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U.S. Indices Weekly Technical Update: May 11

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This week, U.S. indices exhibited their most bullish price action since the 2018 correction ensued. This up-move, in comparison to the February and April rallies, is expected to “have legs”.

Technical Overview

S&P 500

  • Today (May 11), the index made another high for the month, after breaking above two key resistance levels on Thursday:
    • The January – March resistance (orange trendline in Figure 1)
    • The 2,700 – 2,710 area, which served as resistance in April (yellow horizontal trendline).
  • Minimum short-term upside target – 2,800. Likely to retest the January high in a swift manner if 2,800 is broken.
  • Major resistance – the March high (2,800).
  • Major supports – the intermediate-term support (ITS) and 200 SMA (currently both at roughly 2,620 – violet and white lines), and the resistance-turned-support orange trendline.

Figure 1. S&P 500 Daily

NASDAQ

  • On Tuesday (May 8), the index pushed above two key resistance levels:
    • The 7,320 level (the April 18 high – white vertical line in Figure 2).
    • The lower support of the large trading channel (green trendline).
  • Retest of the March high appears imminent after this week’s price action.
  • Major resistance – the 7,474 – 7,637 range (i.e.the range or prices prior to the down-gap of the island reversal in March; island reversal – red ellipse; down gap – white arrow).
  • Major support – the lower support of the trading channel (green trendline) and the intermediate-term support (ITS – violet trendline, currently at 6,950).

Figure 2. NASDAQ Daily Chart

DJIA

  • On Wednesday (May 9), the index closed above several resistance levels and completed a 2-month inverse H&S pattern (bright blue horizontal trendline in Figure 3).
  • The upside target from the H&S pattern lies at roughly 26,200 (bright blue vertical trendline).
  • Major resistance – the 25,500 level may serve as resistance (i.e. the origin of the mid-March correction – yellow horizontal trendline).
  • Major supports – the 200 SMA (white line, currently at 23,883) and 23,350 (Feb and April lows – green horizontal trendline). Above, 24,500 (prior resistance-turned-support) may also support the index during pullbacks.

Figure 3. Dow Jones Industrial Average Daily Chart

Implications

  • U.S. indices are expected to retest their 52-week highs over the next quarter or two.
  • Short positions should be closed unless trades are entirely based on idiosyncratic factors.
  • Long positions in index-tracking ETFs and constituents recommended.
  • Potential breaks of the intermediate-term supports for both S&P 500 and NASDAQ at any point in the future should take precedence over all other technical developments (i.e. a break below the ITS will negate any bullish outlook).

Outlook

  • Short- and intermediate-term bullish.
  • Short- and long-term bearish whenever S&P 500 and NASDAQ break their respective intermediate-term supports. Considered less likely in the short-term after this week’s price action.

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 15 rated postshttp://www.linkedin.com/in/konstantindimov




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    Analysis

    Ether Price Has a Good Chance of Rising Further

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    On Wed July 18, Ether is falling, although the previously formed local uptrend still looks quite sustainable. The crypto is trading around $498, says Dmitriy Gurkovskiy, Chief Analyst at RoboForex.

    Today’s morning, Ether rose above $500, which helped to determine the next important resistance levels. The bullish trendline at $480 that was formed yesterday is now confirmed on H1, and in case Ether is able to go above $500 shortly, its chances for going further up will increase.

    Once Ether continues rising, it will quickly reach $525, and the current support levels will go above, too. As of now, Ether has some potential to rise till $550, according to D1.

    For now, the key support for Ether is at $480, and once the crypto heads up, a new support at $500 will get active. $525 is still key resistance for now. The MACD is going up on D1, still in the negatives, and is issuing a buy signal, while the Stochastic confirms it, being in the positive territory.

    ether

    Among fundamentals and events that are important for Ether traders, one can mention the addition of Bitcoin and Ether to Purple Group. The company believes its customers will now have more freedom in selecting payment methods for running their transactions.

    Another important news item is that the brokers using MT4 began offering cryptocurrency trading (at first, only Bitcoin, but then other cryptos were added). In most cases, the clients can trade CFD’s, although some brokers allow direct cryptocurrency transactions, too. This is a very interesting opportunity, as the investors trust MT4 and consider it a secure platform, so crypto trading added to it will be trusted, too.

    With more products added to the platform, both direct crypto trading and CFD’s, more people will come to MT4 in order to try it. This is positive for both Ether and other altcoins.

     

    Disclaimer:

    Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

    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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    4.6 stars on average, based on 4 rated postsHaving majored in both Social Psychology and Economics, Dmitry went on to continue his education in post graduate. He then worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped him to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. Dmitry is a pro in the financial field who authors articles for various international media. He also holds the position of Chief Analyst at RoboForex.




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    Analysis

    Crypto Update: Monero Bullish Reversal on the Horizon

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    The cryptocurrency world has come to life today. Bitcoin is leading the way, up by over 10% in 24 hours as it surged past $7,000. Other coins such as Ripple (XRP/USD), Litecoin (LTC/USD), and Bitcoin Cash (BCH/USD) have followed suit, growing between 5% – 10% in 24 hours as well. Looking at this cast of cryptocurrencies, it seems that Monero (XMR/USD) investors are missing out on this rally.

    Not to worry because usually a rising tide lifts all boats in financial markets. In this article, we reveal why a major bull run is likely on the horizon for XMR/USD.

    Monero Weekly Chart Looks Promising

    A quick look at the weekly chart of XMR/USD and you can easily spot the formation of a falling wedge. The recent bounce from $120 support has given investors a good reason to be excited. After all, the rally has put the market in a position to finally breakout out of the falling wedge.

    Weekly Chart of XMR/USD

    Monero appears ready to take out the resistance level. The daily chart gives us glimpses on how this breakout might transpire.

    Daily Chart Shows Bullish Two Scenarios

    Switch to the daily chart and you’ll also see the large falling wedge in play. On top of that, it offers two possibilities regarding how Monero can break out of this pattern and launch a bull run.

    XMR Breaks Out on Fear of Missing Out

    Bitcoin, being the most popular cryptocurrency, often acts as a barometer for other cryptos. Its strength or weakness can influence how other altcoins perform. Bitcoin’s recent trend reversal might make Monero investors greedy. The fear of being left out might just be enough to take out resistance of $160.


    This scenario is viable as the daily MACD reveals a bullish divergence and a bullish cross. In addition, the 4-day, 8-day, and 21-day moving averages are not acting as immediate supports.

    XMR Breaks Out on Increased Demand

    A more sustainable breakout is one driven by demand rather than greed. In this scenario, Monero respects resistance of $160 as investors see the bounce as a sell rally. This starts a waterfall event that would push the market down to key support of $85.

    At this price level, demand exceeds supply. Plus, the falling wedge would be at its narrowest point.

    The daily RSI offers support in this scenario. It is currently forming a rising wedge, which is a bearish pattern. Even if XMR climbs to $160, the RSI would likely be overbought by then. That could catalyze the fall to $85 support.

    Bottom Line

    Bitcoin’s resurgence can influence how Monero moves in the coming days. Investors might become greedy and push the market above resistance of $160. On the other hand, investors may see the recent bounce as a sell rally. This can drive the market down to support of $85.

    Either way, a breakout is on the horizon. A bullish reversal is likely not a question of if, but when.

    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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    3.6 stars on average, based on 201 rated postsKiril is a financial professional with 4+ 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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    Analysis

    Crypto Update: Bitcoin Blows Through $7000 but Altcoins Still Lag Behind

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    The relief rally in the cryptocurrency segment continued in earnest today, as Bitcoin still lead the way higher posting its best daily performance since April. The most valuable coin stole the show, although the whole market blasted higher, with the total value of the coins getting close to $300 billion, up by around 20% in a matter of days.

    While the segment is still not out of the woods, BTC triggered a short-term buy signal in our trend model, as it overcame major resistance levels for the first time since May, finally showing some technical progress. That said, most of the majors are still stuck in, or right at the top of their trading ranges, and besides Bitcoin, buy signals are few and far between even considering the smaller coins, as correlations are still very high.

    Trading volumes were also the highest in months, as especially Bitcoin triggered automatic orders while surging through several strong resistance levels. Bulls would still need further coins to join the break-out and fro now the long-term setup is still just little changed.

    BTC/USD, 4-Hour Chart Analysis

    BTC cleared the $6750, $7000, and $7350 levels in a bit more than an hour, and the epic short squeeze settled down near the latter resistance, for now. The coin is now on a short-term buy signal, and should a higher low form in the coming days, a new short-term uptrend could be established.

    The coin needs to stay above the $7000 level to keep the signal intact, and given the relative weakness in Altcoins, the long-term outlook is still mixed. Resistance is now ahead between $7650 and $7800, while further support is at $6500.

    Ethereum at $500 as Ripple Tests $0.51

    ETH/USD, 4-Hour Chart Analysis

    While Bitcoin is already above primary resistance, Ethereum is trading right at the $500 level, leaving the short-term trading range intact. The coin is close to triggering a buy signal, but it remains relatively weak and traders should wait for follow-through before playing a possible trend change. Primary support is still found at $450, with other levels at $420, $400, $380, and $360, while further resistance is ahead between $555 and $575.

    XRP/USDT, 4-Hour Chart Analysis

    With all of the majors registering large gains, and even some the recently weak coins like LTC, XRP, and Dash are trading near key resistance levels, further short-term buy signals could pop up in the segment, but until a confirmed new uptrend, traders should remain cautious with new positions.

    As an example, Ripple is trading slightly above the $0.51 resistance currently, but a break-out is not yet confirmed, and the trading range remains dominant. Further resistance levels are ahead at 0.54 and $0.575, while support is now found at $0.49 and $0.45.

    Featured image from Shutterstock

    Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

    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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    4.6 stars on average, based on 293 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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