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Analysis

Weekly Analysis of Cryptocurrencies

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Litecoin

As forecasted on these pages several times last week, Litecoin was the star performer for currency traders this week. Repeated suggestions were made to load up on the asset while the coin was still under $4. I am aware of several readers who took the advice. The question, as always, is: “What comes next?”

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As we can see, price went vertical exactly at the end of square on this long term daily chart. As this is still within the confines of the 4th arc pair,  the asset is still a few days away from being free to rise to the levels it likely wants to go.

You will note that the wick of that long green candle exited the arc pair before being pulled back. This suggests that the arc is vulnerable, but that was already plain from charts we looked at last week. It remains to see on exactly which day pricetime will close on the sunny side of the arc. But when it does price will likely go considerably higher.

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Bitcoin

Bitcoin is still struggling with the 3rd arc pair on the longer-term daily chart. My personal bias is to sit on the sidelines until we get a convincing close above the arc before buying it. But when it does, we will likely see a new ATH.

Ethereum

Ethereum continues to muddle around the $50-$52 area. But it is still on the sunny side of support at top of square. Serious resistance will be found in the $62 are when it finally gets around to rallying agin. My suggestion would be to take money off the table at that point, with the option of buying the asset back at higher prices if it gets through the arcs (unexpectedly).

Monero

Monero was stopped hard by 1st arc pair resistance on this longer-term 4-hr chart. As long as it stays below that arc, it is a gamble to buy here. While my guess is that the major selling is finished, I would waiting until price closes convincingly above at least the 1st of the arc pairs, though waiting until the entire pair is violated is safer.

ZECUSD

ZECUSD has been bouncing wildly all week. The good news for long traders is that support was found at the 1st arc pair on this 4 hour chart. We are, at this writing just about at the end of a square, so a rally here would not be surprising. The arc pair will be met again at ~ $75. It would be prudent to take some money off the table there, imho…

DASH

As we advised repeatedly several days ago, Dash was clearly overdue for a correction. We advised taking money off the table at $110. It is $74 at this moment. So…  what’s next?

In my opinion, the chart still looks quite weak at these levels. I imagine support will be found somewhere between the top of square and the 2×1 Gann angle on this chart (~$63).

 

Remember: The author is a trader who is subject to all manner of error in judgement. Do your own research, and be prepared to take full responsibility for your own trades.

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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5 stars on average, based on 1 rated postsJim has an MBA from the University of Southern California. He has had a long career in both Corporate Finance and IT. Along the way he discovered that trading was a vehicle with great promise, but struggled for a long time without a mentor. After having been knocked down many times and having struggled to get back up, he had an epiphany and realized that geometry was a solution. He shares his experience here. If you do well as a result of suggestions made here, feel free to say thank you :) BTC: 1FUq3GB1Q8zz2JpuBr7YHzVBKnaWoxgmya Follow him on Twitter (@jimfred1276) or email him at jimfred1276 at gmail.




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7 Comments

7 Comments

  1. Camerpl79

    March 31, 2017 at 8:51 pm

    Please provide guidance on Ripple. Based on the fundamentals, XRP is definitely going to be a major player in Global banking & money transfer.

    Japan Banks are basically all in so if the World continues to do business with Japan businesses then they too will soon be joining the Ripple Blockchain.

    Ripple is not theoretical – It’s being implemented around the world by large players in the financial markets.

  2. Jim Fredrickson

    April 1, 2017 at 12:51 am

    Ripple is not an interest of mine, personally. I view it as a privately owned currency just one step away from fiat. You may be correct that it has a future as a medium of transfer, but I am not convinced that will be a good thing for humanity. Having said that, I realize it is possible that my understanding of the currency is flawed.
    I will take a look at the chart in the next few days and comment as a technical analyst, trying to put my feelings aside.

    • tadej

      April 1, 2017 at 7:56 pm

      Your prediction on LTC was right. I was a little bit late but I jump on the train and made some money.

      Please do consider Ripple in your next analysis, there is a lot of hype out there.

      Keep up the good work! Thanks Jim!

    • farware

      April 2, 2017 at 4:56 pm

      What is your price target for ETH if it breaks through 60? I am leaning towards 75-80 area.

  3. usatrader77

    April 1, 2017 at 3:08 am

    Where can I see graphics, shown in your article?

    • Edward Talliot

      April 1, 2017 at 11:14 am

      Hello, do you not see the graphs there?

      • usatrader77

        April 1, 2017 at 8:57 pm

        I see it, but where I can see graphics by myself, Everytime I want to

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Analysis

Long-Term Cryptocurrency Analysis: Bull Market in Jeopardy

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As the crucial rally attempt that we pointed out in our previous long-term analysis failed, and the major coins sold off heavily afterwards, the segment is now in a difficult situation. While Bitcoin and especially Ethereum are still in bullish setups, the most valuable coin is now close to a major breakdown that could lead to structural bear market as we laid it out back in January.

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Some of the weaker coins are already below the large-scale consolidation patterns that developed after the year-end run-up, and as the divergence between the leaders and the laggards widens, the path of the two dominant coins even more importance.

BTC/USD, Daily Chart Analysis

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Bitcoin failed to trigger a short-term buy signal throughout the Ethereum-led rally in May and early June, and that technical weakness still persists, as BTC is now trading right at the April low, testing the key long-term base pattern.

A break below the strong support zone near $5850 would be the first similar event since the beginning of the bear market in 2014, and it could lead to an extended period of bearish bias for Bitcoin after the spectacular bull run of 2017. For now, the bull market is intact, with support found near between $6000 and $6275, at $5850 and below that at $5500, while resistance is ahead at $6500, $7000, $7350, and $7650.

ETH/USD, Daily Chart Analysis

Although Ethereum is clearly stronger from a technical perspective compared to Bitcoin, the coin is struggling to hold the key $500 level, as it is resumed its short-term downtrend. The April lows are well below the current price level and the long-term setup is bullish, so long-term investors could still add to their positions during the selloffs. Resistance above $500 is ahead between $555 and $575, while strong support is near $450, $400, $380.

(more…)

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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Altcoins

Crypto Psycho:  Crazy Price Action

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Say what you will about the cryptocurrency bubble of 2017 not making sense, what about the action lately?  Prices are acting terribly. Professor John Griffin claims last year’s bitcoin rally was manufactured by Bitfinex. Economist Nouriel Roubini proclaims bitcoin is going to zero. The founder of Crypto Asset Management says about bitcoin: “We are shorting it like maniacs at the moment.”  If that is not enough, technical indicators keep barking downtrend.

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Over the past week already depressed prices have fallen further with things like bitcoin down 14%+, Ethereum 17% and XRP 21%.  Yes, there were those stories about the CFTC digging into price manipulation and demanding more data from Coinbase and other exchanges. And then there was the hack on that small exchange in South Korea.  But nobody could reasonably pin the blame of this week’s performance on these two factors.

MarketWatch quoted Matt Hougan, head of global trading at Bitwise Asset Management: “The big story to me is the absence of positive news”.  There is some truth to this but that is only part of the story. As we pointed out in a recent article, most serious investors in crypto don’t pretend to understand what is causing the mess.  

When bitcoin evangelist Alistair Milne published a survey of his Twitter followers, 81% of them had nary a clue.  Interestingly enough though, almost half of these respondents checked the box “Crypto iz ded”.

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What exactly to conclude from this is open to interpretation but one thing is clear.  It is a big part of the problem long term investors face today. Crypto psychology sucks, the worst it has been since the Mt. Gox hack of 2010.

Good News Being Ignored

One of the barriers to progress in the crypto wars was the issue of regulatory clarification. Are cryptocurrencies simply digital assets or a class of securities that fall under the regulation of the Securities and Exchange Commission?

That question has now been answered.  On Thursday, the SEC’s announced that both bitcoin and Ethereum were not securities but digital assets.  However, the good news does not end here.

William Himman, representing the SEC, clarified the position of Initial Coin Offerings.  In cases where the ICO does not convey equity ownership of an enterprise and where the digital asset is sold only to be used to purchase a good or service available through the network on which it was created, it does not qualify as a security.

This represents one huge step forward in clarifying the regulatory environment and yet the markets response was brief and uninspiring as the full week’s performance unfortunately demonstrates. Honestly, this is a bit bizarre.

Other Good News Being Ignored

Crypto Asset Management may be short selling lots of currencies, but they are not alone.  According to www.bfxdata.com/swaphistory/usd  margin interest in bitcoin and Ethereum is in excess of $1.2 billion.  While this is down from around $2 billion last December it still represents a sizable pool of future buyers.

It’s In The Mind

For digital asset prices reflect not only investor sentiment but also those who represent ultimate users.  For a digital currency to represent a storehouse of value, it must have public trust. Right now that appears to be at a low.

According to the British publication London Loves Business, the story is pretty clear. Headlines state “71% of the UK public think the value of Bitcoin will either decrease or collapse over the next six months.”  According to LLB,  this represents a 10% fall in investor confidence since the same question was last asked in April’s 2018 poll and a 24% fall in investor confidence from November’s 2017 poll figures.  In other words, the price of bitcoin holds the same implication for investors as it does for potential users.

This Too Shall Pass

Mob psychology often proves wrong and this negative mindset appears to be feeding off of itself right now.  Even one of crypto’s biggest critics Warren Buffett would agree that betting against the mob has been a big part of his investment strategy. At some point the mob will once again be proven wrong when short sellers get spooked and forced to cover positions or value investors will filter over from an overpriced U.S. equity market.  Either way, there is value in the crypto market that has not existed for quite some time. In the end, 71% of the Brits surveyed will be proven wrong also.

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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4.4 stars on average, based on 81 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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Analysis

Stocks Pull Back as Euro Rebounds after Carnage

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Stocks are broadly lower today after yesterday’s mixed session, as European equities, which performed much better following the ECB’s meeting, also turned lower, following the major US indices. The losses are limited, as volatility remained relatively low, despite the week’s central bank bonanza that caused turmoil across asset classes.

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NASDAQ, 4-Hour Chart Analysis

The NASDAQ is still the strongest among the main benchmarks, while the Dow is the weakest, dragged lower by the weakness in financials and the energy segment. Small caps are still outperforming the broader indices together with tech stocks, and Trump’s new tariffs targeted at China boosted the segment yet again today.

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EUR/USD, 4-Hour Chart Analysis

The EUR/USD forex pair has been in the center of attention in the last couple of days as expected, while currencies turned volatile across the board in the aftermath of the Fed’s and the ECB’s monetary meetings. The Dollar index surged higher, boosted by the weakness of the common currency and after a brief positive period that weighed somewhat on stocks and other risk assets.

Economic releases were mixed today after a strong weak, at least in the US, as the Empire State Index and the UOM Consumer Sentiment Index were better than expected while Industrial Production slightly missed the consensus estimate. The Eurozone CPI was in line with expectations, while Canadian Manufacturing Production missed by a mile, putting further pressure on the already weak Canadian Dollar.

Commodities Smacked Lower amid Risk-Off Shift

Currencies were by far the most active assets, as we expected after the dovish surprise by the ECB yesterday, with the Dollar’s strength affecting the majors and the recently weak emerging market currencies as well.

USD/TRY, 4-Hour Chart Analysis

The initial bullish reaction in commodities and emerging currencies quickly faded, as the fragility of the most vulnerable countries continues to pose contagion risk, and although the Brazilian Real and the Turkish Lira are both above their recent lows, the charts still look dangerous.

WTI Crude Oil, 4-Hour Chart Analysis

The Dollar’s strength put an end to oil’s bounce, as the WTI contract fell back below the $65 per barrel level, while gold is also testing its lows from May. Oil looks bearish before next week’s OPEC meeting, but the outcome of the event is as hard to predict as ever, especially given the recent volatility in the price of the Black Gold.

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 275 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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