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Trade Recommendation: EURCAD

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The price passed through the kumo and stopped at 1.15000 resistance level. It’s a buy signal based on Ichimoku indicator. DMI confirms trend markets conditions and allows trading. ADX line moves above 20 level and it can be a confirmation of possible strong upward movement. If we look at the weekly chart, we’ll also see a confirmation for further upward movement. We have a buy opportunity confirmed by different bullish signals. Pending orders for buy must be placed above 1.15000 level. Stop orders must be below the local swing low. Profit targets are 1.51850 and 1.53850 levels. Recommended risk size for this trade is up to 3% from your deposit.    

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Buy: 1.50200
S
top: 1.48150
Profit Targets: 1.51850 and 1.53850

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Analysis

Notable Bitcoin Price Growth Events in October

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October has been an interesting month for Bitcoin, with growth of about 40% so far, breaking a market cap of over $101,881,681,652.

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But if you are looking at Bitcoin long-term, this is more than just numbers now. Yes, Bitcoin did experience some explosive growth this month (and has been this entire year), but we shouldn’t let that distract us from some of the main components that will fuel Bitcoin’s growth in the long-term.

  1. Not only did the price break $6,000 per Bitcoin for the first time ever, we started to see Bitcoin’s market cap rate surpass that of big banks such as Goldman Sachs ($93 billion) and Morgan Stanley ($89 billion). While comparing the market capitalization of a cryptocurrency with that of publicly traded companies doesn’t make much financial sense, it’s entertaining to watch financial institutions stress out about Bitcoin.

For example, the CEO of JPMorgan Chase Jamie Dimon can’t stop talking about Bitcoin and venting his frustration with the topic by calling Bitcoin a “fraud” and threatening to fire any employee trading it for the simple reason of “being stupid”.

We also saw Goldman Sachs state that Bitcoin is not the “new gold” in terms of currency, calling it volatile and the methods of storage vulnerable. Goldman Sachs also stated that precious metals like gold are still the best way to store value-long term. While this may be historically accurate, the world hasn’t seen anything like Bitcoin before. Understanding Bitcoin’s growth a matter of equipping yourself with the perspective and ideology that Bitcoin (or  if/when whatever cryptocurrency evolves to take its place) can play a substantial long-term role in how society views money.

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Traditional financial institutions such as investment banks are at an interesting point. Cryptocurrencies such as Bitcoin and Ripple are inherent threats to the very foundation that these multi-hundred-billion dollar companies operate on, and they can’t be defeated because of their decentralized nature. Additionally, many of the same banks that are threatened are also investors looking to reap the rewards of Bitcoin’s explosive growth, and also are incubating similar blockchain concepts to not get left in the dust.

  1. People are starting to look at Bitcoin as an oasis of solidity in an otherwise tumultuous alt-coin market.

In September, we saw an unprecedented crackdown on ICOs and alt-coins by government entities. China and South Korea outright banned the sales of ICOs, and the United States warned investors to be skeptical. While there are hundreds (soon to be thousands) of dubious ICOs, this crackdown did have effects on how investors view legitimate alt-coins. For this reason, many investors flocked to Bitcoin and were able to enjoy some solid growth in October.

So, that brings up the question of whether Bitcoin will be a source of stability in the future. Although the price has gone up a lot this month, that doesn’t make it any less volatile.

  1. Bitcoin still has a long way to go. One of the key pieces of news in October that influenced the writing of this piece was the prediction that Bitcoin will hit $27,000 in four months by an avid cryptocurrency investor and enthusiast called Trace Mayer. While Twitter is filled with all kinds of Bitcoin hooplah, Mayer’s prediction was based on a simple 200 day moving average. This 200 day moving average would put Bitcoin well over $27,000.

Four months is close enough in the future to anticipate, so I’m really interested to see where BTC ends up between then and now. The counter-argument against this would be that Bitcoin may just be experience a state of exponential growth and will cool off, but that’s what people have been saying for years.

It’s also important to note that Bitcoin’s main competitors for value storage and a medium of exchange are the US Dollar and gold. Bitcoin was able to earn a market capitalization of over $100 billion in just a few short years, but this hardly holds a candle to its competitors. The US Dollar money supply circles around $12,500 billion. All the gold that has ever been mined is worth around $8,000 billion.

This means that Bitcoin, this innovative new technology with exponential growth is only around 1% of its two main competitors. This leaves Bitcoin a long way to grow, and I personally don’t think it’s going to slow down anytime soon.

Final Thoughts

By all means, this isn’t a conclusive argument for where Bitcoin’s price will end up. These are just a few points I want to bring up regardless of whatever you choose to do with your money.

There are a handful good of arguments on both sides of the Bitcoin growth discussion, but it all comes down to how well you can either respond to short-term events, or how cemented you are in your long-term beliefs.

Personally, I don’t recommend day-trading or trying to “game” exchanges for the simple fact that losing money sucks, and this is an easy way to lose money.

However, what I can advocate is the thorough research of the fundamental factors influencing the growth of particular cryptocurrencies and how the world responds to it. For example, in October we saw investment banks start commenting more about Bitcoin (which at the very least hints at more media coverage), how many users decided to stick with Bitcoin instead of liquidating for fiat during rough alt-coin times, and some explosive growth that backs up the lofty price goal assumptions by crypto enthusiasts.

 

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5 Things to Watch Next Week: Earnings Bonanza, Bitcoin in Danger Zone, Trump’s Tax Reform, The Dollar Rally, The US Yield Curve

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1.            $4.5 Trillion in Market Cap Reporting

So far, the US earnings season has been a positive affair, as the most important companies, especially mega caps, beat the estimates across the board, lifting the major indices to new all-time highs in the process. Next week, is calendar will be full of another huge batch of key earnings, such as Microsoft (MSFT), Google’s parent Alphabet (GOOG), ExxonMobil (XOM), Amazon (AMZN) and Visa (V).

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With the overbought readings in the Dow, the S&P 500, and the Nasdaq, there is not much left in the tank for the equity rally, and the long-term prospects are not better by any means. That said, trying to pick a top in such a rally is futile, but controlling the Fear of Missing Out is not an easy feat. The correction will come, without a doubt, and it will either bring a trading opportunity as in August or a confirmation for the bears.

Dow 30 Index, Daily Chart Analysis

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2.           Bitcoin Reaches Target but Uptrend Remains Intact

The new all-time highs in BTC have been the most important move in the cryptocurrency segment this week, even as Ethereum‘s major update made headlines earlier on. As the short-lived break-out of ETH and some of the other major altcoins faded away, Bitcoin’s dominance reached levels not seen for months, surpassing 58% as the coin reached the $6000 level towards the end of the week. While the long-term picture is clearly overbought for BTC, we wouldn’t rule out another leg higher towards the range extension target at $7000, but pocketing most of the recent gains is probably the way to go. The quick and deep corrections in the segment always come when the last bears had given up hope, and we are close to that state.

BTC, Daily Chart Analysis

3.           Trump Tax Plan Might Live After All

As the Senate passed the 2018 budget resolution this week, the new tax bill got much closer to passing this year than previously thought. While a lot of experts agreed that the controversial proposal had a good chance of failing at one of the many legislative hurdles, but he Senate’s decision opened up the way for a short-cut and if the GOP speeds up the process of writing the bill, the much-awaited tax cuts could arrive very soon. The next step is to pass the budget bill in the House, while tackling the opposition towards the actual bill in the Senate and the House. So while the process will be grueling, the market already hailed the first step with a rally, and the progress could be a major driver for stocks and the Dollar in the coming weeks.

4.           The Dollar Showing Stability

With the focus still on the next Fed Chair, and the above-mentioned tax reform, the Greenback had a choppy but slightly bullish week, even compared to the relatively strong Euro. The Yen, the Pound, and the smaller majors all lost considerable ground compared to the USD, with the New Zealand Dollar falling the most after the announcement of the new coalition. Technically speaking, the Dollar is not out of the woods, but it seems that a higher low formed on the daily chart of the DXY, and that could have a major implication for all markets. Should the Index post a new swing high next week, the door could open for a major rally in the battered currency.

Dollar Index (DXY), Daily Charts

5.           The US Yield Curve is Collapsing

As short-term Treasury yields are rallying thanks to the hawkish tone of the Fed, and the modest economic numbers, the longer end of the curve is lagging severely. That represents the doubts regarding the long-term growth potential of the US economy, and is usually a strong precursor of a looming recession.

Some analysts argue that raising interest rates this late in the cycle is a major policy error, but with the extremely loose monetary policy of recent years, the normalization must begin, or the Fed will be out of options in the case of an economic shock. In any case, long-term investors should keep a close eye on Treasuries, as the bond market is usually a better predictor of troubles ahead than the stock market.

Key Economic Releases Next Week

Day Country Release Expected Previous
Monday CANADA Wholesale Sales 1.1% 1.5%
Tuesday CHINA PPI 6.3% 6.3%
Tuesday GERMANY Manufacturing PMI 60.1 60.6
Tuesday GERMANY Services PMI 55.5 55.6
Tuesday EUROZONE Manufacturing PMI 57.9 58.1
Tuesday EUROZONE Services PMI 55.7 55.8
Wednesday AUSTRALIA CPI 0.8% 0.2%
Wednesday GERMANY IFO Business Climate 0.4% 0.2%
Wednesday UK Prelim GDP 0.3% 0.3%
Wednesday US Core Durable Goods Orders 1.1% 2.0%
Wednesday CANADA BOC Rate Decision 1.0% 1.0%
Wednesday CANADA BOC Statement
Wednesday US New Home Sales 556,000 560,000
Wednesday US Crude Oil Inventories -5.7 bill
Thursday EUROZONE ECB Rate Decisiion 0.00% 0.00%
Thursday EUROZONE ECB Press Conference
Thursday US Unemployment Claims 236,000 222,000
Thursday US Pending Home Sales 0.7% -2.6%
Friday US Advance GDP 2.7% 3.1%

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Analysis

Long-Term Cryptocurrency Analysis: Bitcoin Outshines Altcoins Again

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The most valuable coin had another encouraging week, as it emerged from a brief but violent correction, just to reach new highs towards the end of the week, draining capital from altcoins. The total value of the market is stagnating near the all-time high, but BTC crossed the $100 billion mark as it surged past the $6000 price level, controlling 58% of the market.

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With the long-term MACD clearly being overbought, and as the long-term target has been hit, investors should now be looking for exit points, even as the short-term uptrend is intact. The range projection target of the recent correction is found at $7000, but correction risks are already high, and only small positions should be kept in the current setup.

BTC/USD, Daily Chart Analysis

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Most of the major altcoins are trading in narrow ranges this weekend after a slightly bearish week, as the optimism surrounding Ethereum’s major update faded and the second largest coin re-entered its previous range.

Litecoin, Dash, and Monero are still looking encouraging despite the lengthy correction, while the recently, while the relatively weak Ethereum Classic IOTA continue to show worrying signs. As the Bitcoin long trade is getting stretched,  let’s see the how the daily charts of the altcoins are shaping up.

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