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Weekly Analysis: Bitcoin on New Highs Again after Busy and Surprising Week

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Weekly Recap

Asset Current Value Weekly Change
S&P 500 2428 0.15%
DAX 12815 0.11%
WTI Crude Oil 45.90 -4.15%
GOLD 1268.00 -1.08%
Bitcoin 2876 11.23%
EUR/USD 1.1195 -0.76%

The British snap election fueled the most prominent moves of the week, as the Pound was heavily sold on the narrow victory of the Conservative Party. The Euro also got under pressure after the referendum, but global stock markets emerged unharmed form the brief turmoil. The major US indices continued to hit new all-time highs, although a strange flash crash occurred in some of the biggest names in the NASDAQ (Apple, Amazon) on Friday. Whether or not this is the beginning of something bigger is yet to be seen, but the fact that a single investment report (by Goldman Sachs, of course) could have such a huge effect on prices is, at least, interesting.Financial markets had a very busy week, with some unforeseen events and surprising developments. Qatar entered the spotlight somewhat out of the blue, when Saudi Arabia and its allies initiated a diplomatic blockade against the country. While the effects on the global markets have been limited so far, this might be the first step in an escalation between the two major power centers of the region, Saudi Arabia and Iran. Donald Trump continues to be a major contributor to the news flow, as the Comey-Russia scandal is starting to really hurt position of the President, following a controversial round of hearings in the ex-FBI Director’s case.

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The Chinese stock market was among the positive surprises of the week as it remained strong despite the mostly negative economic news coming out from the country. Of course, the huge problems of the Chinese financial system are far from solved, but the genie is back in the bottle for now. Commodities had a mixed week, with both gold and oil being on a roller-coaster most of the times. The Chinese rebound helped the industrial segment with copper finally showing some strength, although the global growth concerns are not gone, and we might be in for more weakness down the road.

Amazon (AMZN), 5-minute chart

Cryptocurrencies

The coins had a busy and bullish week, as Bitcoin and Ethereum hit new highs once again, with ETH providing the biggest boost to the market. Ripple continues to struggle, especially compared to the other cryptocurrencies, as it continues to be in a long-term correction phase. Litecoin, Monero, Ethereum Classic, and Dash are consolidating in a bullish fashion, although they all failed to make meaningful progress during the week. NEM is under pressure following in Ripple’s footsteps, while last week’s star Stratis is in a short-term correction , with Bitashares jumping into the top 10 coins in market value according to Coinmarketcap after an epic rally.

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Ethereum, 4-Hour Chart Analysis

Economic Numbers

Economic releases were mixed once again, with the most important numbers coming in slightly below expectations. The British economy kept on disappointing, especially the forward-looking indicators, which is not a good sign before the conclusion of the Brexit talks. The US economy still seems OK before next week’s Fed decision, although the surprises are overwhelmingly on the negative side. The ECB and Mario Draghi hit a more cautious tone on the central bank’s monetary meeting, and that stopped the Euro’s rally for now. It is now up to the Federal Reserve to evaluate the conditions, with forex traders anxiously looking for clues about the bank’s future policies.

Technical Corner

NASDAQ 100 Futures, 4-hour Chart Analysis

The NASDAQ 100 basically flash crashed on Friday as the biggest names in the benchmark dragged it lower, erasing almost two-weeks of gains in just two hours. Although the index rebounded off its lows, it is a strong indication that there is increased fragility in the system after the robust Trump-rally. The most important levels to watch next week are at 5725, 5675, and near 5600.

Key Economic Releases of the Week

Day Country Release Actual Expected Previous
Monday UK Services PMI 53.8 55.1 55.8
Monday US ISM Non-Manufacturing PMI 56.9 57.1 57.5
Monday US Factory Orders -0.2% 0.0% 0.2%
Tuesday AUSTRALIA RBA Rate Decision 1.50% 1.50% 1.50%
Tuesday AUSTRALIA RBA Statement
Tuesday CANADA Ivey PMI 53.8 62 62.4
Wednesday AUSTRALIA GDP Growth 0.30% 0.30% 1.10%
Wednesday UK Halifax HPI 0.40% -0.20% -0.10%
Wednesday CANADA Building Permits -0.20% 2.40% -5.80%
Wednesday US Crude Oil Inventories 3.3 mill -3.1 mill -6.4 mill
Thursday JAPAN Final GDP Growth 0.30% 0.60% 0.50%
Thursday AUSTRALIA Trade Balance 0.56 bill 1.99 bill 3.11 bill
Thursday CHINA Trade Balance 282 bill 336 bill 262 bill
Thursday EUROZONE ECB Interest Rate Decision 0 0 0
Thursday EUROZONE ECB Monetary Statement
Thursday CANADA NHPI Index 0.80% 0.30% 0.20%
Thursday US Initial Jobless Claims 245,000 241,000 248,000
Friday US Prelim GDP 1.20% 0.90% 0.70%
Friday UK Construction PMI 56.0 52.7 53.1
Friday CANADA Trade Balance -0.4 bill 0.0 bill -0.1 bill
Friday US Non-Farm Payrolls 138,000 186,000 211,000
Friday US Hourly Earnings 0.2% 0.2% 0.3%
Friday US Unemployment Rate 4.3% 4.4% 4.4%
Friday US Trade Balance -45.5 bill -45.5 bill -43.7 bill

 

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Analysis

Technical Analysis: Litecoin and Ethereum on the Move as Rotation Continues

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The altcoin bull run continued today despite the US Thanksgiving holiday, as trading remained active in the majors, and another important break-out occurred, this time in Ethereum. Litecoin is also strong today, and the coin is testing the key $75 resistance level, as it follows in the track of ETH again. The currency still looks set to hit the next target at $82.50, with the all-time highs below just below the $100 level also in sight. While the long-term momentum is edging towards overbought territory, the coin remains bullish on both time-frames, with strong support still found at $64 and $56.

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LTC/USD, 4-Hour Chart Analysis

Ethereum scored a new record high after moving past $400 for the first time in five months, and considering the lengthy consolidation before the move, more upside is likely for the second largest coin. With the long-term momentum still not being overbought, the token’s price might test the $500 mark in this leg higher, with Fibonacci targets ahead at $475 and $512. Support levels are found below $400 at 4380 and $350.

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ETH/USD, 4-Hour Chart Analysis

Ripple is also attempting another bullish move, while Monero and Dash are consolidating just below their recent highs, while IOTA is in a short-term correction pattern as well. More and more altcoins are now in the latter phases of their rallies, just like Bitcoin, but traders still have opportunities with favorable risk-rewards ratios. Let’ see the short-term charts.

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Analysis

Break-Out: Another Crazy Rally in Ethereum?

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What crazy rally you might ask? Bitcoin is the star, right? Everything was about BTC (and BCH) in the last few months, and lots of traders forget the gains that ETH posted amid the take-off of the ICO Rocket during the spring.

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Comparing ETH and BTC in 2017

By the numbers, out of the two largest coins, 2017 is still the year of Ethereum as the 3600% rise in the token’s price dwarfs Bitcoin’s impressive 630% gain. Could Ethereum be on the verge of another epic surge? Before answering that question, first let’s see what happened with the coin in recent months.

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How Did We Get Here?

ETH/USD, Daily Chart Analysis

Ethereum finally broke above the magical $400 barrier that has kept a lid on the token’s price for five months after the crazy run-up in May. What first followed after that stellar move, was a 70% decline top-to-bottom, with a flush-out panic low in July.

Our trend model turned long-term positive even before the spike lower, but since then, the coin only managed to get close to the all-time highs, while Bitcoin eclipsed the previous star with its dominant performance. Now the tide might be turning, as ETH is finally gathering bullish momentum and today it breached the $400 mark, flirting with a break-out from the giant triangle consolidation pattern.

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Altcoins

Zcash Dip Offers Chance to Buy

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The ZEC/USD pair went into a downtrend for several days after hitting the 435 level in June. It shed more than half of its value before establishing strong support at 140. The market tried to reclaim resistance at 310 twice, but was sent back on both occasions. As a result, we have a massive reversal structure that might skyrocket the pair into a new all-time high.

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The market closed above 310 a couple of days ago on weak volume which is why it’s struggling to stay above that level. Technical indicators show that momentum is weakening, increasing the likelihood of a dip. A slight correction not only gives the market legs for its next move up, but it also offers you a chance to place orders.

They key indicator to watch for is volume. As long as volume remains sluggish, the market will most likely slide down to 280 first and then 262 next. That’s a good zone to accumulate positions. If volume suddenly spikes, at least 230k at Bitfinex, then we have a legitimate breakout that will take the market to 465.

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 Summary of Strategy

Buy: between 280 and 262 OR confirmed breakout with volume of at least 230k at Bitfinex

Support: 280, 262, and 243

Resistance: 310, 352, 400, and 412

Target: 465

Stop: If the market breaches 243

 

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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