Ethereum leads crypto upsurge as stocks slump

Crypto currencies have been in demand again of late, with prices making higher highs and higher lows. It is not clear what exactly is behind the rally but with the stock markets falling in the US, they may have found some safe haven flows. Today’s sell-off on Wall Street has been vicious, but the warning signs were there. Above all, it was the market’s response – or lack thereof – to so many solid company earnings which made us cautious on US equities. Despite the release of mostly better-than-expected results, the major indices could not push higher. When the markets don’t respond to news in the way one would normally expect them to, then it may be a sign of change. This may well have been indicative of a market stuck in distribution phase: smart money selling stocks to street money. Today’s sell-off was exacerbated because of technical reasons, as the break of the 200-day average on the S&P 500 and Dow Jones probably triggered a cluster of stop sell orders. But it remains to be seen whether the indices will be able to bounce back, or this time the correction will be more severe. If stocks remain under pressure then cryptocurrencies could extend their gains further.

Among the major digital currencies, Ethereum continues to show relative strength. We last looked at ETHUSD back on April 9. Then, Ethereum was trading near that $400 support level where we highlighted the possibility of a rally. Here, several technical factors came together, including the long-term bullish trend line and previous support and resistance level. As it turned out, we were correct on this occasion over the direction of the trend. The crypto has rallied sharply away from that level and it has almost doubled in price. Today in another bullish development, it took out short-term resistance at $700. This level is now going to be the key support level going forward. For as long as price remains above it, the path of least resistance would be to the upside. If and when it goes back below this level then this may be a bearish development, particularly if the last low prior to the breakout at $627 also gives way. Meanwhile the next area of resistance, which could also be a bullish objective, is between $800 and $835. This range was formerly support and so could turn into resistance. Above here, the 61.8% Fibonacci retracement level at $891 is the next objective bullish target.

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.