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Market Overview

Wall Street’s Misery Spreads to Global Stocks; U.S. Futures Recover Slightly in National Day of Mourning

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A dramatic selloff of U.S. stocks on Tuesday has quickly spread to Asian and European markets, with global benchmarks reporting steep selloffs amid a self-imposed deadline by the United States and China to resolve their bitter trade dispute. The Nasdaq and New York Stock Exchange were closed on Wednesday as the nation mourned the death of former President George H.W. Bush.

Global Markets Slump

Markets from Tokyo to London faced brisk selloffs on Wednesday, as investors tracked brutal losses in New York during the previous session. In Asia, large declines were reported for the Heng Seng Index, which fell 1.6% to 26,819.68. Mainland China’s CSI 300 Index fell 0.5% to 3,252.00. Meanwhile, Tokyo’s Nikkei 225 Index closed off 0.5% at 21,919.33.

All of Europe’s major benchmarks settled in negative territory midweek. The Euro Stoxx 50 Pr benchmark for Eurozone stocks fell 1.2% to close at 3,150.27. In individual bourses, London’s FTSE 100 Index fell 1.4% to 6,921.84. Germany’s DAX settled down 1.2% at 11,200.24.

U.S. stock futures traded higher overnight, with the Dow Jones mini contract rising 110 points to 25,156.00. The Dow Jones Industrial Average plunged 800 points in regular trading on Tuesday, with trade-sensitive stocks suffering the biggest declines.

90 Days and Counting

China’s Commerce Ministry on Wednesday formally acknowledged the 90-day timeline to negotiate a new free trade agreement with the United States, clearing up any confusion about future negotiating rounds. The 90-day ceasefire was originally communicated by President Trump following his face-to-face meeting with China’s Xi Jinping over the weekend.

The Commerce Ministry issued an official statement on Wednesday acknowledging a “clear timeline and roadmap” for the negotiations. According to the statement, China seeks to quickly implement “an agreed up on consensus.”

Disgruntled by the lack of progress made on free trade, investors dumped riskier assets on Tuesday, leading to the aforementioned selloff in the Dow, S&P 500 and Nasdaq. Fear and uncertainty sparked a nearly 30% spike in the CBOE VIX, Wall Street’s main volatility gauge.

Cryptos See No Progress

The global cryptocurrency market suffered a fresh setback on Wednesday, as bitcoin returned below $3,800 and major altcoins like XRP and Ethereum failed to stem their downfall. Cryptos lost $6 billion in combined market cap, dragging the total universe back down to $122 billion. Only Binance Coin (BNB) and a few dollar-backed stablecoins were spared from the declines.

As Hacked reported earlier, the bitcoin price has established a new trading range between $3,500 and $4,500, and a lack of momentum for the leading digital currency has kept the broader market at a virtual standstill. At the time of writing, bitcoin was down 4.6% at $3,786, according to CoinMarketCap. XRP, the second-largest cryptoasset by market cap, fell 3.5% to $0.3420. Ethereum was down 6.5% at $103.85.

Given that the downtrend is unlikely to let up anytime soon, some investors are already looking ahead to next year. Recent developments in the cryptocurrency market suggest there are brighter days ahead as institutional adoption and commercial use cases continue to grow. Nasdaq and Intercontinental Exchange are scheduled to launch new bitcoin futures markets next year. The heavily funded and institutionally-backed ErisX cryptocurrency exchange is also scheduled for release in 2019.

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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4.6 stars on average, based on 704 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Analysis

Forex Update: Dollar Drifts Lower With All Eyes on the Fed

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Forex Market Snapshot

Asset Current Value Daily Change
EUR/USD 1.1368 0.19%
GBP/USD 1.2648 0.20%
USD/JPY 112.55 -0.23%
AUD/USD 0.7201 0.34%
GOLD 1,250 0.14%
WTI Crude Oil 48.53 -1.32%
BTC/USD 3,565 1.96%

With just one day left until the week’s main event, the Fed’s rate decision, it’s no surprise that forex markets are having a very choppy session, with the Dollar and the main safe-haven assets being in focus. The USD has been under pressure in the last couple of days amid the louder and louder critiques regarding the Fed’s rate hikes, and although economic numbers continue to be positive in the US, and the consensus still points an increase tomorrow, leaving the rates unchanged wouldn’t be as shocking as one week ago.

Economic numbers were mixed today, with the German IFO index missing the consensus estimate, but with the US housing market showing stability for the second month in a road. Building permits and Housing Starts both bounced back more than expected amid the pullback in Treasury yields in November, pointing to a still relatively healthy economy in the US.

While the Dollar only managed a small pop higher following the releases, as Treasury yields plunged to new multi-month lows again, the underlying bullish trend seems safe for the reserve currency.

Technical Analysis

GBP/USD, 4-Hour Chart Analysis

The Great British Pound is having another active session, and although it briefly surpassed the crucial 1.27 level against the Dollar, it fell sharply later on, leaving last week’s key technical breakdown intact.  While choppy trading is expected across the forex segment up until tomorrow’s key Fed announcements, the Pound could remain active, with the Brexit chaos and Theresa May’s shaky position still causing headaches for traders.

EUR/JPY, 4-Hour Chart Analysis

While risk assets rebounded today after yesterday’s volatile and bearish session, the main safe-haven assets, such as the Japanese Yen and gold continue to perform well, especially compared to the risk-on currencies. The EUR/JPY pair which has been trading in a broad bearish consolidation pattern since October is testing the key support zone between 127.50 and 127.75, threatening with a key breakdown in the coming weeks. While the short-term momentum indicators are slightly oversold, the pair is clearly bearish both short- and long-term and traders should be looking for entry points on the short side.

USD/CNH, 4-Hour Chart Analysis

Some analysts call the Dollar/Yen pair “most important currency pair of 2019”, and the pair continues to trade in the close vicinity of its October low, despite the recent trade-related optimism. A clear dovish surprise tomorrow could send the Yuan soaring, even in light of the recent weak Chinese economic data, but for the coming months, new highs are very likely (meaning new lows for the Yuan), and a drop to 6.85 would be an optimal entry point for traders.

WTI Crude Oil, 4-Hour Chart Analysis

Oil continues to be in a steep broader downtrend, and despite the deeply oversold long-term momentum readings, the crucial commodity only managed to consolidate in a sideways trading range after dipping below the key $50 per barrel price level in the WTI contract.

Yesterday, the price of the contract fell below its prior low, and today the commodity plunged by more than 5%, violating the $47.50 per barrel level for the first time since mid-2017. Barring a quick recovery, the breakdown could extend to the $44 per barrel level but a strong support zone is already found between $46.50 and $47.

Key Economic Events Tomorrow

ChartBook

Forex

EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

AUD/JPY, 4-Hour Chart Analysis

GBP/JPY, 4-Hour Chart Analysis

USD/CHF, 4-Hour Chart Analysis

Commodities

Gold Futures, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 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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4.7 stars on average, based on 420 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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Market Overview

The Ghost of Crypto Anarchy

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Hi Everyone,

Today we bid farewell to the Godfather of the Cypherpunk movement, which gave birth to bitcoin.

If you’ve never heard of Tim May (may he rest in peace), I refer you to his words of 1992. This short passage was so ahead of its time that it may as well have been written last Tuesday.

Quick read: The Crypto Anarchist Manifesto

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Sell Off Continued
  • Breakouts Forming
  • Bounce off the Floor

Please note: All data, figures & graphs are valid as of December 18th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

The global sell-off in the stock markets continues. For a brief moment after the bell rang at the New York Stock Exchange, it did seem like there would be some sort of bounce, but by the end of the session, the major indices were back at the lows.

The S&P500 index fell within a single point of its lowest rate this year (yellow line).

The negative sentiment has carried through into Asia, but it seems the Europeans are a bit more optimistic today, especially in Germany where the DAX is in green.

The feeling is that we could be getting some much-needed relief from the US Federal Reserve as they head into their two-day meeting today. So things might calm down as we approach the announcement tomorrow evening.

Breakout Time

Looking at some of the other assets out there, volatility has increased over the past few sessions. Here we can see the VIX Volatility Index making a move to the upside over the last few days along with the selloff in the stocks.

With that, it pays to take a look at the US Dollar, which continues to push the highs with some upward facing consolidation. This will be critical going into the Fed meeting, where they are largely expected to raise rates.

However, since the rate hike is expected to be dovish, we could just as easily see a downward breakout. Watch this space.

Gold is also looking for a breakout of the psychological barrier at $1,250 an ounce.

Ever avantgarde, crude oil has already broken below $50 yesterday, a staunch indication that the oversupply issues aren’t quite behind us.

Just for good measure we’ll add in the USDJPY as well here. Especially if the dovish rate hike does indeed do the Dollar in, and Asian traders look for safety in the Yen, we could see 112.22 give way.

Crypto Bounce Acquired

Yesterday, on the 10th anniversary of Bitcoin’s all-time high, we did manage to see a strong push off the floor. Though it’s not clear what exactly caused the bounce, it does appear to be a short squeeze that took out a few of the high-risk traders. I did put up a few charts on Twitter as it was happening.

Ever since the break below $5,000 we’ve been talking about light support at $3,500 and heavy support at $3,000, so this bounce off the $3,000 level couldn’t be more picture perfect.

The biggest winner emerging from this move was EOS, which rose a total of 29% within a few short hours. Yet still nowhere near its all-time high of $23.33.

Though it is possible that we do continue downward from here, this type of movement is very encouraging for technical analysts and may just end up creating a bottom for this battered market possibly even giving way to a bullish trend in 2019. Who knows… maybe we’ll get a Santa Claus Rally after all.

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

eToro is a multi-asset platform which offers both investing in stocks and cryptocurrencies, as well as trading CFD assets.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Best regards,
Mati Greenspan
Senior Market Analyst

Connect with me on….

eToro: @MatiGreenspan Twitter: @MatiGreenspan LinkedInMatiGreenspan |Facebook:MatiGreens

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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4.7 stars on average, based on 139 rated postsSenior Market Analyst at Etoro.com.




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Analysis

Forex Update: Trump Pressures Fed Ahead of Rate Decision

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Forex Market Snapshot

Asset Current Value Daily Change
EUR/USD 1.1355 0.46%
GBP/USD 1.2629 0.36%
USD/JPY 112.72 -0.57%
AUD/USD 0.7177 0.03%
GOLD 1,250 0.64%
WTI Crude Oil 49.99 -2.38%
BTC/USD 3,543 10.91%

The US Dollar has been at the center of attention again, as the last full trading week of the year started off in a bearish fashion for risk assets. Although we saw a bounce following Theresa May’s statement on the Brexit process regarding a possible vote on the draft plan in January, risk-on currencies and other risk-on assets are clearly under pressure, with the US stock markets challenging their correction lows again, completing the bearish global shift.

The Dollar’s slight dip, which was triggered by another attack by Donald Trump on the Fed’s tightening schedule provided the most action in the otherwise quiet forex segment, with a lot of traders taking a step back before the Fed’s rate decision on Wednesday. The consensus estimate is still a rate hike on the central bank’s meeting, which would be the fourth tightening step this year, but now, the bond market signals no rate hikes next year and in the current cycle.

Technical Analysis

EUR/USD, 4-Hour Chart Analysis

The EUR/USD pair bounced higher in its broader trading range after last week’s bearish close, but it remains well below the key 1.1440 level, and the bearish long-term technical setup is unchanged, eve as the pair held up above the support zone between 1.1275-1.13.

The breakdown from the consolidation pattern has been aborted, and we will likely have to wait until Wednesday for the next meaningful move, but with the period of positive seasonality soon ending for the Euro, odds still favor new lows in January, barring a sharp dovish shift by the Federal Reserve.

USD/JPY, 4-Hour Chart Analysis

The Dollar also lost ground compared to the Japanese Yen, and the safe-haven currency was among the strongest majors especially in the second half of the day, as risk assets decisively turned lower. The USD/JPY pair continues to trade in a broad consolidation pattern, but today’s drop off the 113.50 level could be the start of a broader trend change, with all eyes on the October low near 111.50. Gold’s strength confirms the strong safe-haven flows, which could propel the Yen higher against all of the majors, even the Dollar.

AUD/USD, 4-Hour Chart Analysis

The AUD/USD pair continues to be in an interesting technical setup with a likely move towards the October lows being likely underway. Today, the Aussie has been showing relative weakness due to the risk-off flows, and it’s virtually unchanged against the Greenback, despite the broad dip in the reserve currency.

Wednesday’s Fed decision and Thursday’s Australian Employment Report will likely cause volatile moves in the pair before the holidays, but bears are still clearly in control of the market both short- and long-term, especially given the weakness in Chinese assets.

Gold Futures, 4-Hour Chart Analysis

We have been following the key break-out attempt in gold, and today, the precious metal likely formed a crucial swing low that could propel it to a new swing high, which would signal a likely rally towards the resistance zone near the $1300 level. While a failed break-out attempt is still in the cards, given the bullish fundamentals, and the recent relative strength of gold, odds favor a confirmed trend change and the start of a bullish cycle here.

Key Economic Events Tomorrow

ChartBook

Forex

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

EUR/JPY, 4-Hour Chart Analysis

AUD/JPY, 4-Hour Chart Analysis

GBP/JPY, 4-Hour Chart Analysis

USD/CHF, 4-Hour Chart Analysis

USD/CNH, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 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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4.7 stars on average, based on 420 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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