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Weekly Analysis: 5 Things to Watch the Coming Week

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Asset Current Value Weekly Change
S&P 500 2398 0.88%
DAX 12675 1.76%
WTI Crude Oil 46.47 -5.75%
GOLD 1228.00 -3.21%
Bitcoin 1570 16.11%
EUR/USD 1.0998 0.91%

5 Things to Watch Next Week

  1. More new all-time highs ahead for stocks?

While several cracks appeared under the surface of the current rally globally—the Chinese woes, the weak performance of the broad US indices, and the slowing US economic growth, the NASDAQ and German equities continued to trend higher to new all-time highs. The leadership of the advance is narrowing, and although that doesn’t mean that a decline is imminent and another leg higher following today’s French is possible, this is definitely not the best time to buy stocks.

  1. Will the cryptocurrency market hit the $50 billion mark?

Litecoin and Ripple are the stars of the weekend so far among the coins, but Bitcoin is also holding up well despite the volatile correction towards the end of the week. The historic $50 billion level in capitalization is less than 10% away, and it’s hard to believe that the current boom won’t carry the market above that in the coming days, with more and more smaller coins popping up on the radar with stellar gains, like Bytecoin, Dogecoin, Steem, and Stratis.

  1. Is the sell-off in oil over?

Oil fell almost 20% in three weeks after a strong rebound in March, as US production keeps on rising and the recent geopolitical woes failed to prop up the market. Also, the North-Korean and Syrian tensions eased somewhat, even though the verbal bouts continued, and China increased the pressure on the communist regime. An escalation could propel a strong rebound in the Black Gold, as it got clearly oversold, even if the fundamentals remain bleak.

  1. Gold turning higher again?

Sentiment towards precious metals turned negative following the first round of the French election, and the confident words of the Fed pushed gold even lower in the second half of the week. Gold is now almost $80 lower than two weeks ago and that could mean that the metal is close to ending the current correction.  If stocks turn lower next week, gold might quickly snap back above the crucial $1240 level

  1. The Pound in the spotlight as the Bank of England holds meeting

The GBP has been one of the strongest currencies since Theresa May announced a snap election three weeks ago, pushing the GBP/USD pair towards the 1.30 level. The Pound also held up well compared to the surging Euro, despite the ongoing dispute regarding the Brexit process that points more and more to a “hard” version of the break-up. With the Pound being stronger the pressure to protect the currency is lower on the BOE, so it’s easy to imagine that the central bank will rather try to boost growth, even if just verbally, causing a correction in the GBP.

The Pound in a strong uptrend against the US Dollar, 4-Hour Chart

In Focus: Cryptocurrencies

 

Weekly performance comparison of the major cryptocurrencies, Hourly Chart

Bitcoin took center stage this week, even considering the HUGE rally in Ripple and Litecoin, as the main cryptocurrency stormed to new all-time highs, hitting the $1600 level that seemed so distant just over a month ago, amid the hard-fork fears. BTC breached the $25 billion level this week for the first time in its history, and although a correction is a real possibility here, the currency is hovering just below its highs this weekend. Ripple and Litecoin are on the move once again with LTC copying its weekend break-out from two weeks ago, while Ripple doubled in the course of the last week. The market capitalization list was little changed despite the strong moves although Dash is sliding lower with NEM and ETC both on its neck after the crazy period.  With buy signals all over the market traders were able to ride major break-outs almost on a daily basis, and hopefully, the favorable conditions will persist throughout the next week as well.

Currency Weekly Volume Monthly Volume Market Cap
Bitcoin 4,370 11,044 25,664
Ethereum 1,475 3,721 8,769
Ripple 652 1,157 5.041
Litecoin 988 2,767 1,531
Dash 126 462 729
NEM 52 151 689
Ethereum Classic 339 830 654
Monero 90 247 429


Key Economic Releases of the Week

Day Country Release Expected Previous
Monday CHINA Trade Balance 197 bill 164 bill
Monday GERMANY Factory Orders 0.70% 3.40%
Monday UK Halifax HPI 0.1% 0.0%
Tuesday AUSTRALIA Retail Sales (monthly) 0.3% -0.1%
Tuesday AUSTRALIA Annual Budget
Tuesday CANADA Building Permits (monthly) 0.40% -2.50%
Tuesday US JOLTS Job Openings 5.67 mill 5,74 mill
Wednesday CHINA CPI Index 1.10% 0.90%
Wednesday CHINA PPI Index 6.8% 7.6%
Wednesday EUROZONE ECB President Draghi Speaks
Wednesday US Import Prices (monthly) 0.2% -0.2%
Wednesday US Crude Oil Inventories  – -0.9 mill
Thursday SWITZERLAND CPI Index 0.20% 0.20%
Thursday UK Manufacturing Production -0.20% -0.1%
Thursday UK Service PMI 54.6 55.0
Thursday UK Official Bank Rate 0.25% 0.25%
Thursday UK Monetary Statement
Thursday UK PPI Index 0.2% -0.1%
Thursday CANADA NHPI Index 0.3% 0.4%
Friday GERMANY Prelim GDP 0.6% 0.4%
Friday US CPI Index 0.20% -0.30%
Friday US Core CPI 0.2% -0.1%
Friday US Retail Sales (monthly) 0.60% -0.20%
Friday US Core Retail Sales 0.50% 0.00%
Friday US UOM Consumer Sentimnet 97.0 97.0
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: Bitcoin Plunges Below $6500 as Heavy Selling Resumes

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The cryptocurrency segment is having another very negative day after a calmer period, as selling pressure intensified yet again. All of the major coins turned sharply lower, with the laggards of the recent period, Litecoin, Monero, and Dash confirming their downtrend and the relatively stronger coins also taking a beating.

The total capitalization of the segment dropped below $270 billion, and from a long-term technical standpoint, several currencies are in precarious positions. With no clear news catalyst behind the move, technicals are playing a very important role, and last week’s lows will likely be in focus in the coming days.

BTC/USD, 4-Hour Chart Analysis

Bitcoin is still relatively weak both on the short- and long-term time-frames, and it dropped back to the $6275-$6500 zone that has been acting as primary support during the recent leg lower. Given the importance of the long-term zone between $5850 and $6000, a break below $6275 could set up a crucial test in the coming days. For now, traders still shouldn’t enter new positions, while investors should hold on to their coins as the bullish secular trend is still intact.

No Hiding From the Selloff as Altcoins Broadly Lower

LTC/USD, 4-Hour Chart Analysis

With the weakest coins leading the way lower again, new swing lows are likely in the majority of the coins, although there is still hope for bulls that a major long-term breakdown can be avoided. Ethereum fell below $500 after touching the declining short-term trendline, and it remains in a bearish trend, even as it’s still in a much better technical position compared to BTC, holding up well above the April lows, and being further away from last week’s swing low as well.

ETH/USD, 4-Hour Chart Analysis

 That said, we remain negative regarding the short-term outlook for the second largest coin, and traders shouldn’t enter new positions here.  Above the $500 level, strong resistance is ahead between $555 and $575, while primary support is found at $450, with further zones near $400 and $480.

BNB/USDT, 4-Hour Chart Analysis

There are no real hiding places for crypto investors from the current selloff even as Binance Coin is still holding up relatively well, within a clear uptrend and above crucial technical support.  That said, as we warned before, given the broad downtrend in the segment, traders should be cautious with new short-term positions.

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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Analysis

Italy Spooks markets Again as Stocks Remain Under Pressure

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European stocks Led the way lower today despite a bullish start in Asia, as equities gave back their gains when Daimler published a surprising profit warning, which was deeply affected by the recent trade war developments, reigniting fears of a tariff-driven downturn in global trade.

DAX, 4-Hour Chart Analysis

The Old Continent got into more trouble later on, when two anti-EU officials were named in Italy, resurrecting fears of a clash between the systematically crucial country and the core of the Eurozone. Italian yields rose in European trading, and although they are still shy of the levels hit during the May scare, the periphery could be in trouble as the ECB pledged to exit the market by the end of the year.

Nasdaq 100 Futures, 4-Hour Chart Analysis

The main European indices were smashed lower during the session, with the DAX hitting a two month low, still being very weak relatively speaking compared to its US peers. US stocks sold off heavily following the opening bell and they failed to recover, unlike two days ago, and the major benchmarks traded well below yesterday’s levels just before the close.

The Nasdaq and the Russell 2000 lost some of their recent mojo, pulling back heavily of the all-time highs during the day. All in all, the risk off shift continues to dominate across the board, as we expected and we remain negative on risk assets here, especially regarding emerging markets, even as the Dollar’s rally could be over for a while.

Dollar Pulls back as Pound Surges

USD/CAD, 4-Hour Chart Analysis

The Dollar took a beating as the Philly Fed Index came in much worse than expected, and as the Bank of England sent hawkish signals, pushing the Pound and the Euro higher. The central bank left its benchmark rate unchanged at 0.5%, but a rate hike this year got much closer, with a key member of the bank voicing inflationary concerns.

The Greenback fell more than what the events would imply, so a larger scale consolidation could have already started in the currency following the recent gains and the marginal new high yesterday. With the EUR/USD pair nearing the 1.1450-1.15 support zone, the USD/CAD hitting 1.33 and the AUD/USD touching 0.7350, a meaningful counter-trend move would be timely in the surging reserve currency.

WTI Crude Oil, 4-Hour Chart Analysis

Gold continued to drift lower before the Dollar’s reversal and it hit $1262 for the first time since lat December before bouncing back above the $1270 level in late trading. Crude oil also fell sharply in early trading, and the WTI contract traded with a $64 handle before rallying back to $66 per barrel.

The OPEC meeting, which is expected to result in a supply increase by the cartel made the crucial commodity very volatile in recent days, but we expect the bearish trend to continue, with a likely dip to the $60 level in the coming weeks.

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 Drift Sideways as Trading Activity Plunges

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Liquidity dried up in the cryptocurrency segment in recent days, as trading volumes have been declining progressively, while the major coins got stuck in tight ranges. Only a few coins show signs of activity, and the bearish short-term patterns continue to dominate the market. With a group of currencies, namely Litecoin, Monero, Dash, and Bitcoin itself clearly dragging the segment down, the short-term trend will likely continue, as the previous leaders are now showing strength either.

While all of the top digital currencies are showing some gains today, and the total value of the market edged close to $290 billion, major resistance levels are still towering above. The fact that the effect of the Bithumb hack faded away quickly is a positive here, but until signs of bullish momentum and a clear leadership forming, the short-term outlook remains bearish.

BTC/USD, 4-Hour Chart Analysis

Bitcoin continues to trade near the $6750 level, edging ever closer to the declining short-term trendline, in a bearish consolidation pattern. Bulls would need a sustained move above $7000 to negate the declining trend, but for now at least a test of last week’s lows is likely with a possible move towards the key long-term zone between $5850 and $6000.  The short-term zone around $6350 level provides support, while further resistance is ahead near $7350.

Ethereum Nears Trendline as ETC Attempts Breakout

ETH/USD, 4-Hour Chart Analysis

Ethereum has been among the strongest coins in the last few days again, and coupled with its long-term relative strength, the second largest coin is still the best candidate to lead a recovery. That said, the coin still faces strong resistance between $555 and $575, and bullish momentum is suspiciously weak. Primary support is found at $500 with further zones near $450 and $400.

ETC/USD, 4-Hour Chart Analysis

Ethereum Classic has been positively diverging compared to the rest of the market, together with Binance Coin, and to a lesser extent Tron ever since its inclusion to Coinbase, and the coin moved above the key $16 resistance yesterday in late trading.

While ETC is slightly overbought from a short-term perspective, a consolidation above $16 and a subsequent move higher could confirm a trend change. For now, the short-term trend signal is only neutral, and traders should remain cautious given the broad downtrend in the segment

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 280 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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