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Analysis

US Opens New Front in Trade War as Oil Plunges

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Financial markets are relatively calm today, with most of the major stock benchmarks being virtually unchanged after the weekend. The energy segment is experiencing the most activity as the volatile correction in crude oil prices continues. Besides that, the Euro’s relative strength is notable, but summer trading conditions remain dominant across the board, with low volumes and choppy intraday price action in most of the asset classes.

Shanghai Composite, 4-Hour Chart Analysis

There seems to be no stopping in the global escalation of trade tensions, as amid the Helsinki meeting between Trump and Putin, the US launched an official probe concerning the retaliatory tariffs of its largest trade partners. The move could deepen the standoff not just between the US and China, but the EU and its other allies as well, and global growth is already weakening, so with further trade troubles growth could grind to a halt.

S&P 500 Futures, 4-Hour Chart Analysis

While global stocks are still well off their highs, and Chinese equities remain in bear market territory, the main US indices are holding on to their recent gains, with the Nasdaq being the by far the strongest benchmark globally. The slightly weaker S&P 500 is also trading at a 4-month high despite trade war fears, and as the first earnings reports of the second quarter were slightly better than expected, with Bank of America beating today before the bell, bulls are still in control on Wall Street.

As for economic news, the much awaited US Retail Sales report delivered a small positive surprise, and last month’s figures were also revised higher. The report helped risk assets during the US session, even as the disappointing Chinese Industrial Production number weighed on investors sentiment earlier on.

Dollar Index, 4-Hour Chart Analysis

Despite the bullish numbers, the Dollar lost a bit of ground against its major peers, although forex markets were less active today than recently and the most traded pairs traded in relatively tight ranges after Friday’s hectic session.

Oil Back Below $70 per Barrel as Commodities Remain Weak

WTI Crude Oil, 4-Hour Chart Analysis

Crude oil prices are sharply lower yet again, with the WTI contract leading the way lower as tight short-term supply conditions got better in Canada, and the general weakness in the global commodity segment infected the market oil. The IMF’s report on weakening global growth, and the chatter about the release of some of the global strategic oil reserves also weighed on oil, and the WTI contract is now at $68 per barrel after trading as high as $75 just one week ago.

Copper, 4-Hour Chart Analysis

Elsewhere in the commodity space, it has been a quiet Monday session, with gold drifting slightly lower after a weak rally in early trading, as selling pressure is still apparent among precious metals. Copper, which also has been suffering in recent weeks as Chinese assets got slammed lower, is still consolidating above the strong long-term support zone that we pointed out last week.

Featured image from 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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Analysis

Crypto Update: Coins Turn Lower After Choppy Weekend

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The major cryptocurrencies are slightly lower today in early trading, as Sunday’s modest rally faded away without major technical progress. Most of the coins are stuck in narrow trading ranges, and last week’s spike well above the current price levels, as buyers failed to take control of the market.

That said, we haven’t seen strong negative momentum either, and although the bearish long-term setups remain intact, there is no immediate danger of new bear market lows in the segment.

Patience is still the name of the game for crypto investors, since there is no evidence of a broader trend change that would justify a more constructive investment position. Our trend model is on sell signals across the board on both time frames, and the bearish pressures are still apparent on the charts, even considering the lengthy consolidation period. Given the negative long-term trends, odds still favor a test of the lows in most case, particularly in the light of the lack of bullish leadership.

IOTA/USD, 4-Hour Chart Analysis

While most of the majors are still above the lows hit just before the Tether-turmoil, there are several relatively weak coins that could lead the market lower in the coming weeks. Especially Ethereum, Liteocin, Dash, and EOS point a negative picture of the market, while Ripple and Bitcoin are still the most encouraging form a bullish standpoint, even as they also failed to signs of bullish momentum.


BTC/USD, 4-Hour Chart Analysis

Bitcoin is back near the $6400 level today, after drifting towards the $6500 resistance during yesterday’s rally,  but the coin is still well clear of the $6275 support level, trading clearly within last Monday’s range. Our trend model continues to be on a short-term sell signal, while the long-term picture is still neutral for the largest digital currency.

Traders and investors still shouldn’t enter positions here with further resistance levels ahead near $6750 and $7000 and with support levels below $6275 found near $6000, $5850 and between $5000 and $5100.

Altcoins Slightly Lower as Stellar Fails to Break Out

XRP/USD, 4-Hour Chart Analysis

Ripple and Stellar have been showing some positive signs last week, but they both failed to make significant technical progress, confirming the segment-wide selling pressure. Ripple is threatening to move below the $0.42-$0.46 level, despite the rally above its triangle consolidation pattern, and a break below $0.42 would likely trigger a test of the $0.355 support.

For now, the short-term sell signal remains in place due to the lack of follow-through, and traders should be cautious with new positions. Strong resistance is still ahead at $0.51, $0.54, $0.57, while further, weak support is found near $0.375.

Stellar/USD, 4-Hour Chart Analysis

Stellar is trading very close to the key long-term support zone near $0.24 that has been dominating trading for several weeks, and despite the rally attempts, the coin is still not out of its bear market. That said, should a broader trend change occur, Stellar would likely be among the leaders of renewed advance, but for now, traders and investors should still stay away from the coin.

The declining long-term trend is intact, with strong resistance levels ahead near $0.265 and $0.2835, while support levels are found near $0.235, $0.21, and $0.1935.

ETH/USD, 4-Hour Chart Analysis

Ethereum is still stuck in a very narrow range after the weekend, with the $200 support/resistance level still being in the center of attention. The bearish broader setup is unchanged in ETH’s market, with the coin still being relatively weak among the majors.

Traders and investors shouldn’t open new positions her, with further support found near $180, $170, and $160, and with strong resistance zones ahead near $235 and $260.

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 380 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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Altcoins

Litecoin Price Analysis: LTC/USD Developers to Slash Transaction Cost, with Upcoming Core Update

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  • Litecoin fees are set to be largely reduced in the forthcoming upgrade, in an attempt to boost adoption.
  • LTC/USD remains heavily dictated by triangular pattern, behavior suggests a breakout is imminent. 

Litecoin Fees to lower by 10x in next Core Release

The Litecoin foundation will be updating the Litecoin protocol to version 0.17, following an announcement via Twitter. This update will ultimately reduce the network’s fees drastically compared to its already nominal costs.

It is reported that with this upcoming upgrade, the network fee will go down to $0.005. Their goal is to encourage greater adoption of Litecoin. Currently, the average transaction fee is floating around $0.05. Bitcoin’s transaction fee is currently seen around $0.10.

At the back end of 2017, a large bull market was observed. Bitcoin prices were up at heights around $20,000. Users as an alternative started to use LTC, given its inexpensive nature, in comparison to Bitcoin. It is interesting to note also that Bitcoin transactions were as much as $55 during those highs. However, Litecoin remained by far competitive, facilitating lower transaction fees, less than $1. During the peak, LTC fees reached $1.5.

Litecoin’s Core lead developer, Adrian Gallagher, was commenting on the upgrade intentions, saying: “To encourage more adoption and usage of Litecoin, I think lowering the fees are a good thing. We’re not even close to block limits and the block size on disk is pretty small (20GB) relative to other coins. Technically people can already adjust their fees right now to the one above, because of the more relaxed min relay/dust relay fee.”

Elsewhere, he was speaking about the current market conditions, believing that the bear market being observed, will not last. Predicting that in the next three to six months, prices could start to rise again. He stated: “With lower fees, it would be possible to lay down the foundation for a fee rate, that can grow proactively rather than re-actively.”

Technical Review – Daily Chart

LTC/USD daily chart

Looking via the daily time frame, LTC/USD price action remains trapped and dictated by a triangular pattern. This is seen across several of the other cryptocurrencies. The calls of an imminent breakout make much sense, with this type of price behavior seen.

Over the past few days, upside has been capped around the $55 mark. Further north, resistance is seen at the $56.50-60, the upper part of the triangular pattern formation. A breakout higher should allow a run well into the $60 territory. Testing the 27th September high ($65.85) would be probable. Supply is seen running from that high up until $70, where the price faltered on 4th September.

In terms of support, $53 has proven to be an area of comfort, over the last five sessions. The lower trend line of the above-mentioned pattern is seen tracking at $51.50. Finally, a demand zone is seen just below running from the big $50 mark, down to $0.47.

Disclaimer: The author 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 (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 33 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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Analysis

Pre-Market Analysis And Chartbook: Chinese Stocks Extend Rally

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Monday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,773 0.22
DAX 30 11,629 0.65%
WTI Crude Oil 69.42 0.07%
GOLD 1,226 -0.28%
Bitcoin 6,406 -0.10%
EUR/USD 1.1513 0.01%

Global stock markets started out the week on a positive note, with Chinese equities surging higher, extending their late-day gains from Friday. European and US indices are not that enthusiastic though, and from a technical standpoint, today’s early rally didn’t change anything yet, with the declining trends in the majority of risk assets being intact. With the economic calendar being empty today, technicals, the EU-Italy debate, and the Khashoggi-assassination will likely be in focus.

Shanghai Composite Index CFD, 4-Hour Chart Analysis

The Shanghai Composite gained the most in two days in over 2 years, with the active help of PBOC, and the benchmark is now testing the previous support that held up Chinese stocks during the bear market. The index broke above one declining trendline and that could open up the way for a larger correction, even if the broader trend is still clearly bearish. The 2700 level could be in the center of attention this week, especially if global markets can also rally following two weeks of turmoil.

S&P 500 Futures, 4-Hour Chart Analysis

US stock futures are broadly higher in European trading, but the momentum of the move is very weak, and the gains of the Asian session are already eroding. From a technical standpoint, the short-term picture is clearly bearish and the charts suggest a test of the lows this week, especially as small-caps continue to underperform and market internals are negative.

Treasury yields are unchanged so far, as Italian assets are up today, and safe haven flows slightly reversed in early trading. The short-end of the yield curve is still very close to its recent highs, and with the European Central Bank’s rate decision on tap this week, we expect further fireworks in bonds, and in turn equities.

Currencies Already Active as Emerging Markets Still in Trouble

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

While the Chinese rally helped equities across the board, other emerging markets lagged on Friday, and despite today’s bounce their technical position still suggests troubles ahead. The EEM ETF is set to open well below the break-out level near 41, and with that, the segment is among the weakest parts of the global market. While the most vulnerable currencies are still performing very well, stocks are seemingly sinking into a grueling bear market.

Elsewhere in currencies, we already saw relatively large moves to start the week, as the EUR/USD rallied up to 1.1550 thanks to the optimism regarding the Italian budget. The most traded pair already sunk back in the red, and the Dollar is higher against most of its peers, reversing some of Friday’s pullback. The Japanese Yen is the weakest so far, due to the Asian risk-on shift, and gold is also lower today as safe-haven assets are struggling.

Copper Futures, 4-Hour Chart Analysis

Besides gold, the key commodities are higher thanks to the Chinese rally, but both crude oil and copper are still below key resistance levels, as technicals are unchanged, so far today. The WTI crude contract is trading below the $70 per barrel level, while copper advanced up to the declining trendline of the consolidation pattern that has been dominating trading in the metal for almost a month.

ChartBook

Major Stock Indices

Nasdaq 100 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Forex

EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Gold Futures, 4-Hour Chart Analysis

Featured image from 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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4.6 stars on average, based on 380 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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