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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.

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.

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

 

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 297 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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Analysis

Crypto Update: Divergence Deepens as Altcoins Fall, Bitcoin Flat

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The unusual discrepancy between BTC and the rest of the cryptocurrency market continued today, with the top 10 coins all losing ground with the exception of Bitcoin itself. Tuesday’s surge, which carried the segment to $300 billion in total market cap quickly fizzled out, at least as far as the major altcoins are concerned, but the largest digital currency is still holding on above the strong $7000 and $7350 support/resistance levels.

Altcoins are on short-term sell signals according to our trend model, but Bitcoin is still on a buy signal as the declining trend was broken by the break-out that remains intact, despite the segment-wide weakness.

Given the mixed, but one-sided setup, and the lack of bullish follow-through, odds still favor a bearish outcome, and traders should remain cautious with new positions here, even in BTC, the positive outlier. A broad trend change would require a meaningful leadership, and until that develops, a test of t eh June lows remains likely, with the possibility of new lows in the coming week as well.

BTC/USD, 4-Hour Chart Analysis

While Bitcoin failed to durably stay above the $7500 level, bulls successfully defended the support zone near $7350, despite the overbought short-term momentum readings. The coin is well above the line-in-the-sand $7000 level and the long-term support near $5850 that was in danger just one week ago.

Although the altcoin weakness makes BTC’s rally suspicious, the short-term bullish pattern is intact, as is the buy signal in our trend model. Further support is found at $6750, and $6500, while primary resistance is still ahead at $7650.

Selling Pressure Apparent in Altcoins

ETH/USD, 4-Hour Chart Analysis

All intraday rally attempts have been sold so far in most of the major altcoins, and Ethereum is just holding up above primary support at $450 despite the rally in the beginning of the week. The coin is on a short-term sell signal, and a test of the June lows is likely after the failed break-out. Strong resistance is ahead at $500 and between $555 and $575, while support is found at $420, $400, $380, and $360.

XMR/USDT, 4-Hour Chart Analysis

While Monero has been holding up relatively well in the last couple of days after getting stuck below the $150 level during the Tuesday surge, but the coin is still among the structurally weak majors, being on a long-term sell signal. As the other bearish leaders, NEO, LTC, and Dash are also trading below key long-term levels, we expect the coin to fall back below the $125 support and likely test the June lows in the coming weeks.

XRP/USDT, 4-Hour Chart Analysis

The third largest coin Ripple is already testing the $0.45 level after drifting lower ever since the Tuesday rally, and as its relative weakness is still clear, a break below that level seems to be imminent. Below that, the crucial long-term support zone near $0.42 could stop the decline of XRP again, but a move under that could trigger a long-term sell signal.

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

Forex Update: Boring Means Long-Term Sustainability for EUR/INR

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Billionaire investor George Soros once said, “If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.” As an experienced investor, I couldn’t agree more. There’s a lot of waiting and sitting involved but that’s how money is made in investing. The Euro/Indian Rupee (EUR/INR) pair seems to be the perfect embodiment of this quote.

Looking as far back as 1999, it appears that EUR/INR has been in an unstoppable bull run since the second half of 2002. If you invested in the pair a decade and a half ago, you would have more than doubled your money. Chances are you didn’t, but don’t fret because you can always invest today. EUR/INR looks as strong today as it did back then.

In this article, we show how EUR/INR is looking strong on all counts despite being boring.

Healthy Ascending Channel on the Daily Chart  

EUR/INR dropped to as low as 67.9819 on April 10, 2017 and it was nothing but blue skies since. It is trading within an ascending channel as it generates higher highs and higher lows in a sustainable manner. The ascending channel looks healthy, too, as the trading range is not significantly contracting or expanding.


Daily chart of EUR/INR

If you look at the technical indicators, everything is fairly clear. EUR/INR rallies when it flashes oversold readings. On the other hand, it corrects when it is overbought. You won’t find excitement here and that’s good news for long term investors.

Concluded Corrective Wave on the Weekly

EUR/INR started showing signs of weakness in September 2013 when it posted a shooting star weekly candle. The ensuing pullback drove the pair down to the 65 levels in March 2015 (A-wave). The market has not visited that price area since. It managed to generate a bullish higher low setup at 68 (C-wave). This was a clear signal to investors that the correction was over.

Weekly chart of EUR/INR

With a higher low in place, EUR/INR took out resistance of 76. The new support level was tested and retested before the pair mounted a strong rally. On top of that, we can see a hidden bullish divergence on the weekly RSI, hinting that the uptrend is in a good shape.

Even in the weekly chart, the market is not pulling any surprises. There are no false breaks and no shakedowns. You don’t have to look close to see where the market is headed. EUR/INR is boring and that’s why it is strong.

Major Support Line on the Monthly Intact

Conventional wisdom says to buy low and sell high. The problem with this is that you don’t really know when is the market low. The market can go down as there’s always the possibility that a key support can break. That’s just not the case for EUR/INR.

Monthly chart of EUR/INR

Buying low is fairly simple in this case. All investors have to do is to wait for the price to hit the long-term support. Investors can be confident in doing so because the trend line has been intact for over 15 years. More importantly, it bounces every time it hit the support. It’s not really exciting but it works.

Bottom Line

A famous billionaire trader once said that good investing is boring, and I agree. Look at the charts of EUR/INR and you’ll see why boring investing is good.

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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Pre-Market: China Tries to Support Markets as Global Stocks Slide

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Yesterday’s risk-off shift continued today in early trading with nervous and choppy trading in Asia and Europe, as global financial markets are still haunted by trade war fears and emerging market weakness. The major US indices rolled over after another period of apparent relative strength, with the Nasdaq being the most robust market once again, while most of the key European benchmarks continue to lag behind.

S&P 500 Futures, 4-Hour Chart Analysis

Chinese assets are still in focus before the weekend, as the Yuan’s recent steep devaluation sparked fears of a credit meltdown in the country. With the largest credit bubble in human history casting its shadow on China, some analysts think that with Trump’s trade war, the bug finally found its windshield and the bubble already started to burst.

USD/Yuan, 4-Hour Chart Analysis

All eyes are on the USD/Yuan pair as Chinese authorities are reportedly intervening in the market of the currency, and most likely local equities as well, trying to prevent a serious run on the most important assets.

With the Chinese stock market already in a bear market, and the Yuan trading at fresh 12-month lows against the Dollar, it might be a bit late to stop the slide, but the intervention could cause spectacular short squeezes.

Italy also made headlines today during the European session, as Italian government bonds got slammed lower, as the future of the new finance minister is uncertain, with another round of political turmoil possibly ahead for Europe’s most vulnerable country.

Unicredit (UCG), 4-Hour Chart Analysis

Looking at the charts of Italian banks, it’s clear that the spring turmoil had a lasting effect on the financial system, as Unicredit is on the verge of hitting a new low, and the other large players also remain under pressure, in part explaining the general weakness in European equities.

Europe Still Far Behind amid Mixed Economic Numbers

USD/CAD, 4-Hour Chart Analysis

The economic calendar is almost empty today with regards to the key markets, as the Canadian Retail Sales and CPI reports are the most important releases. The Canadian Dollar rebounded when the USD entered a correction June, but now the currency edging lower again, as the weakness in commodities and the Greenback’s rally are taking their toll. New highs are likely in the USD/CAD pair in the coming weeks, although strong resistance is just ahead at 1.33.

Commodities are little changed today after yesterday’s volatile session, as the bounce in China helped to stabilize the segment. Notably copper is back above the key $2.70 level, while WTI crude oil is trading at $68 per barrel again, and gold is hovering around $1225.

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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