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Analysis

U.S. Dollar Erases Losses as Risk Aversion Fades; Economic Data in Focus

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The U.S dollar reversed heavy losses on Tuesday, as risk appetite returned to the financial markets following another bout of North Korea jitters. Despite the modest gain, the greenback is in a firm downtrend that extends all the way back to the start of 2017.

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DXY Stems Declines

The U.S. dollar index (DXY) was down around half a percent Tuesday before making a sharp U-turn later in the session. The DXY basket closed at 92.33, gaining 0.1% in the process. Modest gains continued early on Wednesday, with the index climbing another 0.1%.

It has been a disastrous week for the U.S. currency. Between Thursday and Friday, the greenback fell more than 1% to reach its lowest level since January 2015.

A weaker yen provided much of the catalyst for Tuesday’s sharp drop. The Japanese currency was down again Wednesday morning local time despite better than expected retail sales data.

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Receipts at Japanese retail stores rose 1.1% in July and 1.9% annually, the Ministry of Economy, Trade and Industry reported. That was the ninth consecutive monthly gain.

As the following chart illustrates, the DXY has declined around 9.7% since the start of the year.

Outlook Remains Weak

The performance of the greenback is intricately tied to the outlook on the U.S. economy and financial system. If that’s the case, then the currency could be in store for a rough couple of months.

A triad of mega banks that includes HSBC, Citigroup and Morgan Stanley have warned that the end of the bull market is near. The banks say investors won’t be able to ignore valuation fundamentals and economic data for much longer, especially as these variables point to a downturn in the business cycle.

Even the Federal Reserve has maintained a cautious outlook on the economy – one that diverges from President Trump’s expectations.

Gold Maintains Bullish Bias

Gold’s safe haven status shined at the start of the week, with prices closing above $1,300.00 for the first time this year. Bullion eased off recent highs on Tuesday, but remained well supported near Monday’s settlement price.

December gold futures, the most actively traded futures contract, was last seen trading at around $1,318.00 a troy ounce.

Silver also benefited from the haven rally, rising to nearly three-month highs on the Comex division of the New York Mercantile Exchange. The grey metal last traded at around $17.51 a troy ounce.

Gold’s premium over silver has declined in recent sessions to 75.37 ounces. That’s how many ounces of silver are needed to buy one ounce of gold. The ratio peaked above 78.5 back in July.

Source: Goldprice.org

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Analysis

Technical Analysis: Litecoin and NEO Jump as Bitcoin Trades near $8000

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The cryptocurrency segment continued its bullish run, as the total value of the coins climbed above $230 billion for the first time ever, while Bitcoin also posted marginal new highs. The most valuable currency is still overbought regarding the long-term picture, and we continue to expect a deeper correction in the coming period, despite the recent strong rally. Support levels are still found $7700, $7000, and $6700 while the $8000 level is ahead as a major obstacle.

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BTC/USD, 4-Hour Chart Analysis

Litecoin has been the most active major besides Bitcoin, as it rallied strongly after breaking out above the key $64 resistance and it breached the next target at $75 before heading below $70 again. The coin remains in bullish long- and short-term patterns, and we expect a move above the major resistance zone ahead with the next target found at $82.50.

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Litecoin/USD, 4-Hour Chart Analysis

NEO is showing strength in the second half of the session, while Monero is recovering well from a short-term dip, similarly to IOTA and Ethereum Classic. Ethereum continues to represent stability in the segment, while Ripple failed to build up momentum so far after yesterdays spike higher. With still most of the altcoins being in bullish setups, let’s see the short-term charts.

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Analysis

XRP Looking to Make a Significant Rally

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The XRP/USD pair went into a deep correction after hitting 0.29490 a month ago. It nosedived to the major support level of 0.19052. The pair consolidated for a few weeks which gave the market the legs to test resistance at 0.22924.

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Technical indicators show that the pair was ready to breach its immediate resistance, which it did this morning. Now that resistance has broke at 0.22924, it’s time to buy. This successful breakout will take the pair to 0.23997 first and 0.26563 next before hitting the target of 0.26796 which is coincidentally a major resistance level.

Technical indicators hint that the market would most likely be overbought by the time it hits 0.26796. Should it respect the major resistance level, the likelihood of the market turning extremely bearish increases. Therefore, it is recommended to closely watch your trail stops to preserve your gains.  

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Summary of Strategy

Buy: As close to 0.22924

Support: 0.22224 and 0.20081

Target: 0.26796

Stop: If the market breaches 0.20081 as next reliable support is 0.19052

 

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.

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Analysis

Technical Analysis: Ripple Breaks Out as Bitcoin Tests Highs

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Cryptocurrencies are having another bullish session as the total value of the market surged to a new all-time high near $225 billion, with the help of the rally in BTC and Ripple, and despite the drop in the value of Bitcoin Cash. The most valuable coin its record high yet again after the brief but steep weekend correction, despite the still overbought long-term picture. We still urge traders and investors to wait for a deeper correction before entering new positions here, with support levels found at $7000, $6700, and $6000.

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BTC/USD, 4-Hour Chart Analysis

Ripple has been the other main mover of the day so far, as the coin skyrocketed on huge volume and breached the $0.26 level before turning lower and stabilizing near $0.23. The coin triggered a short-term buy signal by moving above $0.2250 and it remains bullish on both time-frames, despite the pull-back, with another major target level ahead at $0.30.

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Ripple/USD, 4-Hour Chart Analysis

The other majors are little changed expect IOTA, which further added to yesterday’s gains and reached overbought readings, while Ethereum Classic and Dash continue to drift lower in short-term correction patterns. Let’s see the detailed analysis of the short-term charts.

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