Categories
Crypto Market Analysis

Today´s Crypto Events 27.07.2018

Here you can find all the news about the upcoming hard fork, releases, exchange listings, updates, conferences, new launches, etc. We gather the most relevant events and conferences for you to pick from.

Today´s Crypto Events 27.07.2018


  • ZenCash (ZEN) — Mandatory Upgrade Deadline
  • EOS (EOS) — EOS Russia Meetup in Moscow
  • Veritaseum (VERI) — Blockchain Conference in Washington
  • PolicyPal Network (PAL) — Bluepaper Launch
  • Aeternity (AE) — AMA Session
  • EagleCoin (EAGLE) — Mainnet Release
  • XinFin Network (XDCE) — Singapore Blockchain Conference
  • Bitcoin (BTC) — CME Bitcoin Futures Last Trade Date
  • Bankex (BKX) — MovieCoin Bounty Program
  • Nebula AI (NBAI) — AMA Session
Categories
Crypto Market Analysis

Daily crypto update 18.07.2018 – Consolidation, and then?

The market continues to consolidate winnings while the TOP-10 currencies are all in green. Stellar has won 21.43% and Cardano 20.89% in the last 24-H and the others are also showing representative positive growing.


General overview


Market Cap: $295.984.421.039

24h Vol: $21.222.164.259

BTC Dominance: 43.1%

Top 100 Gainers of the day

Bitcoin Diamond BCD    48,22%
Ardor ARDR                     35,81%
Dogecoin DOGE              25,78%
aelf ELF                             23,15%
Stellar XLM                      21,43%

Top 100 Losers of the day

TenX PAY                       -8,04%
Pundi NPXS                   -1,54%
Dropil DROP                 -0,77%
Tether USDT                 -0,42%
Huobi Token HT           -0,24%


News


Coinbase Walks Back Claim That SEC Approved Trio of Acquisitions
Cryptocurrency exchange and brokerage giant Coinbase has walked back a claim that it had received explicit approval from the U.S. Securities and Exchange Commission (SEC) to acquire three companies as part of its future plans to list cryptocurrencies that are deemed securities under federal regulations.
Source: ccn.com

Mastercard Wins a Patent to Link Cryptocurrency With Fiat Accounts
Mastercard has been granted a patent that grants it rights for a method for “managing fractional reserves of blockchain currency.”With Mastercard’s latest patent, we’re getting closer to using our cryptocurrency credit cards to purchase goods. According to the filing, the method addresses the storing of both fiat and cryptocurrencies under one profile. This means, as a user, you’d have two linked accounts with your bank — one for your fiat wealth, and one for crypto.
Source: ccn.com

Bitcoin Mining Giant Bitmain is Tripling its Development Center in Israel
Bitmain, the Chinese bitcoin mining giant valued at $12 billion, is cementing its presence in Israel by planning to triple its employees at its domestic development center.In an aggressive expansion of its research and development center in Ra’anana, a city in western Israel, Bitmain is looking to recruit over 40 employees to add its current 15 employees situated in the country, Israeli publication Globes reports.
Source: ccn.com


Analysis


XRP/USD

The price of Ripple is currently trading at $0.5163 and took as support the $ 0.50, the principal and immediate resistance is the Pivot R1 at $ 0.5288. If the price manages to cross this level, we could see the price looking for $0.5444.




Market sentiment

4-H chart technicals signal a Bullish sentiment.

Oscillators are in the overbought zone and pointing down.


Pivot points

R3 0.5790
R2 0.5494
R1 0.5282
PP 0.4986
S1 0.4774
S2 0.4478
S3 0.4266

LTC/USD

Litecoin price has won 4.3% in the last 24 H after finding a strong resistance in the Pivot R1 at $92.19. As we stated yesterday in our daily report, the price could keep the level of $ 85.0 and crossed the $ 90.0 level were is sitting now. If the buyers can put pressure in the upcoming hours it is possible to see another move to the upside in the pair.




Market sentiment

4-H chart technicals signal a Bullish sentiment.

Oscillators are in the overbought zone and pointing down.


Pivot points

R3 100.8426
R2 95.4551
R1 92.2401
PP 86.8526
S1 83.6376
S2 78.2500
S3 75.0350

ADA/USD

Cardano is extending its gains and today reports a positive 14.69% in the last 24 H, the price is trying to go for the $ 0.20 during the day with no success as the pivot R2 at $ 0.1961 seems to have stopped the impulse; if the price cant cross this resistance level, the fib retracement of 23.6% could be the support to rest.




Market sentiment

4-H chart technicals signal a Bullish sentiment.

Oscillators are in the overbought zone, showing buy signals and pointing down.


Pivot Points

R3 0.2133
R2 0.1961
R1 0.1839
PP 0.1669
S1 0.1544
S2 0.1374
S3 0.1250

Conclusion


This is not the first time the market performs a rise like the one we have seen on Monday and Tuesday, we could not expect a different thing than waiting for a consolidation and then a retracement to retake the trend. Will be different this time? It is too early to say it, in my opinion, 50% retracement could be expected in the short term before another spike.

Categories
Crypto Market Analysis

Daily Crypto Update 17.07.2018 – BTC over $ 7000 and dragging up the market

The market is still showing several rises right now, the BTC has crossed the $ 7000 level and is dragging al the ats behind. The prices all along the charts are having an upside momentum due to the possibility of crypto EFTs being approved, if this happens, we´ll see huge capitals coming into the marketplace and the possible will take the prices high in most of the cryptos. It is late to take long positions if we didn´t in the last minimums, it is better to wait for a reversal or a bullish trend confirmation.


General Overview


General Overview

Market Cap: $286.112.341.605

24h Vol: $15.314.441.846

BTC Dominance: 42.8%

Cryptocurrency News

In the last 2 hours, the market capitalisation has increased 12 billion, this has taken all cryptos up and the market is a completely green field right now.


Cryptocurrency News


Buy a Whole Bitcoin Before Buying Any Altcoins, Says Litecoin Creator Charlie Lee
It’s common for longtime cryptocurrency investors to advise newcomers to invest heavily in bitcoin and — depending on their proclivity toward “Bitcoin maximalism — ethereum before investing in what many of them not-so-affectionately refer to as s–tcoins. What’s less common, though, is for an altcoin creator himself to give that same advice.Yet that’s exactly what Litecoin creator Charlie Lee did on Monday when he counseled his Twitter followers to obtain at least 1 BTC before buying any other cryptocurrency, LTC included.
Source: ccn.com

SEC Shutters Kodak-Branded Bitcoin Mining Rig ‘KashMiner’
The developer behind the purported and much-publicized Kodak-branded bitcoin mining equipment has officially halted operations and has denied ties to Kodak.
As CCN reported, KashMiner, a bitcoin mining equipment, was showcased at CES 2018 back in January by the company Spotlite USA, which claimed to be a licensee of the Kodak brand.
Source: ccn.com

Bitcoin Mining Giant Bitmain Opens 20,000 Sq. Foot Office in Silicon Valley
Bitmain, the cryptocurrency industry’s most valuable company, has just opened an office in Silicon Valley ahead of its planned initial public offering (IPO) later this year.
The Silicon Valley Business Journal reports that the China-based cryptocurrency mining hardware manufacturer has just moved into 20,000 square feet of office space in downtown San Jose, CA, filling the last vacancy in the city’s Riverpark Towers office building, which has become a hub for tech startups including Okta, Cohesity, and WeWork.
Source: ccn.com


Analysis


LTC/USD

Litecoin price has been recovering since yesterday from the support at $ 76.00 reaching a maximum at $ 84.00 then the price retraced a little and now is using the central pivot point as support at $ 81.79, there is an important rise in the last hour in most of the cryptos following the BTC that has crossed the important level of $ 7000. if the price can keep this level above $ 85.00 we possibly see it going up for the $90.00




Market sentiment

4-H chart technicals signal a Bullish sentiment.

Oscillators are in the overbought zone and pointing down.


Pivot points

R3 92.2300
R2 88.1647
R1 85.8910
PP 81.8257
S1 79.5521
S2 75.4868
S3 73.2131

BCH/USD

The price of the pair is performing a breakout of this bullish pennant pattern in this 1-H chart and seems to extend the rally higher. The price has crossed the important level of $ 800 and crossed easily the pivot R1 at $ 833 if the bulls continue to push we could see the pair easily testing the $ 850.




Market sentiment

4-H chart technicals signal a strongly Bullish sentiment.

Oscillators are in the overbought zone, showing buy signals and pointing up.


Pivot points

R3 932.4777
R2 872.1778
R1 837.0168
PP 776.7169
S1 741.5560
S2 681.2561
S3 646.0951

ETH/USD

The price of Ethereum is running behind the BTC in the last hours winning 2.8% in the last hour sitting now at $497 the buyer’s impulse is very strong and we could possibly see a prolonged raise in the next hours.




Market sentiment

4-H chart technicals signal a Strongly Bullish sentiment.

Oscillators are showing buy signals and pointing up.


Pivot Points

R3 526.63
R2 503.42
R1 491.12
PP 467.91
S1 455.61
S2 432.40
S3 420.10

Conclusion


Cryptocurrency News: This is an important moment for most of the alts, if BTC manages to stay above $7000, this could be the way to start a new and pronounced rise in the pair.

Categories
Forex Market Analysis

Weekly Technical Overview

US Dollar Index



 

US Dollar Index is resuming its bullish trend. Nevertheless, even though it has left behind many resistances now it is facing a horizontal resistance that will decide whether it creates a double top or breaks it and continues its run. For now, we wait to see its reaction the following week.

 

EURUSD



 

EURUSD has been moving sideways recently, mostly due to the uncertainty of the trade war between China and USA. However, in the upcoming days it should resume its bearish trend without any support ahead in the near term.

 

DAX



 

After weeks of moving sideways and without a clear direction, both fundamentals and technicals give positive reasons to be bullish at the indexes. Not only that the macroeconomic figures are forecasted to be strong but so are the quarterly results from both European and American corporations. Hence, we reopen a bullish position looking to profit the upcoming bull market.

 

GBPUSD 



 

GBPUSD is beginning the bearish trend we were waiting for. However, there is still a long way to go until it reaches the profit target. It can either resume the bearish trend or start moving sideways due to uncertainty. The next few weeks will be key to watch what happens both fundamentally and technically. For now, we remain bearish.

 

USDJPY



 

After weeks of waiting for the breakout, it is finally confirmed. Open positions have been opened waiting for the continuation of the bullish trend. It can either continue or do a retest which will eventually lead to a stronger confirmation of the breakout and the beginning of a bull run.

 

US Oil



 

Between resistances and supports there is not a clear path for oil prices apart from the many fundamental variables surrounding it. For now remain neutral awaiting a clear signal.

 

 

Categories
Crypto Market Analysis

Daily Crypto Update 10.07.2018 – Pronounced Sales

As we wrote yesterday in the Market Update, the pronounced sales started all around the charts, the market lost 8 billion in capitalization and we expect a negative week in most of the cryptos, only 4 coins of the top 100 are in positive today: Kucoin Shares, Bitcoin Diamond, Bitcoin Gold and Tezos; the others have losses of up to two digits being Walton chain with -17.2% the top loser in the last 24-H.


General Overview


Market Cap: $254.246.070.665

24h Vol: $14.234.158.046

BTC Dominance: 43.2%

Pronounced Sales

Top 100 Gainers of the day

Matryx MTX 72.92%
Hurify HUR 39.98%
TokenDesk TDS 38.21%
United Traders Token UTT 29.67%
United Bitcoin UBTC 27.48%

Top 100 Losers of the day

Thrive Token THRT -35.93%
SalPay SAL -35.75%
DAEX DAX -32.44%
Transcodium TNS -31.35%
EJOY EJOY -28.71%


News


FCoin Manipulation Of Ethereum Network Spurs Threat Of Legal Action
Activity on the Ethereum network spiked at the end of last week causing transaction fees to hit all-time highs and now fingers are pointing to an obscure Chinese trading platform called FCoin. Accusations are being made against founder Zhang Jian, formerly of Huobi, of orchestrating a series of Sybil attacks in order to drive up traffic, crippling the Ethereum Network and gaining publicity for itself.
Source: newsbtc.com

Study Finds That Over Half Of ICOs Die In First Four Months
A new study out of Boston University has found that at over half of crypto startups that complete fundraising through an ICO is dead within four months of their coin launch.
As the ICO has become the preferred method for emerging tech companies to raise funding the space. Is has become overpopulated with coins that are never going to make it to an exchange. The first ICO was launched only 5 years ago, but most probably never heard the term until 2017, when the strategy took off along with the rising price of cryptocurrency.
Source: newsbtc.com

Decentralized Exchange Bancor Falls Victim To $24 Million Security Breach
A popular decentralized exchange platform, Bancor, recently took to Twitter to announce that the platform fell victim to a security breach, giving further details about the apparent hack.
On July 9th at 8 AM (UTC), Bancor released a Tweet noting that its web service would be closed down for maintenance. This announcement, which came out of nowhere, got some users worried, as they wondered what had occurred.
Source: newsbtc.com


Analysis


LTC/USD

LTC/USD as with the other cryptos is under heavy pressure, Litecoin has lost -7.54% in the last 24-H and -12.2% in 2 days; as the currency correlates with the BTC, further losses are expected this week.



Earlier, Litecoin touched $74.40 and now is moving around $75.80 trying to cross the Pivot S3 upwards, probably the price will bounce here and will make a movement towards $73.00.


Market sentiment

4-H chart technicals signal a strongly bearish sentiment.

Oscillators are showing sell signals and pointing down.


Pivot points

R3 85.4058
R2 84.2418
R1 82.3481
PP 81.1841
S1 79.2904
S2 78.1264
S3 76.2328

NEO/USD

NEO has crossed below the 100 EMA and the Pivots S1 and S2 in this 4H chart showing the buying pressure is here.
The price touched $32.82 this morning and now is trying to retrace a little but the market has turned even more bearish in the last hours.



 

NEO has dropped -11.40% in the last 24H and if the Pivot S2 can’t be crossed upwards, the price could possibly visit $32.13 in the short term.


Market sentiment

4-H chart technicals signal a Bullish sentiment.

Oscillators are showing buy signals and pointing up.


Pivot points

R3 41.38
R2 40.32
R1 38.29
PP 37.23
S1 35.21
S2 34.19
S3 32.13

EOS/USD

EOS continues the big drop initiated yesterday from $8.62 and is now sitting in the $7.24 area, trying to find support in the Pivot S1. The indicators are in the oversold zone but nothing seems to stop the drop.



 


Market sentiment

4-H chart technicals signal a Strongly Bullish sentiment.

Oscillators are showing sell signals and pointing down.


Pivot points

R3 9.76
R2 9.25
R1 8.46
PP 7.95
S1 7.16
S2 6.64
S3 5.85

 Conclusion


The bears remain in control of the market and it will most likely continue as well because pronounced sales continue. BTC is dragging most of the alt coins decidedly.

Categories
Crypto Market Analysis

Daily Crypto Update 09.07.2018. –

The weekend’s rise in most of the currencies stopped today, Monday and the market made a small pullback.
The Total market capitalization couldn’t break over the $280 billion and pulled back to where its now at $273 Billion. The market remains under a big pressure during the last days and the expectations are in a big percentage waiting for a deeper setback in most of the currencies.


General Overview


Market Cap: $273.846.365.383

24h Vol: $11.597.597.522

BTC Dominance: 42.6%

A bullish shift in the charts will only be possible if Bitcoin could cross the $ 10.000 000 mark. The top 10 chart appears in red with the exception of Thether, which is positive by 0.12% in the last 24H.

Top 100 Gainers of the day

ERA ERA                      162.19%
United Bitcoin UBTC   49.84%
Sumokoin SUMO         42.47%
AirSwap AST                 34.24%
Wowbit WWB               33.03%

Top 100 Losers of the day

Quantum QAU             -48.02%
DecentBet DBET         -34.41%
StarCoin KST               -30.25%
DeviantCoin DEV       -26.92%
Noah Coin NOAH       -26.90%


News


Google Co-Founder Sergey Brin Reveals He Is Mining Ethereum
Co-founder of Google and President of Alphabet, Sergey Brin, revealed he is mining Ethereum with his son at a summit hosted by Sir Richard Branson on July 8. The panel also spoke on the potential of zero-knowledge proofs which underlie the privacy option of Zcash.
Source: newsbtc.com

Tokenizing Trading Fees With Mining Mechanism – Is It Good Or Bad For Exchange Platform Users?
ABCC is another exchange trying to reward users with AT and ToM. Today we are going to discover how a bitcoin-like mechanism and a principle of fixed number of tokens generated via half-life cycle with Simultaneous Release differentiate the new approach from others.
Source: newsbtc.com

Blockchain Platform For Creating Large Consumer Applications Aims At Exchange
New blockchain project Constellation Labs for “consumer grade” applications development announced the listing of its DAG token on KuCoin exchange, following the recent launch of their developer community Orion. Orion has an award system for participants and will be used for the testnet at the beginning of August.
Source: newsbtc.com


Analysis


XRP/USD

XRP/USD could not overcome the Bearish trend line nor the EMA-100 in this 4-hour chart bouncing its price in $0.4877 and it is stuck to the line during the whole day. The price is now close to the Pivot S1 in $0.4118 and if the bears can put more pressure the $0.4622 would be the next level to visit.





Market Sentiment

4-H chart technicals signal a sell sentiment.

Oscillators are showing sell signals and pointing down.

Pivot Points

R3 0.5001
R2 0.4943
R1 0.4863
PP 0.4805
S1 0.4725
S2 0.4668
S3 0.4588

LTC/USD

Litecoin has been moving in a wide range since the beginning of the month between $79-86 while the EMA-100 is still an important resistance to overcome. Today the price is indecisive and close to the pivot S1, if the price can break this support it could return to visit the $79.5 level.



 


Market Sentiment

4-H chart technicals signal a Strongly Bearish sentiment.

Oscillators are showing sell signals and pointing down.


Pivot Points

R3 88.3314
R2 86.9806
R1 84.5891
PP 83.2383
S1 80.8468
S2 79.4960
S3 77.1045

EOS/USD

EOS is having a big drop right now as EOS New York reports. Today a BPs crash and the internal problems in the EOS network and disputes inside the community members may affect the price. Also, some block producers crashed because prices in RAM for EOS increased more than 600% in the last days. We could see pronounced sales in the short term.



 


Market Sentiment

4-H chart technicals signal a Strongly Bullish sentiment.

Oscillators are showing sell signals and pointing down.


Pivot Points

R3 9.22
R2 9.11
R1 8.90
PP 8.78
S1 8.57
S2 8.46
S3 8.24

 Conclusion


My expectation in the short term is a pronounced sale in most of the cryptos for the first days of this week before seeing recovery signs.

Categories
Crypto Market Analysis

Daily Crypto Update 06.07.2018 – Market Can’t Keep Bullish Momentum

Recently, the market has seen a moderate downward trend in most of the cryptocurrencies and the last hours are showing a small correction in the pairs we are going to see today in this update. Only 3 of the top ten cryptos report positive numbers right now (BTC-ETH-XLM).


General Overview


Market Cap: $271.699.753.396

24h Vol: $15.382.782.187

BTC Dominance: 42.1%

Cryptos Report:


News


Why India And China Won’t Lift Their Crypto Bans
The highest court in India this week upheld the Reserve Bank’s decree prohibiting the country’s banks and other regulated lenders from dealing with or supporting any cryptocurrency-related services, including allowing customers to buy crypto with credit cards.
Source: barchart.com

Coinbase UK CEO Interview: Huge Interest From Institutional Investors Toward Crypto
Coinbase UK CEO Zeeshan Feroz is working to achieve a crypto revolution amidst hesitant bankers in a city torn over Brexit. Last week, he made a speech on blockchain’s potential to connect the unbanked and rebuild the entire financial system. Today, in an interview with NewsBTC, he said that Coinbase is looking to roll out GBP wires in the next few weeks, where London could be the next blockchain hub and that Brexit may even speed up clarification over regulatory uncertainties.
Source: barchart.com

Digital Collectible On Ethereum Network Sold For $1 Million On Valentine’s Day 
A group of ten collectors split the million dollar price tag for a digital photo of a red rose digital collectable on valentines day launched on the Ethereum network. The piece is thought to have fetched the highest price yet paid for a piece of virtual art. Forever Rose, produced by Kevin Abosch and GIFTO, exists on the blockchain just as Bitcoin and other virtual currencies do.
Source: newsbtc.com


Analysis


XRP/USD

The price of XRP had a considerable drop today from $0.5063 and broke the $0.50 support area, the drop was only stopped by the Pivot S1 at $0.4624. Now the price is moving around the 0.50% Fib Retracement while the bears keep showing strength.



There is a crucial support broken at $0.475 and if a break below the Pivot S1 happens, we could see declines towards the $0.4547 and the Pivot S2 at $0.4477.


Market sentiment

4-H chart technicals signal a sell sentiment.

Oscillators are showing buy signals and pointing up.


Pivot points

R3 0.5299
R2 0.5163
R1 0.4966
PP 0.4830
S1 0.4634
S2 0.4498
S3 0.4301

ADA/USD

The price of ADA has been recovering from the last drop from $0.1614, bouncing on the Pivot S1 at $ 0.1408. The bears have lost momentum and now the price has been recovering with three consecutive green candles. It seems the price reacted to news from the Cardano Foundation that stated the company is releasing a new roadmap.



Although the EMA-100 appears at this moment as the resistance to break, added to that, the Central Pivot Point is very close to it. We should also consider that a new bearish pressure could send the price to look for the 0.50% Fib Retracement close to $0.1369.


Market sentiment

4-H chart technicals signal a Bullish sentiment.

Oscillators are showing buy signals.


Pivot points

R3 0.1693
R2 0.1627
R1 0.1550
PP 0.1483
S1 0.1408
S2 0.1382
S3 0.1265

EOS/USD

EOS tries to recover the losses of the beginning of today’s session and bounced the price in the Pivot S2 at $8.36 that converges with the lower trend line of this ascending channel in the 4-H graph. At this moment it is trying to beat the Pivot S1 at $8.60. If the price can cross down the channel we could see pronounced sales in the short term.




Market sentiment

4-H chart technicals signal a Bullish sentiment.

Oscillators are showing buy signals.


Pivot points

R3 9.68
R2 9.45
R1 9.13
PP 8.89
S1 8.59
S2 8.36
S3 8.06

Conclusion


Cryptos Report: The expected trend change has not yet shown and that’s why sellers are still taking intraday profits in the market rebounds.

Categories
Crypto Market Analysis

Daily Crypto Update 05.07.2018 – A Breath to Take Direction?

Cryptocurrency Prices Live: The Crypto Market is showing consolidation in the currencies that we will be analysing today and although we still do not see a defined course, it seems that the bulls are losing momentum and there is uncertainty about whether the last raise will continue or the cryptos will be involved in new minimums. By now, the second option is the most probable since today the top 10 of the market is in red except for Ethereum with a minimum gain of 0.34% in 24 hours.


General Overview


Market Cap: $271.699.753.396

24h Vol: $15.382.782.187

BTC Dominance: 42.1%

Cryptocurrency Prices Live


News


‘Stop Trying to Create Money!’: BIS Chief Carstens on Cryptocurrency
Carstens, the newly-christened general manager of the Bank for International Settlements (BIS) — the so-called “central banks’ central bank” — is on record as one of cryptocurrency’s fiercest critics. Earlier this year, for instance, he said that bitcoin is “a bubble, a Ponzi scheme, and an environmental disaster.”
Source: ccn.com

Head of Russia’s Top Bank: the State Will Keep ‘Centralised Role’ in Money Emission
The CEO of Russia’s largest state bank Sberbank, Herman Gref said he could not yet foresee governments “yielding their centralised role” in fiat currency creation as part of his comments on cryptocurrency.
Source: cointelegraph.com

South Korea Legitimizes Blockchain Industry With Major New Classification Standards
Three Korean ministries – the National Statistical Office, the Ministry of Science and Technology, and the Ministry of Information and Communication – are said to have been working since the end of last month to produce the final draft of a new blockchain industry classificatory scheme, ready by the end of July.
Source: cointelegraph.com


Analysis


XRP/USD

Ripple price has had small losses since the beginning of the session and at this moment is at $0.4846 trying to get away from the EMAs200-100 after having bounced on the lower line of the bullish pennant.


The Central Pivot Point looks strong as resistance and we must be alert to a possible new bounce there to look again for the bottom of the Bullish Pennant.


Market sentiment

1-H chart technicals signal a sell sentiment.

Oscillators are showing buy signals and pointing up.


Pivot points

R3 0.5389
R2 0.5228
R1 0.5074
PP 0.4913
S1 0.4759
S2 0.4598
S3 0.4444

ETH/USD

Ethereum has gained 0.34% in the last 24-H and is currently valued at $470. The price has been moving in range throughout the day while the strength of the buyers has disappeared and the price remains unable to definitely leave the bearish channel in this 4-H chart, the Central Pivot Point is still strong as a support.



Market sentiment

4-H chart technicals signal a Bullish sentiment.

Oscillators are showing neutral signals.


Pivot points

R3 513.26
R2 497.69
R1 482.43
PP 466.86
S1 451.60
S2 436.03
S3 420.77

EOS/USD

EOS couldn’t keep the price above $9.00 and now is sitting around $ 8.88.


The price is currently moving over the EMA-100 that is working as an immediate support close to $8.75. Indicators still show an extra field down for the bears and if they want to add some pressure, the price could go to test the Pivot S1.


Market sentiment

1-H chart technicals signal a Bearish sentiment.

Oscillators are showing sell signals and pointing down.


Pivot points

R3 10.19
R2 9.82
R1 9.36
PP 8.99
S1 8.53
S2 8.16
S3 7.70

 Conclusion


Cryptocurrency Prices Live: The market seems to be taking a breath and this is why some of the currencies in this update have moved in narrow ranges during the day, in summary, we don’t know where we are going at the moment and there is no solid confidence that the recent rises are strong enough. We expect directional movements at any time.

Categories
Crypto Market Analysis

Daily Crypto Update 04.07.2018 – Bears everywhere

The market is returning all the gains of the beginning of the week in an interesting movement of the bears that shows that the general trend has not changed and that more consolidated movements are needed in order to define a real change.


General Overview


Market Cap: $263.141.302.151

24h Vol: $15.751.561.828

BTC Dominance: 42.2%

The cryptocurrency market capitalisation has dropped by 10 billion in 24-H

Coin Market Trends

Only 14 of the top 100 Cryptos are in green numbers today, this is showing the big percentage of sellers around.


Top 100 Gainers of the day

  1. Syscoin             49,61%
  2. Decentraland  33,11%
  3. Steem               6,66%
  4. Status               6,54%
  5. SmartCash      6,24%

Top 100 Losers of the day

  1. BCN                      -16,35%
  2. Golem                   -14,02%
  3. WAX                     -12,46%
  4. Mixin                    -12,24%
  5. Loom Network   -11,34%

 News


There is not any considerable news that moves the market in the last hours, here is a short summary extracted from the portal CCN.com.

Binance Leads $12 Million Funding Round in the Tokenisation Startup Republic
A retail investment platform called Republic recently completed $12 million in financing to tokenise its platform and introduce its own security token, led by Binance Labs and NGC ECO Fund. The financing round was also supported by ZK Capital, Oyster Ventures, FBG Capital, Hazoor Capital, East Chain, Zhen Fund and others.
Source: CCN.com

Microsoft Launches Enterprise Blockchain Partnership in Taiwan
Microsoft Taiwan has entered into a partnership with Digital China and Hot Cool in the hope that the three companies can use blockchain technology to improve the financial, e-commerce, entertainment, and other industries.
Source: CCN.com

Bermuda Amends Banking Act to Favour Blockchain Startups
Bermuda continues its push to become a global hub for blockchain and fintech innovation, having recently announced plans to change its banking laws to create a class of banks catering to blockchain and fintech companies, according to Finextra. The amendment to the country’s Banking Act follows the recent passage of a Digital Asset Business Act and an initial coin offering (ICO) bill.
Source: CCN.com


COIN MARKET TRENDS ANALYSIS


NEO/USD

NEO is trying to cross the lower side of the bullish pennant pattern in this 60-minute chart after bouncing in the upper side around $37.40. A breakout of this level could be an opportunity to go short in the short term and against the rules of the trend, the bulls have lost strength and they are returning an important part of the 22% of gains of the last two days.


We must wait for a confirmation of the break to enter about $35.31 and look for the $35.17 (Fib. 61.8%) and then the $34.28 (Fib. 76.4). We can go short in $35.31, placing a stop loss at $36.17, take 70% profit at $34.28 and look for the Pivot S2 at $33.16 or the 100% Fib Retracement.


Market sentiment 

Hourly chart signals buy.

Oscillators are leaving oversold levels and pointing up.


Pivot points

S3 41.59 
S2 40.28 
S1 38.51 
P  36.71 
R1 34.48 
R2 33.17 
R3 30.94 

BTC/USD

BTC/USD has lost -2.34% in the last 24-H while the buyers weren’t strong enough to maintain the upside momentum and to beat the important resistance at $6,700, with the opening of the Asian Market, the bearish pressure has started and Bitcoin goes back to lower levels close to the Pivot S1 and is sitting at $6,460.


The technical perspective is showing us a possible bounce in this EMA-100 of this 1H chart according to the readings of the RSI and Stochastic showing oversold levels, another test to the EMA-100 could encourage the buyers to push the price again and send it to test $6.676 again.


Market sentiment 

Hourly chart signals buy.

Oscillators are leaving oversold levels and neutral.


Pivot points

R3 6830.92
R2 6750.36
R1 6627.50
PP 6546.94
S1 6424.09
S2 6343.53
S3 6220.67

XRP/USD

XRP has returned more than 62% of its last rally in just 24 hours and has not been able to keep the support at $0.4889, at this moment the price is held by the EMA-100 and if a break by the bears happens we could see a fast drop down to the $0.4500 zone.



Market sentiment 

Hourly chart signals sell.

Oscillators are in oversold levels and pointing up.


Pivot points

R3 0.5521
R2 0.5360
R1 0.5102
PP 0.4940
S1 0.4683
S2 0.4525
S3 0.4265

Conclusion


Coin Market Trends: Although a correction in the rise was expected, this has been quite long and it is still possible that we continue to see minimums in most of the pairs while the BTC continues to feel the pressure of the sellers.

Categories
Forex Market Analysis

July 2 – Daily Update on S&P500 & Gold – NFP Week Begins

On the first day of the 3rd quarter, the financial markets remained heavily volatile in the wake of trade war sentiments. For instance, gold slid more than 1% to its lowest ahead of the U.S. holiday, as the dollar recovered. Whereas, the indices inducing SPX, DAX and Nikkei plunged due to ongoing U.S.-European Union trade war. In addition to this, the July 6 trade war tensions have helped the risk sentiment to stay off.  

 

Later this week, we have another series of high impact economic events coming out of the market. Let’s take a quick look.

 

Top Economic Events to Trade

AUD – Building Approvals m/m – 1:30 (GMT)

AUD – RBA Rate Statement – 4:30 (GMT)

AUD – Cash Rate – 4:30 (GMT)

GBP – Construction PMI – 8:30 (GMT)

 

Gold – XAU/USD – Daily Outlook

The precious metal gold is trading at 1242, down 11.60 points and 0.92% on Monday. One of the main reasons behind the bearish trend is the stronger dollar.

 

The greenback continued its ascent as traders boosted their bets that the U.S. administration would prove better in a trade war as compared to some of its trading rivals. The U.S. tariffs on $34 billion worth of Chinese imported goods are due for July 6.


 

Support     Resistance 

1240.83    1247.17

1238.87    1249.13

1235.7    1252.3

Key Trading Level:    1244

         

SPX  – S&P500-  Technical Outlook

SPX is trading bullish at 2727, up 5.75 points and 0.21%. On the 4- hour chart, the bullish trendline is extending a support near 2679. While the resistance predominates at 2732 and 2745 today. The main trend is up as per the daily swing chart. But, momentum is trending lower. A trade through 2679.25 will convert the main trend (bullish) into the bearish bias.

 

Overall, the main trading range of SPX is 2595 to 2796. The index is currently testing the upper or 50% level of this range at 2795.75.



 

Support     Resistance 

2705.72    2719.32

2701.52    2723.52

2694.72    2730.32

Key Trading Level:    2712.52
Categories
Crypto Market Analysis

Daily Crypto Update 02.07.2018 – Is The Reversal Here?

The crypto currencies market has received 16 billion in a few hours which has generated a large increase in most of the top 100 cryptos and it seems a possible a reversal in the trend. We have to be careful and expect the week to evolve before taking determinations since the overbought is present in the charts and most likely we will see a strong drop as well.


 General Overview


Market Cap: $267.609.425.759

24h Vol: $14.357.089.584

BTC Dominance: 42.1%

The market is green in most cryptocurrencies with two-digit gains in many of them.

 

Crypto currencies market

 

Top Gainers of the day

1. Dragon Coins DRG  83.97%
2. Bitmark          BTM  69.34%
3. Alphacat        ACAT 63.01%
4. Metronome   MET  43.72%
5. NaPoleonX   NPX    37.91%

Top Losers of the day

1. Pure               PURE -32.86%
2. Selfkey          KEY    -29.27%
3. Aditus           ADI     -23.95%
4. WINCOIN    WC     -18.67%
5. Naviaddress NAVI -17.20%


News


Bitcoin and Ether Surge 6% as Crypto Market Adds $15 Billion in 2 Hours
In the past 2 hours, Bitcoin and Ether, the native cryptocurrency of Ethereum, recorded a 5 per cent increase in value supported by a sudden spike in volume. Within merely hours, the volume of Bitcoin surged by over $1 billion while the volume of Ether increased by nearly 20per cent.
Source: ccn.com

Coinbase Custody Officially Launches for Institutional Investors
Today Coinbase announced that it has officially opened up Coinbase Custody for institutional investors. The announcement, written by Sam McIngvale, product lead at Coinbase Custody, stated that Coinbase Custody accepted its first deposit last week before its official launch today.
Source: ccn.com

Kraken Strikes Back at Tether Price Manipulation Claims
Cryptocurrency exchange Kraken is calling foul on allegations that its tether (USDT) markets are frequently characterised by trading activity commonly associated with wash trading and other forms of market manipulation.
Source: ccn.com

Former ‘Big Three’ Chinese Giant BTCC Relaunches Cryptocurrency Exchange
After shuttering its doors nine months ago, the world’s oldest cryptocurrency exchange is relaunching its exchange platform for business and has revealed its plan to launch its own token in the future. BTCC on Monday announced the launch of its revamped exchange with support for crypto-to-fiat and crypto-only trading pairs including Bitcoin, Bitcoin cash, Litecoin and Ethereum.
Source: ccn.com


Analysis


BTC/USD

The price of the BTC has been showing a considerable rise in the last hours even crossing the resistance of $6563.


It is not yet known what could have caused this new rise but there is something clear and it is that last week the price was affected in a very positive way for the closing of the next futures contracts, the day this happened the price immediately rushed up. Tether also printed an additional 250 million USDT and the market felt the effects of this. After strongly breaking up the level of $6,250, BTC now looks more bullish.


Market sentiment

4-H chart technicals signal a Bullish sentiment.

Oscillators are in overbought zone pointing up.


Pivot points

R3 6604.24
R2 6516.95
R1 6432.72
PP 6345.42
S1 6261.19
S2 6173.90
S3 6089.67

ETH/USD

ETH is raising up considerably today, testing the upper part of the channel on this 4-H chart. The price made a big jump from the central Pivot Point and a breakout of this line could quickly send the price to $500, however, the EMA-200 is a strong resistance to consider at $471 where the price is sitting right now.




Market sentiment

4-H chart technicals signal a Bullish sentiment.

Oscillators are in overbought zone pointing up.


Pivot points R3 6604.24

R3 469.58
R2 463.14
R1 457.54
PP 451.10
S1 445.49
S2 439.06
S3 433.45

XRP/USD

XRP raises 6.75% in the last 24 hours while the market continues in green behind the new Bitcoin rise that drags the other cryptocurrencies along positively. In this rise, the price has broken the central pivot point and also the pivots R1 and R2. At this moment the price is moving at $0.4914 but the indicators are still pointing upwards very close to the oversold area. The EMA-200 could be a strong resistance for the price.




Market sentiment

4-H chart technicals signal a Bullish sentiment.

Oscillators are in overbought zone pointing up.


Pivot points R3 6604.24

R3 0.4901
R2 0.4798
R1 0.4706
PP 0.4604
S1 0.4512
S2 0.4409
S3 0.4317


ADA/USD

ADA has increased its price by 34.5% since June 29th in a very interesting rally, also helped by the price increase of BTC by 4.66% today.



The price has crossed the EMA-100 and pivots R1 and R2 in this 4-H chart, although the indicators are already showing high overbought levels so we could see the entry of sellers in the short term.


Market sentiment

4-H chart technicals signal a Bullish sentiment.

Oscillators are in overbought zone pointing up.


Pivot points R3 6604.24

R3 0.1654
R2 0.1564
R1 0.1491
PP 0.1401
S1 0.1328
S2 0.1238
S3 0.1165


Conclusion


Crypto currencies market: BTC continues moving the market up and down, to consider a reverse on the trend the price still needs to go higher over $8.000 because the pressure remains on the downside, while this happens there is still at risk for deeper setbacks.

Categories
Forex Market Analysis

Breaking Down the Charts

Technical Analysis

  • US Dollar Index



After a fake breakout in the bearish trend and a bounce back from the resistance, it is back on track to approach the take profit target again. For now, we hold the position.

 

  • EURUSD



The Euro continues its low but consistent downfall against the US Dollar. Recently it has been moving slightly sideways however it remains in the green. After the recent small correction, a continuation of the bearish trend is expected.

 

  • GBPUSD



The British Pound initiated the expected downtrend, nevertheless, a small correction has taken place against the US Dollar. The next days will be key to see whether it continues the downtrend or it reverses and breaks the resistances. For now, we hold expecting a continuation.

 



USDJPY is finally approaching the monthly downtrend resistance we have been waiting weeks for. In the case of a close above it and a breakout, a long position will be opened. If not, we’ll wait to see from which side it decides to break the monthly triangle, it has been moving sideways for months.

 

  • Crude Oil



After breaking abruptly upwards, there is not a clear direction for oil in the next short/medium term. The rational thing, considering Trump’s comments on oil production and concerns about inflation, is that the price should go down. However, technically there is not a clear direction. For now, we do not take any unnecessary risks and wait for a confirmation.

 

  • DAX



After breaking the bullish trend strongly and breaking an important support, DAX is now facing uncertainty and continues moving sideways. First the breakout and then the retest confirm a continuation of this bearish trend which will face many supports. For now, we just wait to reach the first one.

 

Categories
Crypto Market Analysis

Weekly Crypto Update 29.06.2018 – The Red Spot

I was thinking there could be a quiet end of this week but the market wants a different thing, yesterday it started a new sell-off in all the charts. During last week, the prices of the main top ten cryptos were moving in narrow ranges and without definition after BTC touched a maximum of $6,319 on Monday 25th and a few hours ago, was very close to the annual minimums touching the $5,790.


General Overview


Market Cap: $234.606.528.197

24h Vol: $12.030.491.219

BTC Dominance: 43.1%

Overall market cap dropped from a weekly high of $ 261,218 Billion to a low today Friday of $ 232,631 Billion and Bitcoin’s dominance has gone up to 43.1% for the first time since April 12.

The important support for the BTC price of $6,000 was lost. The fear in the market is that most of the cryptos will follow the drop of the mother of coins and the result would be a disaster for all cryptocurrencies because we are facing a real possibility to see a minimum of the BTC close to $3,000.


Top Gainers of the week

  1. Selfkey       KEY   90.64%
  2. SPINDLE SPD   90.10%
  3. Paragon    PRG  43.27%
  4. FuturXe   FXE   40.00%

Top Losers of the week

  1. BigONE Token Big -52.59%
  2. PeepCoin PCN -44.25%
  3. CVCoin CVCOIN -31.48%
  4. BioCoin BIO -29.90%

News


There was no remarkable news that could have moved the market considerably. Here is a summary of the most important news items of the week.

The GBTC and Kimchi Premiums are Disappearing Again
Here in late June 2018, the GBTC premium and the South Korean “Kimchi” premium are quickly disappearing. This has historically been a bullish sign that has signalled the end stages of a bear market. It was very close to the last bottom that time; almost the literal bottom of the last cycle on April 9th, 2018

The Bank of International Settlements (BIS) Publishes Negative Report on Crypto
Click to read `The Bank of International Settlements (BIS) Publishes Negative Report on Crypto`
The Bank of International Settlements (BIS) published a mostly negative report on crypto called “Cryptocurrencies: looking beyond the hype.” The report criticises much of crypto while noting the potential importance of the underlying technology.

Crypto Search Trends are Trending up Again!
Crypto search trends are finally trending up again after a “search term correction” started in the winter as crypto prices started to drop. Although it is too early to say for sure, this is potentially a very bullish sign when considered alongside the price and volume data.

Bitcoin Poses Danger to U.S. Elections, Researcher Tells Congress
For a significant part of 2017 and even this year, social media platforms have taken a lot of heat over their alleged role in influencing the 2016 U.S. presidential election. And for a period of time on Tuesday during a congressional hearing, cryptocurrencies were put in the same spot — at least with regards to the future.

Bithumb Has Recovered Nearly Half of Funds Stolen in Last Week’s Hack
Cryptocurrency exchange Bithumb claims that it has recovered nearly half of the funds stolen in a recent high-profile hack at the South Korean trading platform.

South Korea Reveals New [Positive] Crypto Regulatory Guidelines
Financial Services Commission (FSC), the main financial agency of South Korea, has revealed a new crypto regulatory framework and guidelines pertaining to anti-money laundering (AML) and Know Your Customer (KYC) requirements for crypto exchanges.


Analysis


BTC/USD

BTC opened on Monday at $6,160 and touched a high at $6,319, but since then it has been falling slowly during the week, at this moment it is accumulating losses of -5.6% on the week. At the beginning of the trade session, the price reached the annual minimum at $5,838 and at this time it is negotiated at $5,880.


As we mentioned in our crypto analysis yesterday, the level to beat for the bears was $6000 this important support was crossed and if the bears continue to put pressure on the market, the result would be a complete red spot all around the charts with BTC looking for lower levels towards $3,000.


Market sentiment

4-H chart technicals signal a Bullish sentiment.

Oscillators are in oversold zone pointing up.


Pivot points
R3 6405.93
R2 6283.95
R1 6067.61
PP 5945.64
S1 5729.29
S2 5607.32
S3 5390.98

ETH/USD

ETH has lost 9.32% Since opening on Monday and looses 28.5% in June. The bearish trend continues as the bears are putting lower minimums in the chart.


The price is trying to cross the Pivot S1 at $410 and received some difficulty there. It is now sitting around $411 and continues to move down into the bearish channel on this 4-H chart. A breakout of Pivot S1 will probably send the price to the Pivot S2, the important level of $400.


Market sentiment

ETH 4-H chart technicals signal a Strongly Bearish sentiment.

Oscillators are showing sell signals and pointing down.


Pivot points

R3 463.08
R2 453.26
R1 436.81
PP 427.00
S1 410.54
S2 400.73
S3 384.27

LTC/USD

LTC has lost 8.88% Since Monday’s opening and made big loses of 88.4% in June. The price crossed down the triangle chart pattern in $76.47, exactly at the convergence point with the Central Pivot Point and is now sitting at $73.51, an important support to break. The downward trend of the market continues and there are no positive fundamentals that can turn it back, a red weekend is expected for the market.



Market sentiment

LTC 4H chart is showing strongly bearish.

Oscillators are on oversold zone and indicators neutral (Low volatility).


Pivot points

R3 86.1598
R2 83.7105
R1 78.9434
PP 76.4941
S1 71.7270
S2 69.2777
S3 64.5106

Conclusion


The market is making strong short movements that bring new lows in most of the cryptos. The question here is, will the market take a break and recover a little to go down again or this is a confirmed trip to $3.000 in BTC that will drag the others to the ground?

Categories
Forex Market Analysis

June 29 – Technical Update on S&P500 & Gold – U.S. GDP Disappoints

The financial markets remained heavily volatile due to a series of market-moving economic events like the German CPI and U.S. Final GDP.  Well, the game isn’t over yet. We have another series of high impact economic events coming out of the market on Friday. Let’s take a quick look.

 

Top Economic Events to Trade

  • EUR – German Retail Sales m/m – 6:00 (GMT)
  • GBP – Current Account – 8:30 (GMT)
  • GBP – Final GDP q/q – 8:30 (GMT)
  • EUR – CPI Flash Estimate y/y – 9:00 (GMT)    
  • CAD – GDP m/m – 12:30 (GMT)
  • USD –  Chicago PMI – 13:45 (GMT)

 

Although there are lot more economic events due to be released, these are the most important ones and may help you capture a nice amount of pips.     

 

Gold – XAU/USD – Daily Outlook

On Thursday, gold plunged to its weakest level in six months to trade at $1,247. Most of the selling came in response to escalating pressure from the trade war and the sentiments of higher U.S. interest rates which continues to weigh on gold. Nevertheless, we can expect a modest reversal in the near term. Price action is expected to retrace the decays back to 1263, the same level which earlier served as support.



 

Support     Resistance 

1252.5    1259.76

1250.26    1262

1246.63    1265.63

Key Trading Level:    1256.13

              

 

SPX – S&P 500 – Technical Outlook

SPX is trading bullish near 2718 after gaining support above 2694. On the 4- hour chart, the upward trendline is also extending support near 2679. While the resistance prevails at 2732 and 2745 today, the main trend is up as per the daily swing chart, but, momentum is trending lower. A trade through 2679.25 will convert the main trend (bullish) into the bearish bias.



 

Overall, the main trading range of SPX is 2595 to 2796. The index is currently testing the upper or 50% level of this range at 2795.75.

 

Support     Resistance 

2697.19    2732.87

2686.16    2743.9

2668.32    2761.74

Key Trading Level:    2715.03

 

Categories
Forex Market Analysis

June 28 – Technical Update on S&P500 & Gold – Trade War Tension Eased

It was quite a busy day with series of economic events from global economies. The greenback advanced as trade-related tensions eased after the U.S. administration relaxed its approach to Chinese investment. Most of its buying came on the Euro and the Swiss Franc. Whereas, gold prices hovered on top of 6 months lows as traders continuing to shun the yellow-metal despite signs of a reversal in risk sentiment. The robust greenback continues to keep a lid on the precious metals bullish trend.

 

S&P 500 – Daily Outlook

The New York stock market index  SPX is trading at 2706, down -22.75 points and -0.82%. S&P500 is facing a strong support near 2700, a double bottom level. The violation of 2700 can lead SPX towards 2679. The moving averages are suggesting a bearish bias of investors. The RSI and Stochastics have entered the oversold zone. Let’s see if SPX gets a chance to pull back above 2700.



 

Support     Resistance 

2706        2735.56

2696.86     2744.7

2682.08     2759.48

Key Trading Level:    2720.78

 

Gold – XAU/USD – Daily Outlook

 

Gold traded in a tight range of 1252 – 1261, troubled to manoeuvre off session lows because the greenback remained supported despite a small reversal in intraday risk sentiment, helping safe-haven currencies trim their losses against the dollar.

 

Technical indicators signal gold will continue to drop. For instance, gold has already violated the 1252 support level which is likely to work as a resistance now. Moreover, the moving averages also suggest a bearish bias of traders.



Support     Resistance 

1256.9    1266.84

1253.84    1269.9

1248.87    1274.87

Key Trading Level:    1261.87

 

Investors are advised to monitor the U.S. Final GDP q/q in order to capture further movements in the dollar index, gold, and the U.S. stocks.

Categories
Crypto Market Analysis

Daily Crypto Update 27.06.2018

The Crypto Market starts the second day in red this week with only 5 of the top ten cryptos in positive, QTUM, Bitcoin Diamond, Cortex, Emercoin and Monaco. There is no concrete explanation of what is happening with the market and Bitcoin is trading around $6,170 at the moment of this publication, losing -2.58% over the last 24-hours

 


General Overview


Market Cap: $243.263.694.472

24h Vol: $10.798.007.593

BTC Dominance: 42.7%

There is a bearish dominance all around the charts but with low volume. The market has lost 8 Billion in just 1 day, what is showing is a dark perspective for the coming session.


News


Interest in Bitcoin Set to Double in Europe, New Survey Suggests
People hear and know more about cryptocurrencies with every passing day, and according to a new survey, interest in Bitcoin is expected to increase twofold in Europe.

Crypto Exchange Resumes Trading in India Despite Problems with Banks and RBI
Cryptocurrency exchange Belfrics has resumed trading operations in India after halting earlier this year due to banks refusing to provide payments solutions to the exchange.

Meet Three More Applications That Utilize Bitcoin Cash OP_Codes
Over the past month or so since the most recent Bitcoin Cash (BCH) network upgrade, a lot of developers have created platforms and extensions that utilise the re-enabled Satoshi OP_Codes.

If You Can’t Beat Them, Join Them – Bitcoin Is Hiring Regulators
While everyone is looking for an indication that institutional money is about to flood into bitcoin and revive the market, we just got another confirmation that crypto has indeed entered the big leagues.

Source: news.bitcoin.com


Analysis


Bitcoin is trading around $6,170 at the moment of this publication, losing -2.58% over the last 24-hours. The pair easily crossed the central pivot point in this 1H chart and is now again dangerously close to the $ 6000 level; if this level is crossed the pair could be looking again for the yearly minimums around $ 5.781




Market sentiment

1-H chart technicals signal a Strongly Bearish sentiment.

Oscillators are showing sell signals and pointing down.


Pivot points

R3 6442.78
R2 6357.63
R1 6213.87
PP 6128.72
S1 5984.96
S2 5899.81
S3 5756.04

LTC/USD

Litecoin price has lost -7.54% in the last 24H and is now moving around $75.56 and again, in two days, very close to the year low around $73.62. This price can be the support to beat for the bears and if a breakout happens here the drop can easily move the price to $65.



Market sentiment

4-H chart technicals signal a Strongly Bearish sentiment.

Oscillators are showing sell signals and pointing down.


Pivot points

R3 87.5511
R2 85.0221
R1 80.4131
PP 77.8841
S1 73.2751
S2 70.7460
S3 66.1371


XRP/USD

XRP has lost -5.05% in the last 24h and like many of the cryptos in the market, it has been bearish during the last session. The pair was stuck in the bearish descending line for several hours and then bounced from there to cross the central pivot point and now is sitting around $0.45.




Market sentiment

4-H chart technicals signal a Strongly Bearish sentiment.

Oscillators are showing sell signals and pointing down.


Pivot points

R3 0.5039
R2 0.4931
R1 0.4728
PP 0.4620
S1 0.4417
S2 0.4309
S3 0.4106

Conclusion


The bears are definitively driving the market and we must be prepared for further drops in the short time, the corrections were not strong enough and the buyers are just spectators waiting for an opportunity.

Categories
Crypto Market Analysis

Daily Crypto Update 26.06.2018

The Crypto Markets were Recovering yesterday after Weekend Losses but today we are seeing negative 24h numbers in the top 10 currencies. Bitcoin is trading around $6,173 at the moment of this publication, down around -0.45% over the last 24-hours. Yesterday, BTC raised to $6.342 but since then, the price started to go down, crossed the 100-50 EMAs and seems to be bearish for the remaining time of the trading session, according to the indicators. As we said it, the ten first currencies of the market are in red and the one that loses the most at this moment is Ethereum with -3.16%


General Overview


Market Cap: $251.594.440.275

24h Vol: $17.855.718.044 .

BTC Dominance: 42.0%

Suddenly the market that came a little inactive has become bearish and there are some lost in major cryptos, we must be alert to a possible drop.

The market is turning negative in the last hours but it has only lost a Billion in the capital in 24H, contrary to what we were thinking, apparently the market is not going to have a long setback and would like to resume the low levels of the weekend.


News


20 Percent? Japan’s Finance Minister Ponders Crypto Tax Policy Change
Japan’s minister of finance has discussed the possibility of changing the country’s current capital gains policy which sees crypto investors face between 15 and 55 per cent in taxes.

Breaking New Ground: South Africa Gets Its First Bitcoin Atm
South Africa, whose citizens are increasingly interested in investing and trading in cryptocurrencies, is to have its first functional bitcoin Automated Teller Machine (ATM), following up on Zimbabwe and Djibouti.

Crypto Market Remains Relatively Stable: Theta Surges 30% as Tokens Record Big Gains
The crypto market has slightly rebounded by $4 billion over the past 24 hours, providing investors with a breathing room in a major mid-term sell-off and downtrend.

Robinhood Aims to Disrupt Further by Launching a Cryptocurrency Wallet
If established cryptocurrency exchanges didn’t take notice when commission-free trading app Robinhood started offering free cryptocurrency trading earlier in the year, they are likely to now.

Source: ccn.com


Analysis


BTC/USD

Bitcoin is trading around $6,173 at the moment of this publication, down around -0.45% over the last 24-hours. Yesterday, BTC raised to $6,342 but since then, the price started to go down, crossed the 100-50 EMAs and seems to be bearish for the remaining time of the trading session, according to the indicators in this 1H chart. The immediate support is $ 6,131 and next to the Pivot S1 around $6,096.




Market sentiment

4-H chart technicals signal a sell sentiment.

Oscillators are showing sell signals and pointing down.


Pivot points

R3 6637.76
R2 6491.77
R1 6370.11
PP 6224.12
S1 6102.47
S2 5956.47
S3 5834.82

LTC/USD

Litecoin price has lost -1.99% in the last 24H after touching yesterday highs around $84.18. The price was moving over the central pivot point during the beginning of the session but this support was lost and now the price is testing the pivot S1 at $78.81 in this 1H chart.




Market sentiment

1-H chart technicals signal a Strongly Bearish sentiment.

Oscillators are showing sell signals and pointing down.


Pivot points

R3 90.0820
R2 87.2371
R1 84.4182
PP 81.5733
S1 78.7544
S2 75.9096
S3 73.0906

XRP/USD

XRP has lost -1.17% in the last 24h after finding a strong resistance in the central pivot point around $0.4817 and now is testing the pivot S1 in $0.4711. As like some of the main currencies, XRP comes negative in the last hours. If the Pivot S1 can support the price pressure we could see a bounce to $0.4793, if a breakout happens, a considerable drop can come for the pair.




Market sentiment

1-H chart technicals signal a Strongly Bearish sentiment.

Oscillators are showing sell signals and pointing down.


Pivot points

R3 0.5097
R2 0.5006
R1 0.4905
PP 0.4814
S1 0.4713
S2 0.4622
S3 0.4520

Conclusion


There is a new bearish and unexpected scenario today. Although the losses have not been so big, the market is feeling nervous again, which may lead us to go back to the weekend minimums very soon if the selling pressure is still active.

Categories
Forex Market Analysis

June 22 – Quick Update on Gold and SPX – Risk-Off Sentiment Plays

The global stock markets are facing an immense amount of selling pressure as risk-off sentiment continues to dominate the market. The European Union is anticipated to impose tariffs on approx $3.4 billion of U.S. imports on a weekday. The expected tariffs have added to tensions as investors worry about an outright world trade war between the U.S., the EU, and China.

Tensions between the U.S. and China have additionally continued because these 2 largest economies within the world, faced a tit-for-tat over trade tariffs. Earlier on, U.S. President Donald Trump decided to impose tariffs on another $200 billion of Chinese merchandise.

 

Gold – XAUUSD – Daily Outlook

Gold prices alleviated from fresh lows for the year because the greenback turned negative on weaker U.S. economic figures. Gold futures for August delivery on the Comex division of the New York Mercantile Exchange fell by $3.10 or 0.24%, to $1,271.10 an ounce, spiralling to a new 2018 low of $1,263.20.

A sharp retreat within the greenback – from its highest level since last summer – supported a recovery in gold, however, sentiment remained negative amid expectations of an aggressive Fed rate-hike cycle would still spur demand for the dollar.



 

Gold was down by 0.31%, and it has completed 61.8% retracement near 1270.67 and below this. We can expect a selling opportunity, whereas, the support prevails near 1264 and 1261.

Support    Resistance
1268.04    1272.02
1266.82    1273.24
1264.83    1275.23
Key Trading Level: 1270.03

 

S&P500 – SPX – Dialy Outlook

The S&P500 is trading bearish at 2,748.50, down 22.50 points and -0.78% for the day. That’s mostly because of risk-off sentiment. Investors are feeling uncertain regarding the U.S.- China trade war issues and thereby moving their investments towards safer assets such as Japanese yen, Swiss franc, and Gold.



 

Technically, SPX has already completed a 50% retracement at $2,745 on the 2-hour chart. The U.S. is likely to gain support on this level, whereas, the bearish breakout can lead it towards $2,735.

Support   Resistance
2764.52    2772.88
2761.93    2775.47
2757.75    2779.65
Key Trading Level: 2768.7

Categories
Forex Market Analysis

June 11 – U.S. Indices Soars As Risk-on Sentiment Heads Up

On the first trading day of the fresh week, most of the markets opened with huge gaps on the back of the uncertainty driven by the G7 meeting. However, the markets soon recovered despite unease after U.S. President Donald Trump inflated the threat of higher import tariffs at a rough G7 meeting. Did you miss an opportunity? No worries the game has just begun…

S&P 500 – Daily Outlook

The U.S. stock market index is trading bullish at 2,791.25, up +8.75 points and +0.31%. The S&P500 has come out of the asymmetric triangle pattern at $2,712, indicating the bull bias of investors. At the moment, the SPX is likely to face resistance near the $2,795 level.



Support    Resistance

2767.96    2780.04
2764.24    2783.76
2758.2      2789.8
Key Trading Level: 2774

 

Nikkei – Daily Outlook

Japan’s Nikkei soared more than 375 points to trade at 22,975 on Monday. Most of the bullish trend began in response to the rise in risk appetite. The risk on sentiment kicked in as the investors are very optimistic about the U.S.- North Korea meeting tomorrow.

Technically, the bearish trendline is extending a solid resistance to Nikkei at $22850. At the same time, the RSI has entered the oversold zone which is signifying the chances of a bearish reversal.



 

Support    Resistance
22184.88   22303.38
22148.28   22339.98
22089.03  22399.23
Key Trading Level: 22244.13

That’s pretty much it for now. I hope you are ready for some action tomorrow. We’ve got to deal with the U.S.-North Korea updates and the markets can remain volatile throughout the session.

Categories
Crypto Market Analysis

Incent Sell-Off?


Incent (INCNT)


Market Cap: $14.80M

Circulating Supply: 46.02M INCNT

Max Supply: 0 INCNT

Volume (24h) $46.57K


Technical Analysis


The rate increased today but is seems pressured in the short term. INCNT/USD climbed above the broken dynamic support, but I’m afraid that it will drop further in the short term. We may have a great selling opportunity if the rate will close below the 0.29524790 yesterday’s low and could drop much below the 0.20000000 psychological level.

Price is struggling to stay higher, but I’m afraid that the crypto market could turn to the downside again after the temporary rebound. The major cryptocurrencies have increased a little, but are signalling an exhaustion already, so Incent could drop as well if the other cryptocurrencies will slip lower.


 

You can see on the Daily chart that the price has found a strong resistance at the 0.42260400 level and now has slipped below the lower median line (lml) of the ascending pitchfork. It is pressuring the sliding line (sl) of the ascending pitchfork after the lower median line (lml) retest. A valid breakdown below the sliding line will confirm a drop for the upcoming period.

INCNT/USD could drop even if it will pass above the 150% line as long as it will stabilise below the sliding line (sl).


Conclusion


The price seems that it could drop from here because it has stayed too much on the sliding line (sl). You can sell it from below the 0.29524790 yesterday’s low and you could place the first target at the 0.15696000 level. The Stop Loss should be above the 0.42260400 static resistance.

Categories
Forex Market Analysis

Slight Change of Context

Weekly Update (June 4th – 10th)

Macroeconomic Outlook

Two main factors need to be considered initially this week-

–          Outcome in Italy

o   More expected

–          Outcome in Spain

o   Less likely to happen

  • The bond spreads of Spain and Italy have had a notable increase over the German ones

However, the midterm elections in the USA are more worrying, which are taking place in November.

–          Which means Trump will put more pressure on trade with other countries.

o   This lead to uncertainty and lower growth in global terms

o   However, also they are useful to clarify ideas

For now, we can rely on the rebound that happened on Friday, due to two things that need to happen this week.

  1. The Italian Government should be formed and avoid other elections which can be interpreted as a danger to the Euro.
  2. In Spain, the budget program should go forward, and there should not be any surprise from the government.

Anyway, we cannot rely on this too much as the protectionism will still grow. In general terms, the investment strategy should not change.

–          We should be still exposed to markets

o   We still are within an expansive economic cycle

–          We elevate the perspective looking to 2019

o   Due to the current change of context to a worst one, returns will be slightly lower but that will not change the overall direction of the markets

 

Technical Outlook

US Dollar Index


After taking profits, the US Dollar Index is hanging between the resistance it just touched and the support it previously broke. So, for now, we´ll wait until it breaks one of them and position in the right direction.

 

EURUSD


EURUSD remains in the green, and there is not any support or resistance that signals a change of trend. Hence, for now, we remain short.

 

GBPUSD


GBPUSD is hanging on a key after breaking the first resistance. Now, it is facing the second monthly resistance. In case it does not break it we´ll remain short. However, if it closes above the bearish trendline that is now facing, we might consider changing the strategy to a more bullish position.

 

USDJPY


It remains in the same situation as we left it. It is going sideways between resistances and supports. Recently it has touched the support confirming it and possibly now it can go up to the resistance. However, for now, the movements are too small to care about them, so we remain on the side, looking at how it behaves and waiting for a clear breakout.

 

CRUDE OIL


US Oil just broke a strong monthly support which creates a strong entry to join the recently formed bearish trend. We captured the initial movement and now can be a good opportunity to join again after this last breakout of a resistance.

 

DAX


As analysed in the macroeconomic outlook, the fundamentals remain solid and the technicals too. If it does not close below the support, it is now facing we´ll remain as bullish as we are now. However, if it breaks the support and retests it, we might change to short, but for now, everything is in place for a low but positive uptrend.

Categories
Crypto Market Analysis

Litecoin Holding The Minor Gains


Litecoin (LTC)


Market Cap: $6.71B

Circulating Supply: 56.79M LTC

Max Supply: 84M LTC

Volume (24h) $297.53M


Technical Analysis


Litecoin was into another correction phase on the short term as the crypto market has turned to the downside again. The price increased aggressively on Tuesday and has shown an oversold signal. However, it is still premature to talk about a significant increase after one strong bullish candle. I’ve seen a lot of analysts that are sustaining that the major cryptocurrencies will start to increase again and that the correction is completed. Personally, I need a confirmation before I’ll go long again because the major cryptocurrencies are still trapped below some very important and strong resistance levels.


 

You can see that Litecoin has developed a major triangle on the Daily chart, so only a breakout from this pattern will bring a clear direction for the upcoming period. Price has retested the downside line of the chart pattern and failed to reach and retest the 106.52 static support.

LTC/USD failed to reach and retest the upside 50% Fibonacci line of the descending pitchfork in the last two attempts signaling that the sellers are exhausted after last week’s drop.

We’ll see what will really happen when the rate will reach the fourth warning line (wl4) of the former ascending pitchfork. You should know that a valid breakdown below this dynamic support will signal a further drop. You can see that I’ve drawn a minor ascending pitchfork, so it could come to test and retest the lower median line (lml) in the upcoming days.

Conclusion

You can buy it only if the rate stays within the minor ascending pitchfork’s body, and if it stays above the triangle’s downside line. The first upside target it will be at the UML of the descending pitchfork and the second one at the upside line of the chart pattern. The Stop Loss can be placed below the 106.52 level.

Categories
Crypto Market Analysis

XEM/BTC Finally Poised To Bounce?


NEM (XEM)


Market Cap: $2.31B

Circulating Supply: 9.00B XEM

Max Supply: 0 XEM

Volume (24h) $ 17.15M

XEM/USD = $0.25736


Technical Analysis


XEM/BTC increased today and has resumed the last day’s humble gains. The price remains under selling pressure in the short term because it is still located below some very important resistance levels. A valid breakout above the near term resistance levels will bring us a great buying opportunity. The crypto pair dropped in the short term as the crypto market retreated.

The crypto market has shown some recovery signs in the last days, but we still need a confirmation that the major crypto will increase again.


 

You can see that the rate has found temporary support on the minor uptrend line and on the 50% Fibonacci line of the minor descending pitchfork. We can go long on this pair only after a valid breakout above the minor downtrend line and above the median line (ml) of the minor descending pitchfork. XEM/BTC failed to drop towards the 0.00002857 static support, signalling that the bears could be exhausted in the short term.

Price could continue to move sideways in the short term and could reach the 150% Fibonacci line of the major ascending pitchfork. The rate also failed to approach and retest the 50% Fibonacci line of the major descending pitchfork.

It could move towards the median line (ml) of the major descending pitchfork if it will make a valid breakout from the minor triangle (chart pattern).


Conclusion


We may have a great long opportunity if the rate will have enough energy to stay above the 0.00002857 static support and if it will jump and will stabilise above the median line (ml) of the minor descending pitchfork. We’ll have an important target at the median line (ml) of the major descending pitchfork.

Categories
Forex Trading Strategies

The Connors & Raschke’s 80-20 Strategy


Introduction


 

The original Connors & Raschke’s 80-20 Strategy is an intraday strategy that was published in Street Smarts by Larry Connors and Linda Raschke.

It is based on the Taylor Trading Technique, which is a manual for swing trading. Taylor’s method was the result of the observation that the markets move within a cycle that is made up of a buy day, a sell day, and a sell short day. That setup was further investigated by Steve Moore ar the Moore Research Center.

Mr. Moore focused on days that closed in the top 10% of the range for the day. Then, he checked on for the percent of time next day prices exceeded the previously established high, and, also, for the percentage of times it also closed higher.

His results showed that when prices closed in the top/bottom 10% of its range, it had an 80-90% chance of following-through the next session, but only 50% of them closed higher/lower. This fact implied an excellent possibility of reversal.

Derek Gibson, said Connors, found out that the market has an even higher chance of reversing if the set-up bar opened in the opposite end of the range. That is, a candlestick with short wicks and a large body. Therefore this pre-condition was added. To create more opportunities, they lowered the percent of the daily range from 90 to 80, because it didn’t affect the system’s profitability.


Long Setups


  1. Yesterday, the asset opened in the top 20% and closed in the lower 20% of its daily range.
  2. Today the market must trade at least 5-15 ticks below yesterday’s low. This is a guideline.
  3. An entry buy stop is then placed at yesterday’s low, once the trade is being filled, and an initial protective stop near the low extreme of today’s action.

Move the stop to lock in profits. This trade is a day trade only.

 


Short setups


  1. Yesterday the asset opened in the bottom 20% and closed in the higher 20% of its daily range.
  2. Today the market must trade at least 5-15 ticks above yesterday’s high This is a guideline.
  3. An entry sell stop is then placed at yesterday’s high, after being filled, and an initial protective stop near the upper extreme of today.

Move the stop to lock in profits. This trade is a day trade only.

 


Example of a trade


 

The Connors & Raschke's 80-20 Strategy


Testing the Strategy


We tested this strategy using the backtesting capabilities of the Multicharts64 version 11 Platform.

The naked strategy, as is, in EURUSD, USDGPY, and USDCHF over a range of 17 years, were positive in all cases. Below the equity curves for the three pairs:

 


Examining the parameter map


 

The figure above shows the parameter maps of the USD_CHF and the EUR_USD pairs. We see that the return of the strategy increases as the parameters move to the 50% level, meaning that the importance of the starting and ending point (Open to Close) in the previous candlestick is not essential. The critical fact is the next day’s break above(below) the previous highs(lows) and the subsequent return to that level (False Breakout).

 


Example of  50-50 System with optimized stops and targets on the EURUSD


 

As we said, this is a 50-50 system, meaning that we don’t care in which part of the candle is the Open and Close. This is a simple false breakout system.

We see that the curve is quite good over its 17-year history. Starting with 10,000 dollars, the final equity reached $72,000, for a 6X profit figure.

 

Looking at the Total Trade Analysis table, we can observe that this system is also robust, with almost 40% winners and an average Ratio Win to Average loss ( Reward/risk) of 2.19.

 

The shuffled Trades Analysis shows that the system is very reliable, with a likelihood of small drawdowns, depicting a max consecutive loss of 16 trades.

 

The Net Profit distribution Analysis shows that there is a 75% probability of getting a 5X equity profit over 16 years and a 25% probability of getting a 7X profit figure.

 

Above is the Max Consecutive Losing Streak analysis, which shows that there is less than 10% probability of ending above a 16 losing streak. Although you think that a 16-losing-streak is terrible, it is not, but we need to be prepared psychologically to endure it. This figure is the one needed to help us conservatively decide our risk strategy.

As I already mentioned in other strategy analyses, you, as a trader, need to decide which percent of your equity you can lose without losing your temper. Many don’t like to lose any amount so they shouldn’t trade, because losing streaks are part of the trading job. Many would say 10% while others 50%. That figure has a close relation to the rate of growth of your trading account because it will decide the size of your position.

And here it comes the way to do it. Once we know the distribution of drawdowns of our trading system, we, as traders, want to minimize the probabilities that a losing streak goes beyond our max drawdown figure. This is an approximation, but its good enough to allow us to decide the best position size for our risk tastes.

Let’s say we are an average-risk trader, and we will be upset if we lose ¼ of our account. Using this trading system, and admitting a 10% probability of error, we would choose 16 as the losing streak to compute our size per trade.

Therefore, we divide 25% equity drawdown by 16, which is 1.56%. In this case, we must trade using a 1.56% risk on every trade. That means that the cost of a trade computed by the distance from entry to stop-loss levels, multiplied by the dollar pip risk and by the number of contracts should be 1.56% of your current equity balance.

Let’s simplify it using elementary math:

Percent Risk (PR) = MaxDD / Max_losing_Streak

Dollar Risk = PR x Equity_Balance

Dollar Risk = (Entry-Stop) x PipCost x Nr_of_Contracts

Let’s call Entry-Stop, Pips. And NC the Number of Contracts. Then the equation is:

Dollar Risk = Pips x PipCost x NC

Let’s move the elements from this equation to compute the Nr of contracts.

NC = Dollar_Risk / (Pips x PipCost)

 

That’s all. Every trade will be different, and the distance in pips from entry to stop loss will be different, but we can compute the number of contracts quickly:

Let’s do an example. Our current balance is right now $12.000, and we want to enter a trade with 20 pips of risk, and our cost per pip is $10 per lot. Which is my optimal size?

Our Dollar Risk is 1.56% of $12,000 or $187

NC = 187 / (20 x 10) = 0.93 lots, or 93 micro-lots.

 


Computing the Performance of the System


 

Now we want to know how much on average are we going to get, monthly, from this system. That is easily computed using the numbers above. We know that this system’s history is 205 months long, and it had 1401 trades, which is seven trades per month on average. Evidently, this system trades very scarcely, but we can hold a basket of assets. Thus, If we manage to get a basket of 10 holdings, including pairs, crosses, indices, and metals, we could trade 70 times per month. And those trades will not overlap most of the time if the assets are chosen uncorrelated.

Based on our risk profile and the average Reward-to-risk ratio, we know that our average winning trade will be 2.2 times our average losing trade.

So,

AvgWin = 411

AvgLoss = 187

Our winning percentage is 40%, so our losing one is 60%

Then on a 10-asset basket, there will be 28 winners and 42 losers monthly, then:

Gross Profit: 411*28 = 11,508

Gross Loss:  42*187 =  7,854

Average Monthly Net Profit =11,508 – 7,854 = 3,654

This is an average 30,4% monthly from a $12,000 balance. Not bad!

 


Note: The computations and graphs were done using Multicharts 11 trading platform.

 

 

Categories
Forex Market Analysis

XAUUSD Resting On A Key Area, Breakdown Imminent

 

 

XAUUSD

 

XAUUSD resting on capitulation zone

XAUUSD is resting on a very key area and trend line. It is already trading within an expansive trading range in a Square of 90 and if we are to follow the conditions of Gann’s Rule of Angles, the target area for XAUUSD to test is the 1238 value area. This temporary reprieve within this open zone is being held up by an uptrend line that started back in December of 2016. Also, we are approaching a perfect square in price and time within the Square of 90: the 50% level of time and 50% level of price intersect along with the major 45-degree angles on June 20th. Violent moves should be expected both before and after this date. Because the trend has thus far been up, this confluence zone should be treated as a resistance in time to the trend in force.

 

Categories
Crypto Market Analysis

Cryptocurrencies – Do You Have An Exit Plan?

Cryptocurrency Exit Strategy

source: investing.com

The cryptocurrencies are into a corrective phase, after the temporary rebound. It remains to see how long this will be as the major cryptos are almost reaching crucial support levels. Technically, the current drop was somehow expected after the impressive rally.

However, we’ll see if the buyers will step in again and if they will have enough power to push the crypto market higher again. The pessimism sentiment drives the crypto market in the short term. The investors could run away from the crypto market if the bearish movement is to continue. If you read my editorials you’ll notice that I’ve talked about a corrective phase after the temporary upside movement.

I’ve mentioned previously that the cryptocurrencies could come back down to test and retest some demand zones before they will really start a major upside movement. The major cryptocurrencies could increase again after the current sell-off, but the next major upside movement will be slower compared to what happened in 2017.

Personally, I want to see a strong consolidation in the short term before we can say for sure that the crypto market will be on an uptrend again. The cryptocurrencies are very volatile in the short term, that’s why the investors are sceptical that these speculative assets represent good investments.


Bitcoin Technical Analysis


The most important cryptocurrency approaches a critical support. A valid breakdown could confirm a massive drop for the upcoming period. You should be careful if you are long on Bitcoin because a further downside movement will ruin your account or your investment.


 

Bitcoin failed to reach the 10,000 psychological level and now is located below the 8,000 psychological level. It approaches the outside sliding parallel line (SL) of the ascending pitchfork where it could find support again.

I’ve mentioned in the previous weeks that the rate could come down to test and retest the lower median line (LML), and the sliding line (SL) after the failure to stabilise above the 50% Fibonacci line.

Price will maintain a bullish perspective as long as it stays above the SL, while a breakdown will invalidate a further increase and will send the rate towards the 5,000 level again. This scenario will crash the crypto market again and many projects will die.

The next days will be crucial for Bitcoin because a breakdown is somehow expected after the failure to stay within the ascending pitchfork’s body. Only a false breakdown below the SL, followed by a retest and by an important increase will signal another leg higher.

Ethereum dropped by 10.59% in the last 7-days, while the Ripple decreased by 9.40% and they could slip much lower in the upcoming days.


Conclusion


You should stay away from the crypto market if you didn’t take a long position in the previous weeks and you should keep an eye on it if you invested in the major cryptocurrencies because you can still get out with a small loss if the market were to crash. However, the corrective phase may be temporary and could give us a great chance to go long again after a strong consolidation.

Categories
Forex Market Analysis

Expansive Economic Cycle Still Supports Markets


Macroeconomic Outlook


The past week was mainly influenced by two relevant factors:

  • Oil Price

o   It has reached the benchmark of $80 per barrel

o   It has raised concerns about inflation

  • Ten-year Treasury Yield is at 3.07
  • Italian Elections

o   Populist coalition between the 5 Star Movement and The League

  • This has increased the difference between Italian’s debt to the German one by 155 basis points
  • Depreciation of the Euro against the dollar

So how can these factors influence this week

  • It is reasonable to consider a positive impact rather than a negative one

o   Italian coalition creates further stability to other outcomes

  • Such as Italy leaving the Euro

o   Oil price can still rise due to tension in the Arabic region

  • It can prompt more concerns about inflation
  • However, it is unlikely to change expectations in the monetary policy in central banks
  • Which will support markets
  • $80 barrel is a reasonable price within an expansive economic cycle

Regarding macro indicators, to be published in the coming week:

  • PMI in the eurozone

o   It will consolidate the current slower growth compared to the beginning of the year, however, it will show guidance towards a bigger upcoming economic cycle

  • The economic cycle will be the clear guidance toward a positive environment
  • The outlook is still positive for the markets which are facing the second semester in a good context of moderate globalisation

Technical Outlook


 

US Dollar Index


Monthly resistance has been broken leaving a space until the next one. Hence, it is confirming the continuation of a solid bullish trend through the breakout of this resistance, which leaves space to capture until the next one. A retest may happen to confirm the breakout. In that case, it would be reasonable to double the trade.


 

EURUSD


After breaking and retesting the last weekly resistance, it has confirmed the strength of this bearish trend. It recently touched the profit target, and the strength of the trend shows it has more downturn potential in the coming days. There are no significant resistances ahead which leave more space for another bearish position.


 

GBPUSD


 

After a strong bearish trend, GBPUSD may find a turning point in the coming days, thanks to the monthly resistances ahead. They are significantly strong and may confirm a bounce back.


 

USDJPY

 

USDJY is moving according to our expectations, and it is about to complete the bullish run. When it reaches its benchmarks, which is the monthly resistance ahead, it will be possible to consider a turning back point on the chart.


 

Crude Oil


 

After continuing the bullish trend, it has again touched bullish resistance which gives a reason to still believe in an upcoming downturn. For now, under normal conditions, it would be good to hold, and in case it breaks above the resistance the position would be closed.


 

DAX


 

With no significant resistances ahead and after strongly breaking the previous ones, DAX has a clear bullish route to complete until the next significant resistance. For now, holding the position would be the right decision, since both chart and fundamentals confirm a positive outlook for the markets.

 

Categories
Crypto Market Analysis

Can MUE/BTC Start An Important Upside Movement?


MonetaryUnit (MUE) 


Market Cap: $15.52M

Circulating Supply: 131.36M MUE

Max Supply: 4B MUE

Volume (24h) $118.29K


Technical Analysis


MUE/BTC posted humble gains in the last days, signalling that the buyers are still weak.  The price hovers above a major support area, that’s why we can think of another upside movement. The rate is narrowing right now, but I really hope that we’ll have a major move after the breakout from this minor chart pattern.

The rate tested and retested a dynamic support and it has now increased, but it is premature to talk about a larger upside movement at this moment.



 

I’ve drawn an ascending pitchfork hoping that I’ll catch an important upside movement. The rate has come back down to test and retest the lower median line (LML) and now approaches the minor downtrend line. A valid breakout will signal a further increase towards the 50% Fibonacci line and towards the major downtrend line.

However, it remains to see if this sideways movement will be an accumulation or a distribution. Anything could happen right now. The rate could drop significantly if it fails to pass above the minor dynamic resistance.

Personally, I believe that we could have an important upside movement towards the downtrend line as long as the rate stays above the LML. A larger rebound will be confirmed only after a valid breakout above the major downtrend line.


Conclusion


You could go long on MUE/BTC if the rate jumps and it closes above the minor dynamic resistance. You can place a Stop Loss somewhere below the support area.

Categories
Crypto Market Analysis

Bitcoin Keeps Bleeding, The Next Days Are Crucial

Crypto Price Predictions: Bitcoin is trading in the red and resumes yesterday’s bearish candle. If you’ll read my editorials you’ll see that I’ve talked about a retreat after the temporary rebound. The crypto has failed to make a valid breakout above the near-term resistance levels, that’s why the bears have taken the lead and are driving the price down.

Everyone wants to know what will happen with Bitcoin because a major drop will drag the other cryptocurrencies down. Bitcoin approaches two crucial support levels, a valid breakdown will signal a further drop towards fresh new lows.

As I’ve mentioned in the previous weeks, we may have another drop before the rate will really start a broader upside movement. Bitcoin needs to recapture more directional energy to be able to increase again and to give birth to a major leg higher.



 

Bitcoin drops after the failure to breakout above the red downtrend line and above the third warning line (wl3) of the former descending pitchfork. Actually, we had a strong confluence formed by the wl3 with the downtrend line and with the SL2.

The price failed to stay above the 50% Fibonacci line, so the current retreat is natural. It remains to see how long it will be because it has tried to take out the dynamic resistance from the third warning line (wl3).

The next hours will tell us if today’s drop will represent only a retest of the broken warning line (wl3). It approaches the lower median line (LML), where it could find temporary support. The major downside target remains at the outside sliding parallel line (SL). I’ve said that it could come back down to test and retest the mentioned support levels before it will climb higher again.

However, a valid breakdown below the SL will confirm a further drop towards the 5000 psychological level.

You can notice that Bitcoin is trapped within a triangle, so only a breakout from this pattern will give us a great trading opportunity. Personally, I would like to see a false breakdown below the LML or below the SL and a failure to reach the downside line of the chart pattern, then we could think about a broader upside movement.

A major upward movement will be confirmed by a valid breakout above the downtrend line. Another leg higher will bring us great returns if we’ll go long on Bitcoin after a valid breakout above the red downtrend line. This scenario will take shape only if the sliding parallel line (SL) will hold.

Crypto Price Predictions Conclusion

You should stay away for now because anything could happen in the short term. Personally, I believe that we may have a great trading opportunity soon. Right now we have to let the market to play its role and to step in only after a confirmation.

Categories
Crypto Market Analysis

VEN/BTC Further Increase Could Be Confirmed

VEN/BTC pair is strongly bullish right now, but only a valid breakout will validate a further increase.

VeChain (VEN)

Market Cap. $2.57B

Circulating Supply:525.78M VEN

Max Supply: 0 VEN

Volume (24h) $120.84M

VEN/USD = $4.8790

 

VEN/BTC could resume its bullish movement if it really manages to make a valid breakout. Price is trading in the green and resumed the yesterday’s bullish candle. The rate goes up after the breakout from the Falling Wedge pattern. VEN/BTC is trading at 0.00054630 level and seems determined to approach and reach some very important resistance levels soon.

VEN/BTC Further Increase Could Be Confirmed

Price increased sharply after the retest of the 50% Fibonacci level and now is trading well above the 38.2% retracement level. The upside movement is natural after it has escaped from the Falling Wedge and retested the 61.8% retracement level.

I’ve drawn a minor black ascending pitchfork to catch the upside movement. The rate has finally managed to make a valid breakout above the 50% Fibonacci line (ascending dotted line) of the minor pitchfork. It should take out the resistance from the median line (ml) as well.

VEN/BTC retested the lower median line (lml) and failed to close below it or on it signaling a significant upside movement.

You should know that a valid breakout above the median line (ml) will confirm a further increase towards the upper median line (uml). Resistance can be found at the 50% Fibonacci line of the minor ascending pitchfork, at the sliding line (SL) of the major ascending Pitchfork and higher, at the 23.6% retracement level.

Conclusion

The VEN/USD should increase further if it makes a valid breakout above the median line (ml). A further increase will be invalidated only by a valid breakdown below the outside sliding line (sl2) of the major ascending pitchfork. Price could approach the 0.00081678 swing high if it makes a valid breakout above the sliding line  (SL).

©Forex.Acedemy

Categories
Crypto Market Analysis

Zcash Breakout Still In Cards

Zcash (ZEC)

Market Cap. $1.12B

Circulating Supply:3.79M ZEC

Max Supply: 0 ZEC

Volume (24h) $ 64.10M

 

The ZEC/USD dropped today and erased some of the yesterday’s gains. Price remains under pressure after the last false breakout and because is still trapped below some crucial resistance levels. The has found a temporary resistance, but we could see another breakout attempt soon.

Zcash rose by 4.17% today and by 10.80% in the last 7 days. We need a confirmation that the crypto will start a larger upside movement.

Zcash (ZEC) chart

The rate is trapped within a Falling Wedge pattern after the false breakout above the upside line of this pattern. ZEC/USD has also made a false breakout above the 23.6% retracement level and above the 50% Fibonacci line (ascending dotted line), so the minor decrease is natural.

It will drop towards the lower median line (lml) of the ascending pitchfork if the downtrend line will hold. A valid breakout above the upside line of the chart pattern will signal a further increase, but only a valid breakout above the 50% Fibonacci line will confirm a sharp increase in the upcoming weeks and months.

The ZEC/USD further increase could be invalidated only if the rate will drop and will stabilize outside the ascending pitchfork’s body.

Conclusion

We may have a buying opportunity after the breakout above the downtrend line and above the 23.6% retracement level, but only if the rate will stay above the lower median line (LML) of the ascending pitchfork. The next major upside target will be at the median line (ML) of the ascending pitchfork.

©Forex.Academy

Categories
Crypto Market Analysis

STEEM_Further_Increase_Awaits_Confirmation

Steem (STEEM)

Market Cap. $909.33M

Circulating Supply: 254.27M STEEM

Max Supply: 0 STEEM

Volume (24h) $96.44M

 

We had very high volatility on the STEEM/USD today. The crypto dropped aggressively in the morning, but the bulls have stepped in and have forced the rate to increase again. Price is trading in the green right now and has managed to increase by 2.47%  and by 21.82% in the last 7-days.

As you already know, the crypto market crashed today after the last period rebound. Steem maintains a bullish perspective on the Daily chart despite the today’s drop.

 

You can see that the rate was close to reach and retest the 50% Fibonacci line (ascending dotted line). Price has rallied and erased the morning losses, but it has failed to close and stabilize above the median line (ML) of the major ascending pitchfork and the 3.63158182 static resistance.

STEEM/USD it was expected to increase after the failure to test and retest the lower median line (LML) of the ascending pitchfork. It will move towards the 6.00000000 psychological level if will make a valid breakout above the median line (ml) of the ascending pitchfork.

The cryptocurrency will resume the upside movement and could be attracted by the upper median line (UML) if will close and will stabilize above the median line (ML).

Conclusion

Price squeezed in the second part of the day and now is trading in the green again. You can go long on this crypto after a valid breakout above the median line (ML). The next major upside target will be at the upper median line (UML), while the Stop Loss could be placed below the 2.52287131 level.

©Forex.Academy

Categories
Forex Market Analysis

April 25 – Global Stocks Slips as Bond Yields Rises above 3%


S&P 500 – Daily Outlook

The U.S. stock market index SPX is trading at 2,631.25, down -4.25 points and -0.17%. Recalling our previous update, the index was trading in an overbought zone below 2,680 before falling down. It has already completed 61.8% retracement, and it’s likely to face support above 2,616.


Support     Resistance
2619.84     2670.44
2604.21     2686.07
2578.91     2711.37
Key Trading Level: 2645.14


Nikkei – Daily Outlook

Japan’s Nikkei dipped -62.80 points to trade at 22,215.32 on Wednesday. Most of the selling trend began in response to a weakness in the Wall Street soured risk sentiment. While the investors focused remained on rising bond yields.

Technically, the index has formed a double top pattern up at 22,350 which is likely to hold Nikkei below 22,350. The 50 periods moving average is suggesting a bullish bias with a significant support at 21,850.


Support     Resistance
22184.88      22303.38
22148.28      22339.98
22089.03     22399.23
Key Trading Level: 22244.13

That’s pretty much it for now. I hope you are ready for some action tomorrow in the wake of ECB policy decision. European Central Bank is due to release the monetary policy with wide expectations of no change in minimum bid rate. However, the press conference will be a key market mover. Don’t forget to watch it.

©Forex.Academy

Categories
Crypto Market Analysis

Bitcoin Cash Long Again?

Market Cap. $21.76B

Circulating Supply: 17.09M BCH

Max Supply: 21M BCH

Volume (24%) $1.95B

 

Bitcoin Cash (BCH)

The BCH/USD signaled an exhaustion since yesterday, so the current drop is somehow natural. Price dropped as much as 1227 today and now is pressuring a very strong dynamic support (resistance turned into support). We could have a great buying opportunity in the upcoming days if the rate will test and retest the near-term support levels and will stay above.

Bitcoin Cash (BCH) chart

The rate has finally managed to break above the 50% Fibonacci line of the descending pitchfork and now is retesting it. Price has shown an oversold when has failed to stabilize below the median line (ML) after many breakdown attempts.

Technically, the BCH/USD it was expected to approach and reach the upper median line (UML) of the descending pitchfork. Right now is very important to see if we’ll have a valid breakout above the 50% Fibonacci line  (descending dotted line).

Bitcoin Cash could drop in the upcoming days after the failure to close on the 250% Fibonacci line and near the 1567 static resistance.

Price has also made a false breakout above the 23.6% retracement level, which has signaled an exhaustion. It could drop along the 50% Fibonacci line till will reach and retest the upper median line (uml) of the ascending pitchfork or even the median line (ml).

Conclusion

You can go long again after the retests and after a significant increase. It could climb at least till the upper median line (UML) if will have enough energy to make a valid breakout above the sliding line (SL).

©Forex.Academy

Categories
Crypto Market Analysis

EOS reached a major target, now what?

EOS (EOS)

Market Cap. USD 11.16B

Volume (24h) $3,36B

Circulating Supply: 815.92M EOS

Total Supply: 900.000.000 EOS

Max Supply: 1.000.000.000 EOS

 

EOS Price Analysis:

EOS/USD rallied aggressively in the last days and has managed to reach a major dynamic resistance. Price plunged today and could try to test and retest some support levels before will make the next move.

eos price target - eos price chart

You can see on the daily chart that it has registered an impressive rally in the yesterday’s trading session. EOS increased as much as 16.1460 level failing to approach and reach the 18.6700 historical high.

The perspective remains bullish despite the current drop. This could be only temporary before it tries to reach the historical high and to pass above it.

I’ve said in the last week’s trade setup that the EOS price should increase further after the breakout above the UML of the descending pitchfork. The confirmation has come after the amazing breakout above the sliding parallel line (sl) of the ascending pitchfork.

EOS/USD has found strong resistance at the first warning line (WL1) of the descending pitchfork and now is somehow expected to come to test and retest the upper median line (uml) of the ascending pitchfork.

You should know that only a valid breakout above the WL1 will confirm a further increase. Otherwise, the rate will drop towards the median line (ml) of the ascending pitchfork and towards the 150% Fibonacci line of the descending pitchfork.

© Forex.Academy

Categories
Crypto Market Analysis

Is The Crypto Market Sell-Off Natural?

If you read all the analysis/trade setups in the Crypto Picks section, you’ll notice that I’ve talked about a temporary rebound and about a corrective phase after the last day’s impressive rally.

Technically, today’s aggressive drop was somehow expected because the major cryptocurrencies have reached very strong upside obstacles.

Cryptocurrencies – a new generation of speculative assets

Personally, I’m not surprised by the current sell-off as the cryptocurrencies are very volatile and you should be very careful when you trade or invest in them. Cryptocurrencies are representing the next generation of speculative assets, and they should be treated accordingly.

I’ve seen today all sorts of reasons why the cryptocurrencies have dropped. Most of the specialists have talked only about fundamental reasons. I want to show you the technical factors and reasons why the major cryptocurrencies have dropped today.

Is The Crypto Market Sell-Off Natural | Forex Academy

Source: investing.com

I’ve selected the most important three cryptocurrencies because these are leading the crypto market. Bitcoin dropped by 2.28%, Ethereum by 10.73% and the Ripple by 14.50% at this moment, but this drop could be only temporary if the near-term support levels will hold and will stop the bearish momentum.

Bitcoin (BTC/USD)

Crypto Market Sell-Off

Bitcoin drops after the yesterday’s impressive rally and could invalidate a further increase at this moment. It has found strong resistance right above the 350% Fibonacci line (descending dotted line), above the 23.6% retracement level and above the 50% Fibonacci line. A minor decrease was somehow expected after the breakout above the WL2 of the descending pitchfork. So, a false breakout above the mentioned resistance levels will send the rate down again in the short term as expected.

Only a valid breakout above the  50% Fibonacci line, the 350% Fibonacci line, and the 23.6% level will really confirm a broader upside movement towards the 12000 and 15000 levels.

Ethereum (ETH/USD)

Ethereum (ETH/USD) - Forex.Academy

ETH/USD plunged after the false breakout above the 150% Fibonacci line. Price is pressuring the 50% Fibonacci line and could drop towards the 565.44 static support and towards the upper median line (UML).

The crucial downside obstacle is represented by the lower median line (lml) of the ascending pitchfork. Only a breakdown below it will invalidate a further increase on the Daily chart. A corrective phase was expected after the impressive rally and after the breakout above the upper median line (UML) of the descending pitchfork.

Ripple (XRP/USD)

Ripple (XRP/USD)

The Ripple registered a massive drop today but will be very important where will close the trading session. It has dropped as much as 0.49010, but it has squeezed in the last hours and now is trading at 0.79212.

Yesterday’s false breakout above the 23.6% retracement level and above the 50% Fibonacci line has sent the rate down. This is the second false breakout above the 50% Fibonacci line signaling a major exhaustion.

Conclusion

Technically, the major cryptocurrencies have reached some very strong supply areas and now could come down to test and retest the downside obstacles. The rates could decrease and could also start a sideways movement because they need to recapture more bullish energy before will really start a medium to the long-term upside movement.

©Forex.Academy

Categories
Crypto Market Analysis

VeChain Broader Increase Validated

VeChain (VEN)

Market Cap. $2.15B

Circulating Supply: 525.78M VEN

Max Supply: 0 VEN

Volume (24h) $94.45M

VeChain increased significantly today and erased the last day’s minor drop. It has finally managed to jump in the buyer’s territory, so we should have a further increase. The next hours could be crucial because we still need one more confirmation that it will jump much above the 5.0000000 psychological level in the upcoming period.

VeChain (VEN) price - Forex Academy

VEN/USD has finally made an aggressive breakout above the upper median line (UML) of the descending Pitchfork and now approaches the 50% Fibonacci line. It should climb towards the upper median line (uml) of the minor ascending Pitchfork and the first warning line (WL1) of the major descending Pitchfork.

The perspective will remain bullish on the Daily chart as long as the price stays within the ascending pitchfork’s body. The crypto could increase without a broken upper median line (UML) retest. You can notice that its price has been pressing the UML in the last days. However, it could still retest the median line (ml) of the ascending pitchfork in the upcoming days because it could try to capture more directional energy. A significant retreat could appear if the crypto market crashes again.

vechain price prediction 2018

An important upside movement will be confirmed if the price gets enough directional energy to close above the 4.20381996 high. VEN/USD could be attracted by the confluence area formed between the upper median line (uml) with the150% Fibonacci line. A valid breakout will validate a further increase towards the WL1 of the major descending pitchfork.

Conclusion

If you go long on this crypto, you should place a Stop-loss somewhere below the lower median line (lml) of the ascending pitchfork. Technically, it is expected to double its value in the upcoming months, so it should approach and reach the 8.0000000 level again.

©Forex.Academy

Categories
Forex Market Analysis

April 23 – S&P500 & Nikkei Dips on Rising U.S Treasury Yields

 

 

S&P 500 – Technical Outlook

At the moment, the US stock market index SPX is trading right above a strong support level of 2,660, and a break below this level can drive more bearish in the market until 2,640. Whereas, on the upper side, the index is likely to face a resistance near 2,717.

Speaking of leading indicators, the RSI and Stochastics are holding below 20, signifying a potential for a retracement. However, the SPX seems to continue trading bearish below 2674 today.

Nikkei – Technical Outlook

During the Asian session, the Japanese stock market index Nikkei fell after the heavyweight stocks such as SoftBank and Terumo lost ground, compensating gains in financials, which roused after U.S. yields rose. Moreover, the financial stocks, that trades in the foreign bonds, soared dramatically following a rise in the U.S. yields.

Technically speaking, the NKY is trading in an upward channel which is supporting it near 21,975. The 50- periods EMA is suggesting a bullish trend whereas, the RSI is massively oversold. Nikkei is likely to stay bullish above 22,166 for a target of 22,240 and 22,351.

Good luck & have an awesome day!

©Forex.Academy

Categories
Crypto Market Analysis

NEM Further Increase Could Be Confirmed

NEM (XEM)

Market Cap. $3.05B

Circulating Supply: 9.00B XEM

Max Supply: 0 XEM

Volume (24h): $30.37M

 

The XEM/USD has lost the bullish momentum in the short term and now seems undecided. It has changed little since yesterday, but it maintains a bullish bias. Maybe the rate will make a minor consolidation before will move towards fresh new highs.

NEM Price

NEM (XEM) is trading much above the 0.30000000 psychological level and is somehow expected to resume the rebound in the upcoming period. NEM price has made a false breakout above the median line (ML) of the minor ascending pitchfork so that a minor decrease will be natural.

It should pressure the 50% Fibonacci line (ascending dotted line) of the minor ascending pitchfork and also the 0.35471335 static support. The perspective will remain bullish as long as the rate stays within the ascending pitchfork’s body. XEM/USD was expected to increase after the breakout above the downtrend line, but we still need a confirmation that we’ll have a broader upside movement.

Personally, I believe that only a valid breakdown below the lower median line (lml) could invalidate a further increase.

nem stock price

You can see on the H4 chart that the rate failed to reach and retest the median line (ml) signaling a minor exhaustion in the short term. It is still expected to increase further despite a minor drop. You can go long on this crypto if the rate will make a valid breakout above the median line (ml), or if will come back down to test and retest the lower median line (lml).

The next upside targets will be at the upper median line (uml) and higher at the Fibonacci retracement levels.

NEM Price Prediction Conclusion:

NEM (XEM) will become strongly bullish after a valid breakout above the median line (ml). NEM price prediction could consolidate the latest gains before will resume the upside movement. Personally, I really hope that we’ll have a fresh buying opportunity soon.

©Forex.Academy

Categories
Forex Market Analysis

April 23 – 27: Top 2 Setups to Watch This Week – Dollar Index & Nikkei In Focus!

In this update, we will discuss fundamentals & technical setups, that are worth watching during the coming week. On Friday, the US dollar climbed to a two-week high vs. a basket of currencies as risk-off sentiment wanes.

 

US Dollar Index – Double Top Resistance

The Dollar Index soared dramatically after breaking a trendline resistance level at 89.70. Most of the buyers entered the market for two reasons:

Firstly, the single currency Euro fell sharply to a two-week low vs. the greenback as the European Central Bank (ECB) is due to release its monetary policy decision in the coming week (on April 26) and traders seem to price in the dovish monetary policy. A drop in Euro is driving more bulls to the US Dollar.

Secondly, the investors switched their investments from pound to the greenback after the Sterling extended losses in the wake of dovish remarks from the head of the BOE (Bank of England).

 

Dollar Index – Forecast

Technically, the index is overbought (RSI above 70) and bulls are exhausted. We may see a retracement up to 90 and 89.75 before seeing another bullish wave in the dollar. On the upper side, Dollar index can face a solid resistance near 90.55 and 90.85.

Nikkei 225 – Shooting Star Pattern In Play

The Japanese stock market index Nikkei gave up 0.1% to 22,162.24. The index grew 1.8% this week, its fourth straight weekly gains. However, the markets remained muted on Friday as investors didn’t find any solid reason to trade the Nikkei. But they do have it for the coming week.

The BOJ (Bank of Japan) is scheduled to release the monetary policy report on April 27. Investors appear to save their shots before the release of the policy rate. BOJ is widely expected to keep the interest rates on hold at -0.10%.

Nikkei 225 – Forecast

The Japanese index Nikkei is trading below a double top resistance level of 22,380. The leading indicators RSI and Stochastics are moving in the overbought zone and signaling a potential for a bearish reversal. Moreover, Nikkei has formed a shooting star below 22,385 which is signaling a neutral sentiment of investors. The breakout of 22,385 can lead the index to next resistance level of 22,985 and 24,000. Whereas, the support remains at 20950.

© Forex.Academy

Categories
Crypto Market Analysis

Stellar To The Moon?

Stellar (XLM)

Market Cap. $6.69B

Circulating Supply 18.57B XLM

Max Supply: 0 XLM

Volume (24h): $177.67M

 

XLM/USD increased sharply in the last days and has managed to jump above some very important resistance levels. Stellar increased like the other major crypto after the massive drop but remains to see how long the rebound will be.

Stellar (XLM) - Forex Academy

XLM/USD has finally managed to breakout above the downtrend line. Price has failed to reach this line since January 2018. You can see that I’ve added an ascending pitchfork hoping that I’ll catch a significant upside movement.

The rate has made several false breakdowns below the lower median line (LML) of the ascending pitchfork. It has failed to stay below the 0.2000000 psychological level and now tries to reach new highs.

Stellar increased by 60.22% in the last 7-days and has managed to jump above the 50% Fibonacci line (ascending dotted line) and above the 0.3433903 static resistance. The breakout needs confirmation because another false breakout above the 50% Fibonacci line will send the rate down again.

A valid breakout will lead the rate towards the next upside target represented by the median line (ML). The major upside target remains at the upper median line (UML) as long as the rate stays within the ascending pitchfork’s body.

Price has come back down to test and retest the broken 50% Fibonacci line and the 0.3433903 level. We should wait to see if this will really be a valid breakout before we go long on this crypto. A failure to stay above the 50% line could signal a minor corrective phase. Stellar could still increase despite a minor drop as long as stays above the outside sliding line (SL).

Categories
Crypto Market Analysis

EOS Bullish Perspective

EOS/USD

Market Cap. $7.301.307.239 USD

Volume (24h) $568.861.000 USD

Circulating Supply: 802.920.263 EOS

Total Supply: 900.000.000 EOS

Max Supply: 1.000.000.000 EOS

 

EOS/USD is trading in the green and tries to stabilize above a broken dynamic resistance. Technically, it is somehow expected to climb much higher in the upcoming period.

EOS/USD is trading in the green

EOS/USD has retested the upper median line (UML) of the former descending pitchfork and now tries to reach new highs. Price climbed above the median line and should approach the 50% Fibonacci level and the sliding line (sl2).

You should know that only a valid breakout above the mentioned resistance levels will confirm a further increase. The false breakdown below the first sliding line (sl1) has signaled that the bulls could take the lead again.

A valid breakout above the sliding line (sl2) and above the 10.0000 psychological could send the rate towards the upper median line (uml) and towards the first warning line (WL1). Resistance can be found at the 150% Fibonacci line as well.

EOS Bullish Perspective

I’ve added an H4 chart to show you what could happen in the upcoming hours. A failure to stabilize above the median line (ml) could signal a minor drop. So, a drop below the sliding line (sl1) followed by a retest will send the rate towards the downside 50% Fibonacci line.

We may have several breakout attempts above the upside sliding line (sl2) and above the 50% Fibonacci level (see the daily chart). The perspective will remain bullish on the daily chart as long as the rate stays somewhere above the UML and within the ascending pitchfork’s body.

Categories
Crypto Market Analysis

Ripple Breakout In Play

  • Ripple breakout needs confirmation.
  • ETP/USD still under pressure.
  • EOS could resume the short-term rebound.

 

The major cryptocurrencies have found a temporary resistance in the yesterday’s trading session and have slipped lower. Bitcoin, Ethereum, Ripple are still expected to climb much higher in the upcoming period, despite the minor retreat. I’ve said in the yesterday’s daily report that the main cryptos could come back down to test and retest some support levels before will start to increase again.

Ripple

The coin changed little in the early morning, but this decrease is natural after the breakout above a dynamic resistance. Ripple is trading at 0.65254 right now and could register an impressive upside movement after the integration with banks and traditional financial institutions.

Ripple dropped by 2.62%, but personally, I’m still expecting to see a bullish momentum soon as the rate has managed to jump in the buyer’s territory.

Ripple breakout in play

Price has finally managed to break out above the downtrend line. However, the breakout needs confirmation because this could be a false one if the rate will drop significantly in the upcoming hours.

Ripple increased in the last days from the 0.45410 low and after the minor accumulation. It is premature to talk about a larger upside movement as long the Bitcoin and Ethereum are still sluggish.

The rate is trading much above the 0.57210 static support (resistance has turned into support) and above the lower median line (lml) of the ascending pitchfork. Ripple could come back down to test the lower median line (lml). A rejection from this dynamic support or a false breakdown will send the rate towards the median line (ml). Minor resistance could be found at the downside 50% Fibonacci line as well. You should know that the perspective remains bullish on the short term as long as the rate remains within the ascending pitchfork’s body.

EOS/USD

The EOS increased by 4.12%, reaching the $8.60 again after the minor corrective phase. We have a $6 866 517 270 market capitalization and a $626 057 000 daily trading volume. The crypto could become strongly bullish soon.  We may have a great trading opportunity on the EOS/USD if the price will have enough directional energy to stabilize somewhere above the 10.00 psychological level.

EOS/USD - Forex Academy

EOS/USD rallied today and reached the median line (ml) of the ascending pitchfork. It has come down to retest the broken upper median line (UML) of the major descending pitchfork and now tries to resume the upside movement.

A valid breakout above the median line (ml) and above the 9.00 psychological level will signal a further increase. Technically, it will be expected to climb towards the upper median line (uml) if it will close above the $10 level. EOS could find temporary resistance at the 50% Fibonacci line and at the 150% Fibonacci line.

ETP/USD

Metaverse increased by 57.52% in the last 7-days, but unfortunately, it remains under some selling pressure. Price failed to reach and retest two important resistance levels and now slipped below the 1.00 psychological level.

ETP/USD - Forex Academy

ETP/USD registered humble gains today and could resume the yesterday’s bearish candle. Price moves in a range between the 0.5705 and 1.1105 levels. It has failed to reach the lower median line (lml) and the 1.1105 level, signaling a minor exhaustion and a potential drop.

Only a valid breakout from the minor sideways movement and above the lower median line (lml) will confirm a significant increase.

Conclusion

XRP/USD, EOS/USD and the ETP/USD have decreased in the yesterday’s trading session and now are fighting hard to stay higher. We need confirmations all the analyzed crypto pairs before we can say for sure that the rates will reach fresh new highs.

© Forex.Academy

Categories
Crypto Market Analysis

Bitcoin Shines Again

The crypto market has finally managed to bounce back in the last days as expected. The major cryptocurrencies have registered important gains in the short term, but we still need a confirmation that we’ll have a larger upside movement. The current rebound could be only temporary and the major cryptocurrencies could come back down to test and retest some very important support levels before will have started a major upwards movement.

Will Bitcoin Rise Again

The rate dropped in the early morning and erased some of the yesterday’s gains. Bitcoin has managed to jump in the buyer’s territory in the short term but is too early to talk about a larger rebound at this moment. It has managed to pass above the 8000 psychological level and approaches a very strong dynamic resistance.

Will Bitcoin Rise Again

Bitcoin increased sharply on April 12 signaling that the corrective phase is completed. Price was almost to reach the second warning line (WL2) of the major descending pitchfork where it could find resistance again.

Maybe the rate will come back to test and retest the lower median line (lml) of the ascending pitchfork before will breakout above the WL2. The perspective will be bullish on the Daily chart as long as the price stays inside of the ascending pitchfork’s body and above the outside sliding parallel line (sl).

Bitcoin has lost the bearish momentum, so another leg higher was expected. Personally, I still believe that we may have a significant bullish movement in the second part of the year. It could become strongly bullish after will climb and will stabilize again above the 10000 psychological level and above the downside 50% Fibonacci line.

Ethereum rebound in play

The crypto decreased a little as well today, but the bias remains bullish on the short term. Ether jumped above the $500 again and should reach crucial resistance levels very soon.

Ethereum rebound in play

Price jumped above the 50% Fibonacci line (descending dotted line) of the descending pitchfork as expected. The next upside targets will be at the 565 level and at the upper median line (UML) of the descending pitchfork. Resistance could be found at the downside 50% Fibonacci line of the ascending pitchfork.

Ethereum could decrease to retest the broken 50% Fibonacci line and also the lower median line (lml) before will make a valid breakout above the UML of the descending pitchfork. Personally, I believe that only a valid breakout above the downside 50% Fibonacci line of the ascending pitchfork will really confirm a broader rebound.

Litcoin still under pressure

Litcoin still under pressure

Litcoin retested the second warning line (wl2) of the former ascending pitchfork and now is trading in the red again. Price moves sideways between the 106.52 and the 136.61 level. Only a breakout from this range and above the 50% Fibonacci line (descending dotted line) will confirm an increase towards the upper median line (UML) of the major descending pitchfork.

The failure to reach and retest the 106.52 lowest low has signaled an oversold and a potential bullish momentum. However, the rate could slip lower to test and retest 106.52 level, the median line (ML) and the third warning line (wl3) before will try to climb towards fresh new highs.

Conclusions

Bitcoin, Ethereum, and Litcoin increased in the short term and signaled that the major corrective phase could be completed. It is premature to talk about larger upside movements at this moment. We need confirmations on the major cryptocurrencies before we can go long on the medium to the long term.

Categories
Forex Trading Strategies

Volatility Expansion Strategy

Overview

 

There are two main measures we use routinely: The center of our observations and the variability of the points in our data set from that mean.

There’s one main way to compute the center of a set: the mean.

Mean: It’s the average of a set of data. It’s computed adding all the elements of a set and divide by the number of elements.

The variability of a data set may be calculated using different methods. One of the most popular in trading is the range.

Range:  The range is the difference between the highest and lowest points in a data set. On financial data, usually, a variant of the range is calculated: Average true range, which gives the average range over a time interval of the movement of prices.

The Strategy

The Volatility Expansion Strategy rationale is that a sudden thrust in the volatility in the opposite direction of the current momentum predicts further moves in the same direction.

For this strategy, we are going to use the Range as a measure of volatility. Specifically, we are going to use the Average True Range indicator to spot volatility sudden changes.

The rules of the strategy are:

Long Entries:

Set a buy stop order at Open + Average( Range, Length ) * NumRanges  next bar

Short Entries:

Set a stop sell short order at Open – Average( Range, Length ) * NumRanges next bar

The parameters are the Length of the average and the NumRanges for longs and shorts.

Manage your trade using a trailing stop.

Let’s see how an un-optimized system performs under 14 years of EUR_USD hourly data:

The standard parameters are:

 Length: 4

NumRanges: 1.5

As we can observe, the actual raw curve is rather good, showing a continuously growing equity balance. ( click on the image to enlarge)
The Total Trade Analysis for single-contract trades shows a nice 2:1 Reward to risk ratio (Ratio Avg Win/Avg Loss) and a 35% winners.

Analyzing the Parameter map:

As we observe in fig 5, there are two areas A and B where to locate the best parameters for this strategy. The surface is smooth, thus, guarantying that a shift in market conditions won’t harm too much the strategy. For the sake of symmetry we will choose the A region, thus, the Long ATR length will be 10 and the short ATR length is left at 13.

Fig 6 shows the map for the NumRanges That weights the ATR value and sets the distance of the stop order from the current open. The surface is, also, very smooth. Therefore we can be relatively sure that setting the NumRages value to 1.3 in both cases we will get good results.

The new equity curve has improved a lot, especially in the drawdown aspect, and in the overall results, as well, although we know this isn’t a key aspect because this equity result was achieved with just a single-contract trade.

This kind of strategy incorporates its stops because it’s a reversal system. Therefore there is no need for further stops or targets.

In fig 8 we observe that the percent winners are close to 39% while the risk to reward ratio represented by the ratio Avg win/ Avg loss is 1.9. Also, we see that the average trade us 28.5 euros which is the money expected to gain on every trade. That shows robustness and edge.

Main metrics of the Volatility Expansion System, on the EUR-USD

(click on the images to enlarge)

As a final note, one way to perform semi-automated trading using a volatility  expansion is the free indicator Volatility Ratio, from MQL5.com

When you click on the Download button, a pop-up window appears:

When you click on the Yes,  this indicator is installed automatically in your MT4 platform. To use it on a chart you just go to Insert -> Indicators -> Custom-> Volatility Ratio, as shown below:

 

The Options window for this indicator allows you to toy with the parameter values, but I advise you to keep the default values and paper trade them, so you get the idea about how it works and how parameter changes may affect its effectiveness and the number of trade opportunities.

Finally, this is the type of chart annotations of this indicator:

(click on the image to enlarge)

Categories
Forex Educational Library

How to Trade Using the RSI

Introduction

In 1978, J. Welles Wilder Jr published the Relative Strength Index (RSI) in the book “New Concepts in Technical Trading Systems.” Wilder describes the RSI as “a tool which can add a new dimension to chart interpretation.” Some of these interpretations are tops and bottoms identification, divergences, failure swings, support and resistance, and chart formations.

The Relative Strength Index is probably the most popular indicator used by professional and retail traders. It’s an oscillator which moves in a range between 0 to 100. A. Elder describes the RSI as a “leading or coincident indicator – never laggard.” In this article, we will show these different ways to use the RSI.

Tops and Bottoms Identification

The theory about this indicator states: “when the RSI goes above 70 or below 30, the Index will usually top or bottom out,  before the real market top or bottom, providing evidence that a reversal or at least an important reaction is imminent”. Some traders have modified these levels to 80 – 20.

The basic trading idea is:

  • Buy zone: when the RSI is below the 30 (or 20) level.
  • Sell zone: when the RSI is above the 70 (or 80) level.

A trading system based on this interpretation is an easy way to lose money. The following example shows what I mean:

Relative Strength Index (RSI)

Figure 1: Tops and Bottoms signals

Source: Personal Collection

 

In figure 1, an example of a trading system based on Top and Bottoms is shown, with RSI levels of 30 and 70 (or 20 and 80) as entry signals.  To make it short, most of the time the entry signals were false and didn’t allow catching significant trends.

Divergences are the most popular use; Wilder describes the divergence between price movement and RSI as a “very strong indication that the market turning point is imminent.” Divergence takes place when the price is increasing, and the RSI is flat or decreasing (this is known as bearish divergence); the opposite case happens when the price is decreasing, and the RSI is flat or increasing (bullish divergence).

How to trade using the Relative Strength Index (RSI)

Figure 2: Divergences

 

As shown in Figure 2, the divergences are a price weakening formation. That does not mean that it’s a turning point or that you should position yourself in the opposite direction.

Failure Swing

LeBeau and Lucas describe Failure Swing as a formation “which is easier to observe in the RSI study itself than in the underlying chart.” A strong indication of market reversal occurs when the RSI climbs above the 30 level or plunges below the 70 level.

Failure Swing

Figure 3: Failure Swing

 

As we can see in figure 3, the failure swing is part of the divergence concept, and it only confirms that the divergence is real. But you must pay attention and be careful with the failure swing as an entry signal because it is not a rule. The potential trade requires price-action confirmation.

Support and Resistance

The theory says that “support and resistance often show up clearly on the RSI before becoming apparent on the bar chart.” Some authors use the 50 level as a support level in a bullish trend or as resistance in a bearish trend. Hayden proposes the following rules for each trend direction:

  • In a bullish trend, the RSI will find support at 40 and resistance at 80.
  • In a bearish trend, the RSI will find support at 20 and resistance at 60.

RSI Support and Resistance

Figure 4: Support and Resistance.

 

In figure 4, the RSI shows how the RSI works as support and resistance on a bearish and a bullish trend. In the bearish trend, the 60-70’s zone is acting as resistance levels and 30-20’s zone as support. In a contrarian case, during the bullish trend, 70-80’s are the resistance zone, and 40-30’s the support zone.

Chart Formations

The RSI could display a pattern similar to those present in chart formations which may not be clear on the price chart, for example, triangles, pennants, breakouts, buy or sell points. A formation breakout indicates a move in the breakout direction.

RSI Chart Formations

Figure 5: Chart Formations

 

The most common formation is the triangle as a consolidation pattern before an explosive move. However, also is common to see false breakouts before the real move (see figure 5).

RSI chart formations breakout as a trading signal:

Buy Signal: When RSI breaks above its downtrend line place an order to buy above the latest price peak to catch the upside move.

Sell Signal: When RSI breaks below its uptrend line place an order to sell short below the latest price to catch a downside breakout.

We must consider that, usually, the RSI breaks its trendline one or two periods before price does.  In this sense, it’s important to get a confirmation using price-action.

COMMENTARY

To summarize, the RSI is a popular indicator between professional and retail traders alike.  It’s characterized by being a leading indicator. While every one of those styles (divergences, failure swing, support and resistance, and chart formations) can be used independently, that’s not a powerful tool.

A more reliable way to apply the RSI is using a mix of those methods, but the main issue here is how to trade using the RSI.

Some tips to use the RSI:

  1. Determine what is the primary trend? The “big picture” of the traded market.
  2. Identify key levels (swings), divergences, failure swings, chart formations between Price and RSI. In bear markets, wait for a resistance level (60-70’s zone). In bull markets, wait for support levels (40-30’s zone).
  3. Observe price and RSI breakouts.
  4. The order could be placed at the open of the candle, or when the price reaches a specific level (limit or stop orders).
  5. The stop-loss level could be set beyond the last swing high or low, or specific number of pips away.
  6. Profit-taking, ideally, should be set, at least, at two times the distance from the entry point to the stop-loss. Another possibility is to find a key level and set it close to it if the reward is worth its risk
  7. As trade management, the use of a trailing stop should be considered.
  8. If the market moves without us, let it go. The market will provide more opportunities.

 

Trading with the RSI

Figure 6: Trading with the RSI (*)

Source: Personal Collection

 

Trading with the Relative Strength Index (RSI)

Figure 7: Trading with the RSI (*)

Source: Personal Collection

As you can see figures 6 and 7, the RSI is an indicator that does much more than an identification of overbought and oversold price levels. It helps us detecting trade opportunities, areas of movement exhaustion, confirmation of price patterns (price level failures), and chart patterns. However, RSI signals and patterns should only be used as a guide.  A relationship of those signals with the price action should always be present.

(*) This is a simulated analysis and trade application.

SUGGESTED READINGS

  • Wilder, J.W. (1978). New Concepts in Technical Trading Systems. North Carolina: Trend Research.
  • Hayden, J. (2004). RSI: The Complete Guide. South Carolina: Traders Press Inc.
  • LeBeau, Ch., Lucas, D. (1991). Computer Analysis of the Futures Market. New York: McGraw-Hill.
  • Elder, A. (2014). The New Trading for a Living. New Jersey: John Wiley & Sons, Inc.

 

Keywords:

Technical Indicators, RSI, Education.

 

©Forex.Academy

Categories
Forex Educational Library

Profitable Trading (VII) – Computerized Studies: Bands & Envelopes

Introduction

We have already dealt, briefly, with bands and channels. On this article, we will try to develop a bit more on bands and envelopes, as it is quite important in trading.

The history of trading bands is quite long. Let’s first define what we mean by a band.  John Bollinger defines bands as bands constructed above and below some measure of central tendency, which need not be symmetrical.

We called it envelopes when they are related to the price structure, with a kind of symmetry, but not following or associated with a central point reference -for example, moving average envelopes of highs and lows.

A Brief History of Envelopes and Bands

The earliest mention, according to John Bollinger, comes from Wilfrid LeDoux in 1960, who copyrighted the Twin-Line Chart, that connected monthly highs and monthly lows. You may google “Wilfrid LeDoux Twin-line chart” to see this type of chart.

At about the same time, Chester W. Keltner published the Ten-Day Moving Average Rule in his 1960 book How to make money in commodities. Keltner computed what he called the typical price by the simple formula: (H+L+C)/3 for a given period as a center line, and a 10-day moving average plus and minus a 10-period average of the daily range.

In the 60’s Richard Donchian took another approach. He let the markets show its envelopes via his four-week rule. A buy signal happens if the price exceeds the 4-week high, and a sell signal if the price falls under the 4-week low. This 4-week rule was turned into envelopes connecting the 4-week highs and the 4-week lows.

Back in the 70’s, J.M Hurst published The Profit Magic of Stock Transactions. Mr. Husrt interest was in cycles, so in his book, he presented “constant width curvilinear channels” to emphasize the cyclic character of the stock price movements.

In the early 80’s William Smith, of Tiger Software presented a black-box system: The Peerless Stock Market Timing. The system used a percentage band based on moving averages.

Concurrently, in the early 80’s Marc Chaikin and Bob Brogan developed the first adaptive band system, called Bomar Bands. They were designed to contain 85% of the price action over the latest 12 months (250 periods). That was a significant improvement to the former bands, as the width of the band grew or shrunk depending upon the market action.

A mention should be made to Jim Yates that in the early 80’s developed a method, using the implied volatility from the options market. He determined whether the security was overbought or oversold concerning market expectations. Mr. Yates showed that implied volatility could be used as part of a framework to make rational investing decisions. The framework consisted of six zones (bands) based on the implied volatility, with a specific strategy to be followed in each band.

John Bollinger, who at that time was trading options and met Mr. Yates, took this idea in the late 80’s to find a method to automate the band’s width based on the current mean volatility. He realized that volatility was directly related to the standard deviation of prices and that this method would provide a superior way to draw its bands, which he named Bollinger bands.

Bands formed by moving averages

There are several envelope types in trading. The simplest is the moving average envelope with percentage bands, n% away from the central average (Fig 1.a), that shows a 10-bar EMA with 0.2% bands.

Usually, the beginning of a trend is pointed out by prices touching or breaking one of the bands that agrees with a new change in the slope of the moving average.

The variations on this theme are countless. We could favor the volatility in the direction of the trend by using asymmetric bands.

Envelopes on highs and lows

Another possibility is using envelopes on highs and lows (Fig 1.b). Bands will show prices contained within the band at sideway channel price movements and will indicate the beginning of a trend with a breakout or breakdown.

An uptrend is in place as long as the price doesn’t close below the channel. The reverse holds true on downtrends.

To assess if this method improves its results against entries on a usual moving average breakout, Perry J. Kaufman (see reference) did a study over a 10-year span, using both methods, in two very different markets: Eurodollar interest rates and the S&P 500.

The results he presented on page 320 of his book is shown in table 1. We may observe that this method is slightly worse for the Eurodollar market, although the 40-period variant is quite similar. Just the opposite happened in the S&P 500, where, using a 40-period envelope MA turned a losing system into a winner, and the 20-period variant has improved a lot.

The conclusion is that bands might be a worthy entry method, but we need to find the right parameters for the market we try to trade.

Keltner Channels

Chester Keltner, a famous technical trader at the time, presented his 10-day moving average rule in his 1960 book How to Make Money in Commodities. This was a simple system that used a channel whose width is defined by the 10-day range.

The algorithm to compute the channel, as is done today is:

  1. Set the MA period n. Usually 20.
  2. Set a period m to calculate the average range. Usually 10.
  3. Set a multiplier q.
  4. Compute the typical daily price: (high+low+close)/3
  5. Compute AR the n-day average of the typical daily price.
  6. Compute MA the m-day average of the daily range.
  7. Compute the upper and lower bands by performing:

Upper band = q x AR + MA

Lower Band = q x AR – MA

  1. Buy when the market crosses over the upper band and sell when it crosses under the lower band.

The original system was always in the market, but on actual computer testing, it doesn’t show any effectiveness. The system is buying on strength and selling on weakness, so it may happen that, at the time of entry, the price has already traveled too much and It’s close to saturation.

Today, traders have modified the concept to better cope with current markets.

  • Instead of buying the upper band, they sell it, and vice versa. The reasoning is selling the strength and buying the weakness because markets are usually trading in ranges. The disadvantage is not being able to catch a significant trend.
  • The number of days is modified. Some systems use a three-day average with bands around that average.
  • Many systems are using a lower timeframe for entries. If the market hits an upper band, the system waits for the shorter timeframe to hit a lower band to act.

Fig 4 shows a Keltner channel system using a 3-period channel and a 10-period moving average.

The slope of the 10-period average defines if the trend is up or down.

A Sell takes place when the price hits the upper band, and the MA is pointing down (selling at resistance).  A buy is open when the price hits the lower band, and the 10-period MA is pointing up (buy at support). As Fig. 3 shows, the system forbids trading against the trend, avoiding reactive legs.

A short exit occurs if price crosses over the 10-period MA; while a crossing below it is a sign to close a long position.

Bollinger Bands

Bollinger bands are another type of volatility band, as is the Keltner channel, but the measurement of the volatility isn’t the daily range, but the standard deviation of prices for the period in place.

John Bollinger used the 20-period standard deviation (STD), and the upper and lower bands separated 2 STD’s from a central 20-period SMA. He explains that two STD’s distance from the mean will contain 95% of t e price action and that the bands are very responsive, since the standard deviation calculation is computed using the squares of the deviations from the average, so the channel contracts and expands rapidly with volatility changes.

Bollinger bands are commonly used together with another technical study. Some people use it with RSI. But, I think there’s another technical study much better suited as its companion.

Bollinger bands with two moving regression line crossovers were introduced to me by Ken Long on a seminar that took place in Raleigh, NC, back in 2013. He calls his system the Regression Line Crossover (RLCO), but, many charting packages don’t have a native moving linear regression study, so, he presented, too, a very close alternative to it: The 30-10-5 MACD study.

Bollinger band framework

Ken Long called the ±1 bands the river. The stream of prices is represented by the dragon, a 10-period -0.2std width- Bollinger band, which he calls that way due to its shape resembling those Chinese moving dragons, so common in their celebrations. Ken uses 30-period BB, but I don’t see any gain using this period. In fact, it makes more difficult to spot sideways channels because a 30-period BB is less responsive to volatility changes, so I recommend using the standard 20-period.

The dragon moves from side to side of the river, sometimes beyond. When it crosses it and travels along the upper side, the trend is up. If it moves to the lower side and keeps moving on that side, a downward leg has started.

Sideways channels are distinguished by a shrink in volatility that is clearly visible, particularly in ±1 bands, as Fig 5 shows (1, 3, 4, and 5). Those places are excellent entry points when the dragon breaks out (4), up or down, or if it starts moving next to a riverside, as in (1 and 3). You could be able to earn your monthly pay by just trading this formation.

We should be ready to close a failed breakout, as in b, and c; and willing to reverse direction when the candle, or the dragon, cross again the river because failure to continue is a clear indication to trade the other side, although, sometimes we got fooled twice. Twice is not that much. (read my essay “Trading, a different view”)

Trends are distinguished, also by an expansion of the river and its “wetlands”. And, if the price goes away from the dragon and travels to the 2nd and 3rd lands (a and d), then the price movement is well over-extended, and, for sure, it will travel back to the mean of the river. Anyway, an automatic stop and reverse trade isn’t advisable at these points. You should carefully assess the reward to risk situation, considering that the mean of the river also moves up or down with the flow.

This two-spike pattern, at the edge of ±3 bands (a and d), is quite important, as it’s a warning that we should take profits right away, it marks the peak of the trend, at least for a while.

As said earlier, Prices, after crossing bands 2 and 3, will move back searching the mean.  Usually, this is a continuation pattern. Price goes to the vicinity of the river mean and resumes the trend, as in 2.

Trading this setup together with MACD crossovers is very revealing. When we use this framework, we know beforehand a lot about the actual state of the market. At 1 we know we cannot trade long unless the dragon shifts sides. We, know, also, that the price stream is heading to the downside and the bands are expanding. All this points to a short side entry.

At a, we knew that prices have gone crazy, and the second white candlestick confirms that the downward move has paused, at the minimum. At b, and c we got fooled twice, but, as somebody said, crocodiles live in great rivers!

We, also, know the price condition relative to a well established statistical framework that shows 98% of prices enclosed within ±3 STD bands, and 95% of them within ±2 STD bands. The framework is a visual indication of overbought and oversold, but within a framework that quantifies the concepts.

Finally, by just looking, we are able to assess the reward to risk situation anytime. If our risk is 1STD and we expect to get 2 STD’s out of a trade, based on its position on this framework, then we have a 2:1 Reward to risk situation. We don’t need to spend time calculating. It’s visual and fast. You’re able to jump faster into any trade situation!

A practical trade scalping-like exercise

Trading Bollinger bands using the MACD, this way is a beauty, as the MACD tells the direction of the trade and the Bollinger band tells where the price is, relative to its mean.

If we look at fig. 6, point 1, we observe that, on the previous bars, the price has made a bottom, by touching the -2 band four times and in the last one, a Doji was formed. Meanwhile, the MACD sang a buy, loud and clear, so it was a buying opportunity at the breakout of the highs.

Since we wanted fast and dirty profits we set our target at the piercing of the +2 band for an excellent 3:1 reward to risk trade.

The beauty of the Bollinger is that price when on a trend, tends to go back to its mean, touch it and back away from it, so at point 2 we’ll take a re-entry for a nice 2.5:1 Reward/risk trade. And this happened a third time at point 3. We were nimble, so we took no chance and close the trades, again, at the bar piercing the +2 band.

At point 4 we saw a sideways channel, that is quite observable with Bollinger bands, as noticeable shrinkage of the three bands. This is a good trade to take when a breakout occurs. So, we took it and the market fooled us for a small loss on the trade.

Anyhow, the MACD crossover and the price crossing was a sign to stop and reverse(5), and that we did! Usually, a failed breakout and, then, a breakdown with the slope of the Bollinger band turning south is an excellent entry point. This time it didn’t fail for a big trade with almost 4:1 reward/risk. We let profits run this time because the price had broken down from its support and MACD wasn’t in oversold territory. We exited when it showed signs of bottoming, as seen in the graph.

At (6) we observed another sideways channel, so we took its breakout. This time it didn’t fail, but the trend wasn’t strong enough to touch the +2 band and we sold on weakness, when MACD crossed under. We might have taken a re-entry there but the MACD wasn’t pretty, Overall, 5 winners and 1 small loser. Not bad!

Donchian Channels

Richard Donchian was a pioneer of systematic trading. He was the author of one of the first channel breakout systems. When we draw lines connecting those breakouts – highest highs to highest highs and lowest lows to lowest lows- a channel is formed.  Fig 7 shows a 20 bar Donchian breakout channel of the EUR/USD 1-hour chart.

As a new high is made the upper band moves higher, while the lower band stays at the same level, until a new 20-day low comes out, creating the stairway pattern we observe in fig 5. Sometimes, the upper band goes up while the lower goes down. This is caused by a big outside bar.

According to Perry Kaufman, in 1971, Playboy’s Investment guide reviewed Donchian’s 4-week rule as a “childishly simple” way to invest.

The Donchian trading method was as follows:

  1. Go long (and cover short positions) when the current price is higher than the high of the latest 4 weeks
  2. Sell short (and close long positions) if the current price falls below the low of the latest 4 weeks.

This system is amazingly simple and effective, even today, after more than 50 years of it being public knowledge. The Donchian 4-week rule system complies with three basic rules of trading:

  • Follow the trend
  • Let profits run
  • Limit losses

The third rule is just relatively accomplished. In high volatility markets, where the highest high is far away from its lowest low, there is a risk problem that the system doesn’t solve.  In the early years trading with this system, most systems were focused on maximum returns, without regard to risk. Now the usual way is to adapt the trade size to the market risk.

Testing the N-BAR Rule

The widespread use of software platforms for trading, incorporating some kind of programming allows for simple back-testing and optimization of trading ideas.

In the case of a Donchian system, we need just one input parameter: N, the number of bars that define a breakout. Fig 8, below, shows a naked N-day breakout system parameter optimization. In this case, we’ll use different N parameters for long trades and for the short ones.


The graph shows a relatively smooth hill, with three main tops, that graphs the Return on Account achieved by the strategy. The Return on Account is a measure that weights profits against max drawdowns, so it’s an excellent mix to choose for when optimizing our systems.

All tops seem the right places for our parameter settings, so we chose the widest one, which seems to be more stable with time. The best parameters using return-on-account as metric are Longs: 65, Shorts: 55, resulting in the following equity curve (Fig 9).

The curve is typical of breakout systems. The system is robust, but the equity curve isn’t pretty.

A Montecarlo simulation of the system (fig 10) shows its robustness, but its wild nature, as well.

Fig 11 shows the Net profit distribution, which shows an orderly shape, being its mean about $14.000 on a single contract trade, for an average max-drawdown of $5.500.

My guess was that this entry system might improve a lot if we use MAE stops (from John Sweeney’s Maximum Adverse Execution concept). Let’s see what we get by adding them.

Fig 12 and 13 show the system behavior by adding MAE-type stops together with an appropriate trail stop. No targets added as this would spoil the spirit of the system.

We observe a slightly better and tighter smoke cloud, and the distribution analysis of the profit shows a 30% increase in the mean profit.

Below the distribution analysis of max drawdowns of the original and modified systems, showing that the MAE stops not only improved profits, but it lowered the system’s average max drawdown to about $4.800, a 13% improvement.

To conclude we may assert that Donchian channel breakouts work. Its mean risk to reward is 2:1 and it depicts 38% profitable trades. It’s is a robust and reliable system, although very difficult to trade.

Diversification and risk

To overcome those long and deep drawdowns, there is just one solution: To trade a basket of uncorrelated markets with risk-adjusted position sizing, so no single market holds a significant portion of the total risk.

To show you how a basket of uncorrelated stock may reduce overall risk and smooth the equity curve, let´s discuss the concept of portfolio variance.

As a simple situation let’s consider the total variance on a 2-position portfolio, which can be calculated using the following equation:

𝜎2 = w1 𝜎12 + w2 𝜎22 + 2 w1 w2 𝜎1𝜎2*cov12

Where w1 and w2 are the weights for each market, and cov12 is a quantity proportional to the correlation (ρ) between those assets.

In fact, cov12 = ρ1,2 * σ1 * σ2

Then, if the covariance is zero, then the variance of a portfolio with n assets is:

𝜎2 = w1 𝜎12 + w2 𝜎22 + … + wn 𝜎n2

To observe the effect of diversification, let’s assume that we have equal weights on five uncorrelated markets with an equal risk of $10, compared to investing just one of the markets with its full $10 risk.

Thus, to spread our risk we divide our position by five on each market, therefore, now we are exposed to a $2 risk in each market. Then, the total risk would be, again, 10, if the markets were perfectly correlated with each other, as is the case of a single asset. But, if they were totally uncorrelated, the expected combined risk would be computed using the above equation:

Risk =√ (5 x 22) = √20 = 4.47

So, for the same total market exposure, we’ve lowered our risk by more than half. Of course, there are no totally uncorrelated positions in the markets, and, sometimes, all markets move in sync with each other, but this is the way to reduce risk and smooth our equity curve as much as we can: By diversifying and making sure the correlation between our assets is as low as it may possibly be.

The Turtles

The Donchian breakout system is part of the history of systems trading, and it’s the subject of an amazing story worth a Hollywood movie.

“We’re going to raise traders like they raise turtles in Singapore”, said Richard Dennis to his friend Will Eckhardt. They wanted to end a long debate about whether a trader should be borne or could be raised.

Richard Dennis believed that anyone with the proper training and coaching could become a successful trader, while Eckhardt thought a trader needed to be born with special traits. So, the Turtles were born!

The full story at the link, below:

(https://www.huffingtonpost.com/zaheer-anwari/the-turtle-traders_b_1807500.html )

Turtle soup

As Newton found out, an action carries its reaction. To profit from those foreseeable turtle breakouts the market found a solution: Turtle soup.

Larry Connors and Linda Bradford Raschke wrote a beautiful book called Street Smarts, filled with a lot of ideas to swing trade.

Two of the ideas explained in their book trade against the Turtle pattern: The main concept is: If the 20-day Donchian breakout commonly used by the Turtles is just 38% profitable, trading against it should be about 62% profitable, by detecting and profiting from failed breakouts.

The method that Connors and Rashcke propose, looks to identify those times when a breakout fails and jump aboard to catch a reversal. By the way, this strategy can be traded in all markets and time frames.

The Turtle Soup rules for long positions (the inverse goes for short positions):

  1. The market must make a 20-period low. The lower the better
  2. The previous low must have happened four periods earlier
  3. After the market fell below the 20-period low, we place an entry buy stop 5 ticks above the previous day low.
  4. If the buy stop is filled, buy a stop-loss some tics under the current period low.
  5. Use trailing stops, as the current position is moving profitably.
  6. Re-entry rule: if you’re stopped out, you may re-enter at your original entry price if this happens in the next two bars.

Turtle soup plus one

This strategy is identical to the Turtle Soup, except it happens one day or bar later.

This strategy is more conservative, as it waits for the current bar to end, and sets the buy stop at the same place, but one bar later.

To show that two radically different ways to trade are both valid, I’ve tested this strategy. Let’s see how it behaves.

As we observe in Fig 15, the strategy is about 44% percent profitable, higher than a Donchian breakout, but far away from the theoretical 62%. Anyway, this strategy is very good, its equity curve( fig 16.b) nicer than the Turtles, and its Montecarlo cloud (fig 16.a) much thinner than the one shown in the original Turtle strategy, a sign that the variance of results is much better and more adapted to swing and day-trading. This is in agreement with its drawdown, which is more than 50% smaller than that on the Turtle strategy.

But a word of caution here. The red Montecarlo line in fig 16.a is an equity path with a segment depicting a large drawdown. The corollary here is, even using a smoother strategy, we need to have the psychological strength to accept such drawdown. This also proves that diversification is key in reducing market risk.

 


References:

John Bollinger on Bollinger Bands, John Bollinger

Ken Long Seminar on RLCO framework

Trading Systems and Methods. Fifth Edition, PERRY J. KAUFMAN

The Ultimate trading guide, John R. Hill, and George Pruitt

Quantitative trading strategies, Lars Kestner

Street Smarts, Larry Connors, Linda Raschke

Parameter testing and graphs, including Montecarlo analysis, was done in a Multicharts 11 Trading Platform.

©Forex.Academy
Categories
Forex Educational Library

Maximum Adverse Excursion

INTRODUCTION

What is the MAE

Maximum Adverse Excursion (MAE) is a method of analysis for automatic or discretionary trading systems that allow us to objectively improve the overall operating result by positioning stops based on the statistical analysis of the development of operations from its inception to its closure.

When we study a trading system, we often find losses. Sometimes these losses are recurrent and lead us to reject a system or some of its rules. Here, the proposal is that instead of doing this, we approach the problem in another way.

As a method of improving results, John Sweeney proposes a statistical system rather than a technical one. We will not rely on indicators or the behavior of complicated logarithms, but on the statistical study differentiated from winning and losing operations. If our entry method is good, the course of price in winning trades is different from the behavior of the price of losing trades. We will not rely on indicators or the behavior of complicated logarithms, but on the statistical study differentiated from winning and losing operations.

Let’s analyze the winning trades and, above all, those that ended in losses. Are there any common features in them? Can we detect any pattern that makes us think we are in front of something usable?

There is a truth that in any trading system we must accept inescapably. At some point, we have to cut our losses. Of the many methods used for this purpose, the most common of all is price action when it distances itself from the meaning of our trade.

THE METHOD

We will track the price path during positive trades and along those that end in losses. The idea is to check the typical route of each of them and in this way, find the best way to place the system stop to achieve a better risk to reward ratio.

We will call “excursion” to the price range traveled by the price from our entrance to its end. We will distinguish the two possible directions:

Maximum Favorable Excursion: (MFE) It is the biggest advance of the price from our entrance to the exit.

Maximum Adverse Excursion: (MAE) It is the maximum retreat of the price from our entrance until the closing.

Steps

  1. Define our input and output rules.
  2. Record how much the price has moved from our entry to our departure both for and against the trade.
  3. Separate the winning trader’s data from losers into a table.
  4. Order the losers for lost categories.
  5. Check which patterns follow the price on losing trades and learn to recognize it.
  6. Set the stop according to the recognized pattern. If it behaves like a loser trade, acknowledge that we have been wrong and assume the losses.

Let’s see an example of how this methodology works.

Graph of a system without stops that operates on the DAX

In the vertical axis, we can see the maximum gap of each trade before its closure (MFE). The horizontal displacement represents the maximum adverse excursion (MAE) produced before its closing.

Given the graph, it appears as relevant the level of 0.15% – 0.20% as a limit. This translates into losing trades less than 0.15% -0.20% before ending losses. We can then cut losses at 0.28% (X-axis). It is also appreciated that the vast majority of winning trades retraced less than 0.10%.

The statistics of this system before making changes are as follows.

Based on the above results, we set the stop at 0.105% of retraction, and now it looks like this.

The statistics are as follows:

Statistics have improved. First, the maximum loss has been reduced from -1425 € to -237 € as well as the average loss from -195.47 to -167.24, and the profit-loss ratio has improved from 1.81 to 2.13.

By applying a trailing stop to the system, we can improve some statistical data that will help in the general computation. The use of this type of stop is delicate because it is very easy to be touched by a momentary price retreat. However, its use at a sufficiently loose distance can prevent a trade that is very advanced from becoming lost. In our case, the average loss on the losing trades improve from 167 to 158, and the percentage of winning trades increases slightly in both the long and short sides. It would read as follows:

Now to advance the robustness of the system, let’s look at the Maximum Favorable Excursion (MFE) by looking at the following graph.

We see the effect of the Trailing Stop. The trades advance far beyond the point at which they finally close. This is normal using this type of stop. Adjusting them further usually leads to a worsening of the final result of the set.

In the following chart, we see the effect of setting the Trailing Stop 50% closer.

Although it seems better, the total gain is worse, and the drawdown increases.

You can then compare the two options statistics, which leave no doubt.

Statistics with optimal Trailing stop:

Statistics with Trailing stop a 50% more adjusted

Maximum Favorable Excursion

The MFE is found by monitoring the maximum reached during positive operations. Often, we find that our trades end very far from this point. Obviously, our goal must be to get them to stop as close as possible to the MFE. In each particular case, we cannot expect to always close at the absolute maximum. In this case, the methods of traditional technical analysis based on indicators often betray us by getting us out of the market ahead of time or, on the contrary, keeping us while the point of maximum profit goes away.

By searching the MFE, we can detect the most likely area that the winning trades will reach. In this way, we should place our profit target at a point that’s the most probable, statistically speaking. This won’t make our system jump to an absolute possible maximum profit. However, it simplifies the system and makes it more robust by shortening the exposure time to the market.

Finally, a sample of the effect of adding a profit target, taking as reference the MFE. In this case, we separate the behavior of the MFE in the bearish bullish trades since, in the case of indexes and stocks, the market does not usually show symmetry. Experience tells us that there are different characteristics between bull markets and bear markets, although there are authors who question it.

We put a TP (Take Profit) of 27 on bullish and 33 points for the bearish.

What you see is a performance improvement. Although the improvement in net profit does not seem too important, the maximum streak of losses decreases a lot. This procedure reduces the capital necessary for its implementation, and therefore, there is a substantial improvement in percentage profitability. It also increases the net profit and especially the Profit Factor.

Minimum Favorable Excursion

Another concept to evaluate is the Minimum Favorable Excursion. It is to detect the minimum point of advance from which it is unlikely that the price returns on our entrance. This will allow us to move our stops to break even, upon reaching this area and prevent it from ending up in losses.

Conclusion

The statistical method proposed by the MAE and MFE study is revealed as a fully valid system for the study and improvement of any trading system. The use of Maximum Favorable Excursion charts gives us a way to distinguish winning trades from losing trades since they behave differently.

We can see very quickly if there are exploitable behaviors. The behavior of losing trades has its own patterns. It just advances a tiny amount in favor of the entry and then moves against it, and this allows to act consequently by cutting the losses at the right spot where statistically winning trades didn’t reach.

On the other hand, the traditional use of pivots as a reference to locate stops usually leads to losses, since it is the first place where the market seeks liquidity as it minimally weakens a trend.

Finally, the MFE allows us to put the trade into break-even at the right time or even add positions in a favorable environment. It also facilitates the tracking of profit targets. In any case, it is a highly recommended study method to improve automatic or manual systems.

 ©Forex.Academy
Categories
Forex Basics

Everything you should master to Detect Trends, and more!

Introduction

In chapter 1, we’ve set the foundations of market classification, what a trend is about, and the dissection of a trend in its several phases. Then we talked about its two dissimilar wave parts: an impulsive wave, followed by a corrective wave.  We dealt with support, resistance, and breakouts. Finally, we talked about channel contractions.

In this second chapter, we’ll learn the methods available in the early discovery of trends: Trendlines, moving averages, and Bollinger band channels.

Trendlines

A trendline is a line drawn touching two or more lows or highs of a bar or candlestick chart. The convention is to draw the line touching the lows if it’s an uptrend and the tops on a downtrend. Sometimes both are drawn to form a channel where the majority of prices fit.

As we see in Fig. 1 the trendline tends to draw resistance levels or supports where the price finds it difficult to cross, bouncing from there, although not always this happens. In Fig. 1 the first trendline has been crossed over by the price, and during the following bars, the slope of the downtrend diminished.  We saw, then, that the first trendline switched its role and now is acting as price support.

When the second trendline was crossed over by the price, a bottom has been created, and a new uptrend started. After a while trending up, we might note that we needed a second trend line to more accurately follow the new bottoms because the uptrend has sped up, and the first trendline is no longer able to track them.

Fig. 2 shows two channels made of trendlines, one descending and the other ascending. The trendline allows us to watch the volatility of the trend and the potential profit within the channel. The trend, as is depicted, has been drawn after it has been developing for a long lapse. Therefore, it’s drawn after the fact.  If we look at the descending channel, we observe that during the middle of the trend, the upper trendline doesn’t touch the price highs. So, this channel would look different at that stage of the chart.

I find more reliable the use of horizontal lines at support and resistance levels and breakouts/breakdowns at the end of a corrective wave. But, if we get a well-behaved trend, such as the second leg in fig 2, a channel might help us assess the channel profitability and assign better targets to our trades. If we use horizontal trendlines together with the trend channel (see Fig 2.b) it’s possible to better visualize profitable entry points and its targets, and, then, compute its reward to risk ratio.  The use of the Williams %R indicator (bottom graph) confirms entry and exit points.

Fig. 2b graph’s horizontal red lines show how resistance becomes the support in the next leg of a trend.

As a summary:

  • A trendline points at the direction of the trend and acts as a support or as a resistance, depending on the price trend direction.
  • If a second trendline is needed, we should pay attention if it shows acceleration or deceleration of the price movement.
  • If the price crosses over or crosses under the trendline, it may show a bottom or a top, and a trend change.
  • A trendline channel helps us assess the potential profitability and assign proper targets to our next trade.

Moving Averages (MA)

Note: At the end of this document, an Appendix discusses some basic statistical definitions, that may help with the formulas presented in this section, although reading it isn’t needed to understand this section.

Some centuries back, Karl Friedrich Gauss demonstrated that an average is the best estimator of random series.

Moving averages are used to smooth the price action. It acts as a low-pass filter, removing most of the fast changes in price, considered as noise. How smooth this pass filter behaves, is defined by its period. A moving average of 3 periods smoothens just three periods, while a 200-period moving average smoothens over the last 200 price values.

Usually, a Moving Average is calculated using the close of every bar, but there can be any other of the price points of a bar, or a weighted average of all price points.

Moving averages are computationally friendly. Thus, it’s easier to build a computerized algorithm using moving average crossovers than using trendlines.

Most Popular types of moving averages

Simple Moving Average(SMA):

The simple moving average is computed as the sum of all prices on the period and divided by the period.

The main issue with the SMA is its sudden change in value if a significant price movement is dropped off, especially if a short period has been chosen.

Average-modified method (AvgOff)

To avoid the drop-off problem of the SMA, the computation of an avgOff MA is made using and average-modified method:

Weighted moving average

The weighted moving average adds a different weight to every price point in the period of calculation before performing the summation. If all weights are 1, then we get the Simple Moving Average.

Since we divide by the sum of weights, they don’t need to add up to 1.

A usual form of weight distribution is such that recent prices receive more weight than former prices, so price importance is reduced as it becomes old.

w1 < w2 < w3… < wn

Weights may take any form, most popular being Triangular and exponential weighting.

To implement triangular weighting on a window of n periods, the weights increase linearly from 1 the central element (n/2), then decrease to the last element n.

Exponential weighting is an easy implementation:

EMAt = EMAt-1 + a x (pt Et-1)

Where a, the smoothing constant, is in the interval 0< a < 1

The smoothing property comes at a price:  MA’s lags price, the longer the period, the higher the lag of the average. The use of weighting factors helps reducing it. That’s the reason traders prefer exponential and weighted moving averages: Reducing the lag of the average is thought to improve the edge of entries and exits.

Fig 3 shows how the different flavors of a 30-period MA behave on a chart. We may observe that the front-weighted MA is the one with a slope very close to prices, Exponential MA is faster following price, but Triangular MA is the one with less fake price crosses, along with simple MA: The catch is: We need to test which fits better in our strategy. The experience tells that, sometimes, the simpler, the better.

Detecting the trend using a moving average is simple. We select the average period to be about half the period of the market cycle. Usually, a 30 day/bar MA is adequate for short-term swings.

One method to decide the trend direction is to consider it a bull leg if the bar close is above the moving average; and a bear leg if the close is below the average.

Another method is to watch the slope of the moving average as if it were a trendline. If it bends up, then it’s a bull trend, and if it turns down, it’s a bear trend.

A third method is to use two moving averages:   Fast-Slow (Fast -> smaller period).

In this case, there are two variations:

  1. Moving average crossovers
  2. All the averages are pointing in the same direction.

As with the case of a single MA, a price retracement that touches the slower average is an opportunity to add to the position.

For example, using a 30-10 MA crossover: If the fast MA crosses over the slow MA, we consider it bullish; if it crosses under, bearish.

Using the method of both MA’s pointing in the same direction, we avoid false signals when the fast MA crosses the slow one, but the slow MA keeps pointing up.

When using MA crossovers, we are forbidden to take short trades if the fast MA is above the slow MA, but we’re allowed to add to the position at price pullbacks. Likewise, we’re not allowed to trade on the buy side if the fast MA is below the slow MA.

Using smaller periods, for instance, 5-10 MA, it’s possible to enter and exit the impulsive legs of a trend.  Then, the 10-30MA crossovers are used to allow just one type of trade, depending on the trend direction, and the 5-10 MA crossover is actually used as signal entry and exit (if we don’t use targets). In bull trends, for example, we may enter with the 5MA crossing over the 10MA, and we exit when it crosses under.

Bollinger Band Channel

We already touched channels that were made of two trendlines. There is another computationally friendly channel type that allows early trend detection and trading.

One of my favorite channel types is using Bollinger Bands as a framework to guide me.

A Bollinger Band is a volatility channel and was developed by John Bollinger, which popularized the 20-period, 2 standard deviations (SD) band.

This standard Bollinger band has a centerline that is a simple moving average of the 20-period MA. Then an upper band is drawn that is 2 standard deviations from the mean and a lower band that’s 2 standard deviations below it.

I tend to use two or three 30-period Bollinger bands. The first band is one SD wide, and the second one is two SD apart from the mean. A third band using 3 standard deviations might be, also, useful.

Fig 6 shows a very contracted chart with 3 Bollinger bands to show how it looks and distinguishing periods of low volatility.

During bull trends, the price moves above the mean of the Bollinger band.  During bear markets, the price is below the average line of the bands.

On impulsive legs of a trend, the price goes above 1-SD (or below on downtrends), and it continues moving until it crosses the 2-SD line, sometimes it even crosses the third 3-SD line. Price beyond 2 SDs is a clear sign of overbought or oversold. On corrective legs, the price goes back to the mean. During those phases volatility contracts, and is an excellent place to enter at breakouts or breakdowns of the trading range.

Below Fig. 7 shows an amplified segment of Fig 6, with volatility contractions circled. We may observe, also, how price moves to the mean, after crossing the 2 and 3 std lines.

 

Grading your performance

According to Dr. Alexander Elder, the market is testing us every day. Only most traders don’t bother looking at their grades.

Channels help us grade the quality of our trades. To do it, you may use two trendlines or some other measure of the channel. If you don’t see one, expand the view of the chart.

When entering a trade, we should measure the height of the channel from the bottom to its top.  Let’s say it’s 100 pips.  Suppose you buy at ¾ of the upper bound and sell 10 pips later. If you take 10 pips out of 100 pips, your trade quality is 10/100 or 1/10. How does this qualify?

According to Elder’s classification, any trade that takes 30% or more of a channel is credited with an A. If you make between 20 and 30%, your grade will be B. Between 10 and 20% you’re given a C and a D if you make less than 10%.  So, in this case, your grade is C.

Good traders record their performance. Dr. Elder recommends adding a column for the height of the channel and another column for the percentage your trade took out of the channel.

Monitor your trades to see if your performance improves or deteriorated.  Check if it’s steady or erratic.  The information, together with the autopsy of your past trades, helps you spot where are your failures: Entries too late? Are you exiting too soon? Too much time on a losing or an underperforming trade?  A trade against the prevailing trend?

 

The next chapter will be dedicated to chart patterns.


 

Appendix: Statistics Overview

Statistics is a branch of mathematics that gives us information about a data set. Usually, the data set cannot be described by an analytical equation because they come from unpredictable or random events. As traders, we need basic knowledge, at least, of statistics for our job.

We can express statistical data numerically and graphically. Abraham de Moivre, back in the XVII century, observed that as the number of events (coin flips) increased, the shape of the binomial distribution approached a very smooth curve. De Moivre thought that if he could find the mathematical formula for this curve, he could solve problems such as the probability of 60 or more heads out of 100 coin flips. This he did, and the curve is called Normal distribution.

This distribution plays a significant role because of the fact that many natural events follow normal distribution shapes.  One of the first applications of this distribution was the error analysis of measurements made in astronomical observations, errors due to imperfect measuring instruments.

The same distribution was also discovered by Laplace in 1778 when he derived the central limit theorem. Laplace showed the central limit theorem holds even when the distribution is not normal and that the larger the sample, the closer its mean would be to the normal distribution.

It was Kark Friedrich Gauss, who derived the actual mathematical formula for the normal distribution. Therefore, now, Normal distribution is also named as Gaussian distribution.

Although prices don’t follow a normal distribution, it’s is used in finance to extract information from prices and trading statistics.

There are two main measures we use routinely: The center of our observations and the variability of the points in our data set from that mean.

There’s one main way to compute the center of a set: the mean. But it’s handy to know also the median if the distribution isn’t symmetrical.

Mean: It’s the average of a set of data. It’s computed adding all the elements of a set and divide by the number of elements:

Mean = Sum(p1-Pn)/n

Median: The median is the value located in the middle of a set after the set has been placed in ascending order. If the set has a symmetrical distribution, the median and the mean are the same or very close to it.

The variability of a data set may be calculated using different methods. Two main ways are used in financial markets:

Range: The easiest way to measure the variability. The range is the difference between the highest and lowest data of a set. On financial data, usually, a variant of the range is calculated: Average true range, which gives the average range over a time interval of the movement of prices.

Sample Variance(Var): Variance is a measure of the mean distance of the data points around its mean. It’s computed by first subtracting the average from all points: (xi-mean) and squaring this value. Then added together and dividing by n-1.

Var = 𝝈2 =∑ (x-mean)2 / (n-1),

whereis the symbol for the sum of all members of the set

By squaring (xi-mean), it takes out the negative sign from points smaller than the mean, so all errors add-up. The division by n-1 instead of n helps us not to be too much optimistic about the error. This measure increments the error measure on small samples, but as the samples increase, its result is closer and closer to a division by n.

If we take the square root of the variance, we obtain the standard deviation (𝝈 – sigma).

 Volatility: Volatility over a time period of a price series is computed by taking the annualized standard deviation of the logarithm of price returns multiplied by the square root of time expressed in days.

𝝈T = 𝝈annually √T

 


References:

New Systems and Methods 5th edition, Perry Kaufman

Trading with the Odds, Cynthia Kase

Come into my Trading Room, Alexander Elder

History of the Gaussian distribution http://onlinestatbook.com/2/normal_distribution/history_normal.html

https://en.wikipedia.org/wiki/Volatility_(finance)

Further readings:

Profitable Trading – Chapter 1: Market Anatomy

Profitable Trading Chapter III: Chart patterns

Profitable Trading – Computerised Studies I: DMI and ADX

Profitable Trading – Computerized Studies II: MACD

https://www.forex.academy/profitable-trading-computerized-studies-iii-psar/

Profitable Trading (VII) – Computerized Studies: Bands & Envelopes

Profitable Trading VIII – Computerized Studies V: Oscillators

Categories
Forex Educational Library

Trading Is An Adult Game: Spicy & Risky

Introduction

In this series, we will explore the basic aspects of charts and indicators; what they are, how to use them, what they represent, etc. All of this with a humorous attitude, but with the depth and seriousness to make it a good reference for people who are new in trading.

So, let’s begin:

Mom, What’s Technical Analysis (TA)?

Honey, that’s too easy for me!  Fundamentals tell you a lot about love, but behavior tells if you’re wrong a lot sooner!

The term “technical analysis” (hereafter, “TA”) came from the idea that price movement is all that is needed to make a trading decision; that fundamental issues are incorporated into price history. The idea of price analysis is attributed to Charles Dow around 1900, the creator of the Dow theory. Kicking off from there, TA started to grow in importance to traders in the sense that price discounts all new information, including price trending, price confirmation, support, resistance, divergence, volume confirming price, etc.

To TA practitioners, the price represents a consensus of value. It’s the price at which somebody is willing to buy and another person ready to sell. That consensus depends on the different beliefs of the person on the market. The seller believes that price will go down in the future, while the buyer believes that it will go up. There’s a third category of traders: Traders that are waiting to see a price level to make a decision.

If an equivalent number of buyers and sellers collide, then price fluctuate around some consensus of value. When, due to some new information, that equilibrium is broken, price moves until a new equilibrium is found.

The historical record of prices is what draws chart patterns the investor or trader is willing to study, to determine the right way to enter a market.

Charts come in different flavors: line, bar, and candlestick chart are the most common; but there are other useful types, as well:

Technical Analysis and The Basics Of Charting

Fig 1. 5 min candlestick chart

Point: this chart type forgets the time. A new bar is created if a delta of price points is bettered. Very handy to get rid of the noise on tight price fluctuations.

10-point candlestick chart

Fig 2. 10-point candlestick chart

Ticks: It forgets time, as well. A new bar is created after a defined number of ticks.

80-tick candlestick chart

Fig 3. 80-tick candlestick chart

Changes: Also forgetting time, a new bar is made after a predetermined number of price changes.

80-changes candlestick chart

Fig 4. 80-changes candlestick chart (same segment as the tick chart)

Renko: This chart type ignores time and focuses on price changes that move further than a defined price delta.

10.point Renko chart

Fig 5. 10.point Renko chart (same segment as the tick chart)

Point and figure: It consists of X’s and O’s columns. X’s represent rising prices, while O’s, falling prices.

Point and figure chart

Fig 6. Point and figure chart (same segment as the tick chart)

Kagi: It draws lines of price action in columns that represent price movements. It’s a different way to represent what point and figure charts does.

Kagi chart

Fig 7. Kagi chart (same segment as the tick chart)

Three-line break: White and black blocks of varying heights. Using the closing price a white reversal block is added if price exceeds the previous 3-block  high, and a black block reversal is added is price reaches a new 3-block low. A new line is drawn when a new high or low is made.

Three-line break chart

Fig 8. Three-line break chart (same segment as the tick chart)


Daddy, What’s a Bar?

Honey, a bar is a nice idea, but don’t take it too seriously…

Bar anatomyFig 9: Bar anatomy

A bar is a summary graph of what happened in a time-lapse. It consists of four price fields, and, usually, there’s also a volume field that’s plotted below the price plot.

The four fields are important moments during the time-lapse the bar represents: The open price, the highest and the lowest prices, and the last price (close), summarized in four letters: OHLC

Bars can be created in any time frame. From one-second bars to hourly, daily, weekly, monthly,  or quarterly bars. A higher time frame bar is constructed using smaller time frame bar data. 1-minute bars from 30-second bars, or hourly bars from minute bars, for instance.

A single bar tells a lot of information. Price changes show the dominant beliefs and psychological frame of mind of the trader horde. Certain bar formations have special significance:

Reversal bar: The bar closes in the vicinity of the open, but the high or low is far away.  This single bar pattern represents a couple of opposing bars at a smaller timeframe:

Fig 10: Bullish reversal patternBullish reversal pattern

Fig 10: Bullish reversal pattern

Key Reversal bar: It’s a particular kind of reversal bar. A key reversal bullish bar consists of an opening below the previous close, and a close above the previous high.
It’s hardly seen in intraday charts. This combination is a strong confirmation that the downtrend has ended and an up-trend is beginning. Bearish reversals are similar, but opposite.

Key Reversal bar

Inside bar: It’s a bar that’s entirely inside the previous bar. It’s a contraction of volatility. Several of them together tighten prices on a horizontal channel:

Inside bar

Outside bar: It’s a bar whose range exceeds that of the previous bar. It shows an increase in volatility.

Outside bar

Exhaustion bar: A bullish exhaustion bar opens with a gap down and moves up and closes near its top with a long body bar, with a high volume. The gap may remain unfilled, but when there’s a lot of strength it gets filled as well. The volume confirmation and the pattern are a sign of the end of a down-trend leg. The bearish exhaustion is the opposite, starting with a gap up and traveling south.

Exhaustion bar


Mom, What’s a candlestick?

Sweetie, I’ve had a lot of fun using candlesticks! I’m sure you’ll enjoy them too when I explain to you how!

Candlesticks are a different way to depict the information present in a bar. It uses the Open, High, Low and Close of a bar to construct a figure that resembles a candlestick, that’s the explanation of its name. Candlesticks were widely used in Japan beginning a hundred years ago but were mostly ignored in western countries.

It was credited to Steve Nison its introduction to the western charts, and since then it has grown in popularity because it presented the same information as a bar chart, but it added visual information a bar couldn’t show.

A candlestick bar consists of a body part from open to close and two “shadows”, outside the body, up to the High and down to the Low price levels.Candlestick Chart

The traditional candle style was leaving the body of an ascending candle empty, and filled, if it belonged to a bearish candle. That was because charts were pencil-drawn on paper. With the advent of personal computers, charting software allows filling the body of a rising candle with a different color than on a falling candle.

The wicks, or shadows, are an important source of information when their length is similar or greater than the body. Several candlestick patterns contain large wicked candles, as we’ll see.

The Japanese say, according to Steve Nison, that the essence of price movement resides in the real body. We might say that the body contains the information part while the shadow is noise.  Observing a particular candle, we get a quick visual indication of who’s in command: bulls if there’s a green body or bears if it’s red. Another use of the candle body is a way to measure market momentum. A large body reveals momentum, while a small, or bodyless, show indecision or a fading of the momentum.

This kind of information warns about the health of a trend but is usually hidden in simple bar charts.small bodies chart

Of course, we’ll observe all patterns of a bar graph. In fig 15 there are some of them: A reversal candle, just past the dissected candle, an inside bar, and an outside bar are seen later, as well.

But Japan brought us a new batch of candlestick-based patterns with exotic and suggestive names.

Candlestick formations:

Spinning tops: Very small bodies, red or green that show a very tight trading range. It’s a sign of indecision- It may be a pause before continuing the trend or sign that the trend loses steam.

Doji: It’s a kind of spinning top, but with an extremely thin body and long wicks. It’s one of the most important single body candlestick signals. The longer the shadow, the higher its importance. Dojis are present in major tops and bottoms.

Candlestick formationsdoji

Together with an oversold indicator (oversold if it’s a doji at a potential bottom) is a very good place for a high reward to risk ratio entry.

Marubozu:  A long body candle with no shadows. Black marubozus are viewed as weak indicators. It usually appears as a final candle in a downtrend, followed by a long white candle, but If it appears after some small body candle it reveals the continuation of a trend.

White marubozus are extremely strong when appearing at the beginning of a trend change. If it appears after the trend has been for a while, it may show the last impulse of that trend and a is a warning sign of the end of that leg, or that a reversal is coming.

There are also two more varieties of marubozu: Closing Marubozu and opening marubozu.

A closing marubozu has a small shadow on the opening side and no shadow on the closing side. It shows momentum in the direction of the closing side.

marubozu

Opening Marubozus show shadows on the close side, but not on the opening side. Although it’s a strong signal, it’s not as strong as the closing marubozu.

In the next article of this series, we’ll deal with major and minor candlestick patterns.

 


References: 

Technical Analysis from A to Z, Steven B. Achelis

https://www.tradingsetupsreview.com/10-price-action-bar-patterns-must-know/

Japanese Candlestick Charting Techniques, Steve Nison

Profitable Candlestick Trading, Stephen W. Bigalow

All images were taken using Multicharts© v11 software.

©Forex.Academy