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The Bear is Coming – Are you prepared?

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More bickering in Washington among the Republican party with Trump taking to Twitter to rail against one senator and another announcing his retirement only to dig into the President.

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The fun continues in politics but doesn’t seem to have any effect on the stocks. Tax reform is still widely expected to happen and that’s all that investors care about right now. That and earnings season, which is well underway.

@MatiGreenspan
eToro, Senior Market Analyst

 

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Please note: All data, figures & graphs are valid as of October 25th. All trading carries risk. Only risk capital you’re prepared to lose.

Market Overview

Sometimes all you need is a little push in order to really fly. After taking some minor losses on Monday, the Dow Jones leaped 161 points yesterday.

For dramatic effect, here is a chart of the benchmark index since the turn of the century…

Some great results from CAT and MMM have propelled the markets. AMD put out some good numbers after the closing bell but investors were disappointed about their source of revenues going forward and it is expected to open about 10% lower when the market opens this afternoon.

The VIX volatility index has also woken up and is well above the record low levels seen earlier this month.

Though most analysts agree the market is overpriced, it still doesn’t make sense to go in short. One of my clients on eToro put an excellent rant on the network this morning explaining that this is where patience comes in and predicting that for those who prepare correctly, there could be an opportunity to 10X shortly.

Here’s my favorite part…

The author @NestorArmstrong from Mexico has delivered himself and about 80 copiers a return of 30% since the beginning of the year with an incredibly low stable risk score and virtually no drawdown…

Of course, predicting a market crash can be even tougher than predicting an earthquake so while most investors are still wildly bullish on the markets, now is the time to prepare for the eventuality that the markets will turn and for the abundant opportunities such a turn can bring.

Bitcoin Technical

As we’ve been discussing in these updates, bitcoin has been trading counter to the rest of the digital currencies lately. Here we can see that the original blockchain asset is up about 30% since the beginning of the month even though most of the others are still in negative…

If we do see the digital king start to trek further above $6000 and mark new highs that could certainly kick in the FOMO factor and we could see further surges in price. However, as Nestor says, we need to be prepared and sow the seeds.

Bitcoin has broken just about all the rules of technical and fundamental analysis but for now, it’s the only thing we have to go by. By fundamental analysis, we’ve got some calling for $0 and some for $100,000 and just about everything in between.

If we’re looking for a perfect entry and if the price does indeed come down further, we need to look at the graph from the beginning of the year. A mighty graph indeed.

The white line does indeed represent a solid form of resistance. Even though it’s quite a sharp incline the line has yet to be broken.

On the bottom, however, it’s difficult to find the exact support. Many are of the mind that the dotted blue line can indeed hold and we have only to go up from here. The yellow line in my mind is a bit more practical. Meeting that yellow line at about $4500 a coin would represent a total pullback of 25% from the peak.

As always, all questions, comments, and feedback are extremely welcome. Tag me on eToro or any other social network. I’m always glad to hear from you.

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.
The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Analysis

Long-Term Cryptocurrency Analysis: All Majors Stretched as Ripple Finally Breaks-Out

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Although the previous leaders of the rally started to correct or at least consolidate in the wake of the overbought long-term setups, another batch of coins turned exponential, with Litecoin, Ripple, and Ethereum all registering lofty gains this week. Bitcoin, Monero, and Dash have been holding up well, and even drifted to new marginal highs during the period, while Ethereum Classic had a more volatile week, before moving to new highs today.

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XRP left the broad trading range that has dominated its market since May, and surged to new all-time highs while almost quadrupling in the process. As the coin was the only major on a long-term buy signal according to our trend model, and the move triggered a sell signal on Thursday, now all of our tracked coins are on sell signals.

Ripple could be in for further short-term gains but long-term investors should reduce their positions after this week’s spike. Support levels are found Major at the prior high near $0.4250 and in the $0.30-$0.32 range.

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XRP/USDT, Daily Chart Analysis

IOTA, which has been leading the market higher before is down by more than 30% off its all-time high, but given the exponential move before, an even deeper correction is likely in the coming weeks, and investors should wait until a more favorable setup to add to their positions. Strong support is only found at $3 and $1.5, but potential Fibonacci support is at $2.35.

IOT/USD, Daily Chart Analysis

Let’s see how the long-term charts of the other majors look this weekend.

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Analysis

Technical Analysis: Bitcoin Up Again as Altcoins Mixed in Volatile Trading

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Bitcoin is at a new all-time high today, although the momentum of today’s move is far below from what we saw recently, and the coin only managed to reach a marginal record high yet again. BTC is now worth $300 billion, and it is still trading right at the short-term trendline, inside a rising wedge pattern that shows a clear momentum divergence.

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With the short-term trend still being intact further gains are still possible, but as all the majors are overbought from a long-term perspective, we still advise investors to wait for a better buying opportunity before adding to their holdings. 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

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 XRP entered a volatile short-term correction after its two-day surge after giving a short-term sell signal yesterday, and the coin spiked back towards $0.60 before settling down just below yesterday’s highs. The long-term setup also turned overbought thanks to the almost 300% rally, and now investors should reduce their holdings, even as further gains are still possible. Major support is still found at the prior high near $0.4250 and in the $0.30-$0.32 range.

XRP/USDT, 4-Hour Chart Analysis

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Analysis

Cryptocurrency Analysis: Ripple Continues Rampage as Litecoin and Ethereum Enter Correction

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Ripple remained in the center of attention in the segment after breaking out to a new all-time high yesterday, and the coin almost doubled in value, climbing above the $0.80 level. The currency concluded a 6-month long consolidation pattern with the move after being the only major on a long-term buy signal in our trend model.

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XRP gave a short-term sell signal today, while turning neutral regarding the long-term setup. Investors now shouldn’t add to their positions, although further gains are still possible, and reducing holdings somewhat is a good idea here. Major support is still found at the prior high near $0.4250 and in the $0.30-$0.32 range.

XRP/USDT, 4-Hour Chart Analysis

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While Bitcoin stagnated, and Bitcoin Cash jumped, Ethereum, Litecoin, Dash, and IOTA has been drifting slightly lower, although the recent gains are still mostly intact, and the basic setup in the segment is unchanged.

Litecoin fell below the $300 level after yesterday’s consolidation, and the coin faced strong selling pressure in the latter half of the session. The currency remains extremely stretched regarding the long-term momentum indicators, and although the short-term uptrend is still intact, a deeper correction is likely in the coming weeks, with key support levels found at $125 and $100, and weaker levels at $260 and $170.

LTC/USD, 4-Hour Chart Analysis

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