinary investor who believes in the revolutionary power of Bitcoin, the amount of FUD out there might shake your beliefs. However, is there a grain of truth in what bears are yapping? In this article, we reveal the possible bull and bear scenarios to prepare you for whatever comes next.

    The Bullish Scenario

    Bulls have a simple task ahead in the next few days. They just need to take Bitcoin above $5,800 before the week closes to preserve the weekly support. This has the potential to invalidate the descending triangle breakdown and create a bear trap. However, with heavy bearish pressure, this is easier said than done.

    With that being said, the key levels to watch in addition to $5,800 are 5,500, 5,300, and 5,190. The line in sand is 4,800. Below that, we’ll very likely experience a full-blown and painful bear winter.

    As of this writing, Bitcoin is working really hard to establish support at $5,500. This is a positive signal. It works well with our bullish scenario of an inverse head and shoulders reversal pattern on the 15-minute chart.

    BTC bullish scenario

    In this scenario, bulls have two great chances to make this work. They can create a bullish higher low setup at $5,500 or at $5,300 to complete the right shoulder.

    Another play would be a quick relief rally between $5,600 to $5,700. From there, we would likely experience a heavy volume dump to prices between $4,800 – $5,190. With this scenario, we’ll get a solid double bottom structure in the 15-minute chart where bulls can stage a reversal.  

    BTC double bottom

    This double bottom scenario is where many hodlers would capitulate and at the same time, it would exhaust many sellers. For this to manifest, however, bulls must show that they’re ready to battle to the bitter end so they can close the week above $5,777. Otherwise, bears will continue to rampage unchecked.

    The Bearish Scenario

    From a technical perspective, the descending triangle breakout has an ultimate target of $2,800. In addition, Bitcoin has firm weekly and monthly support levels at $3,000. These are the reasons that fuel calls for Bitcoin trading at $3,000.

    Bitcoin bear scenario

    It’s safe to say that this is not a pretty sight.

    For this to happen, Bitcoin must close below $5,800 this week and then retest $5,800 – $6,000 next week. This price action would confirm that $6,000 is now a resistance. Therefore, bears would be able to use all the strength of $6,000 as support and flip it into a heavy resistance area.  

    If this happens, there’s a strong possibility of a long and painful Bitcoin bear market that can extend for many months. During this period, the market may range trade between $3,000 – $6,000. This is not the scenario that we’re looking for. However, it is always better to prepare for such possibilities.

    Bottom Line

    Richard Wyckoff said: “The more compact the trading range is, the more likely the stock is under control by professionals, and the greater the possibility for the swift explosive move upward following a spring or a shakeout…watch for them”. This is why we remain bullish in Bitcoin despite the massive dump. After the compact trading range in the last few months, we believe that this is the spring or the shakeout before the explosive move upward.

    At this point, we are rooting for the bull scenarios mentioned above but we’re also seriously considering the bearish case. In short, we’re hoping for the best but also preparing for the worst.

     

    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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    3.7 stars on average, based on 271 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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