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The Only Semblance of Sanity

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So far there’s been virtually no reaction from financial markets to the most recent provocations from North Korea.

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On the other hand, the crypto markets are moving a mile a minute on news that is far less apocalyptic.

Looks like most of the volatility traders have already moved over.

@MatiGreenspan
eToro, Senior Market Analyst

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Not as It Should

The Yanks have an excuse. Their markets were closed yesterday for a holiday but stocks from the rest of the world are only falling mildly and the China50 is inexplicably high.

This isn’t exactly what you’d expect after a 6.3 magnitude nuclear test by the world’s most unstable country followed by taunts from said country’s leader that he can pretty much blow up any city in the world.

The US Dollar traditionally acts as a safe haven in panicked markets. So watching the US Dollar fall over the past few months as all of this drama has been building up is quite puzzling.

The only semblance of sanity is coming from the world’s original form of money.

Gold has been rising steadily higher since the beginning of the year and over the last few days has been pushing new highs.

Of course, some are arguing that even this move is unconnected to Un and that Gold is simply following a bigger picture, long term cycle.

The following long term (close to 40 years back) analysis was recently posted by @Dawespoint on Twitter.

It seems that investors simply don’t believe Kim’s claims. Either that, or they are ready to act only if things escalate further. This, of course, begs the question, what would have to happen to illicit a reaction from the financial markets?

Well, let’s hope we never find out. But one thing that could be a good signal is the Korean markets. South Korea has been dealing with their northern neighbor for decades so they might be the first to react when and if anything really hits the fan.

For the time being the KRW is remarkably stable…

Thought KOSPI has shown some signs of weakness in the past few weeks, it’s far from any sort of panic reaction.

So what is moving?

The Crypto markets are!

Due to the nature of this new asset class volatility in this market has been steadily extreme since mid-December.

About 24 hours, the People’s Bank of China announced that they are putting a ban on all ICO activity effective immediately. Meaning, that Chinese citizens will no longer be able to take place in the multi-billion Dollar industry of creating new crypto currencies.

Our Market Analyst in China had this to say…

“This is a good thing, which means the development of Crypto has aroused great attention of the Chinese government.
At the same time, many ICO projects from China are filled with high risks such as Ponzi scheme. Ban ICO is the right decision for Chinese financial security.

I believe that soon the Chinese government will accelerate the regulation of ICO, and protect the real ICO.”

@Macygogogo
eToro, China Analyst

So let’s tally up the damage…

The world’s favorite cryptocurrency bitcoin has seen prices coming down from its all time high of $5000 on Friday almost touching $4000 this morning. A pullback of approximately 20%.

For Ethereum, which many of the ICOs are done on, the damage was more severe. On Friday (white circle), Ether prices were trying hard to break the $400 resistance point. The prices this morning are almost 30% lower.

To be completely fair, the cryptos were already in a pullback a good 24 hours before the China regulatory news even broke but there’s no doubt that this particular headline convinced some traders to sell.

Of course, there’s no indication that the pullback is completely over yet but some of our larger clients have already begun buying in lightly at the discounted prices, ready to go in more heavily should things come down further.

Let’s have an amazing day!!

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

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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Altcoins

Trade Recommendation: XMR/BTC Pair Throwback

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The XMR/BTC market (Monero) has been in downtrend on the hourly chart after posting a high of 0.0225 on December 6 and failing to hold critical support at 0.02. It went to as low as 0.0145 on December 8 before respecting RSI at 32 where it established support. The market used the new support level to rally and generate one higher low after the other. It recently attempted to reclaim support at 0.02 but was repelled by bears. Currently, the market is trading around 0.019 levels where it appears to have created another higher low.

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Technical analysis shows a large reversal pattern in the hourly chart that can take the XMR/BTC pair to 0.025. Even though the market failed to breach resistance at 0.02, investors should not see it as a failed breakout. What we’re seeing is a throwback which is a temporary retreat in price. Throwbacks are common in breakout plays and are often seen as a bullish signal. The next time the market attempts to breach 0.02 resistance, it has a much better chance of breaking it with conviction.

The strategy is to buy breakout at 0.02 with immediate stop at 0.0189.

Hourly XMR/BTC Chart on Poloniex

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As of this writing, XMR/BTC is trading at 0.018714 on Poloniex.

Summary of Strategy

Buy: breakout at 0.02

Target: 0.025

Stop: move below 0.0189 after buying breakout at 0.02.

Disclaimer: The writer 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 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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Altcoins

Trade Recommendation: FCT/BTC Bullish Reversal

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The market reach its all-time high back in June this year when FTC/BTC (Factom) reached 0.01463162. Unfortunately, the pair wasn’t able to sustain its momentum. It created a lower high several days later at 0.01066744 which signalled investors to take profits or cut their losses. As a result, the market tumbled and lost 93.17% in value from its all-time high. Such a tremendous loss would have created an atmosphere of despair in the market. Usually, that’s when the savviest traders come in.

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Technical analysis reveals that the worst is behind the pair. FCT/BTC touched support at 0.001 on the daily chart twice and respected it on both occasions. This is a good indication that the market has found a reliable support level. In addition, hourly chart shows that a large reversal pattern is underway. The pair may have retreated when it nearly touched 0.002, but it generated a new higher low in the process at 0.00156566. The throwback is a bullish signal that enables the pair to gather momentum to break resistance at 0.002.

The strategy is buy on breakout at 0.002. Breach that level and the market reclaims 0.003. Sell that level because it is a strong resistance.

Hourly FCT/BTC Chart on Poloniex

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As of this writing, FCT/BTC is trading at 0.001738 on Poloniex.

Summary of Strategy

Buy: breakout at 0.002

Target: 0.003

Stop: move below 0.0018 after buying breakout at 0.002.  

 

Disclaimer: The writer 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 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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