NASDAQ Bearish Divergence, Amazon’s After-Hour Losses Weighing on US Futures Overnight

NASDAQ Bearish Divergence, Amazon’s After-Hour Losses Weighing on US Futures Overnight

U.S. stock index futures are down sharply in Friday’s pre-market session as a disappointing earnings report from Amazon.com threatened to dampen an otherwise strong month ahead of July’s final day of trading. The early price action has put the major futures indexes in a position to post a potentially bearish closing price reversal top. If confirmed, this could mean a weak start to August.

Early Trading Results

At 04:41 GMT, September E-mini S&P 500 Index futures are trading 4378.25, down 33.50 or -0.76%. September E-mini Dow Jones Industrial Average futures are at 34863, down 111 or -0.32% and September E-mini NASDAQ-100 Index is trading 34861, down 113 or -0.32%.

Possible Bearish Divergence

On Thursday, the S&P 500 Index and the Dow Jones Industrial touched record highs but the NASDAQ Composite underperformed. This created a divergence in the major indexes, suggesting weakness in the technology sector.

Weighing on the tech-heavy NASDAQ Composite during the regular session were shares of Facebook, which tumbled 4% after the social media company’s earnings report.

A disappointing IPO from online brokerage firm Robinhood helped cap NASDAQ’s gains throughout the regular session. The stock opened at $38 per share on Thursday, but eventually closed its debut session more than 8% lower at $34.82 per share.

The weakness carried over into the after-hours and pre-market sessions after e-commerce giant Amazon and social media platform Pinterest released their earnings reports to investors.

Amazon equity sank 7.4% in extended trading after it reported its first quarterly revenue miss in three years and gave weaker guidance. The move in Amazon’s stock helped weigh on NASDAQ-100 futures. Pinterest fell even further, down 19%, after saying it lost monthly users during the three months ended June 30.

Thursday Recap

Thursday’s positive session came despite a government report that showed U.S. second-quarter gross domestic product accelerated 6.5% on an annualized basis, considerably less than the 8.4% Dow Jones estimate. Meanwhile, weekly initial claims surprisingly came in higher-than-expected.

Story continues

Helping to underpin the markets was the Fed news from late Wednesday. Many investors were relieved that the Federal Reserve signaled no imminent plans for dialing back asset purchases.

Fed Chairman Jerome Powell also noted that while the economy has come a long way since the COVID-19 recession, it still has a ways to go before the central bank considers adjusting its easy-money policies.

Near-Term Outlook

The bearish divergence between the NASDAQ and the other major indexes could be an early sign that a major top is forming. If the tech-heavy NASDAQ trades sharply lower, it will drag the technology sector of the S&P 500 with it. The Dow is not likely to feel as much pain since it is tech unweighted.

The U.S. stock markets could be facing several near-term headwinds including summer vacation until after the U.S. Labor Day holiday. This would lead to low volume trading sessions. Overvaluation is another concern as well as the coronavirus outbreak.

One major concern is that investors won’t have a clue as to what the Fed is planning to do about tapering until it meets on September 21-22.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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Bitcoin Showing Signs of ‘Short-Term Fatigue’ Near $50K Ahead of Possible Continuation

Bitcoin failed to break $50,000 during weekend trading and is beginning to flag signs of profit-taking in the short term.

The world’s largest crypto by market cap is down 2.5% over a 24-hour period and is currently changing hands for around $45,892, CoinDesk data shows.

Still, bitcoin is up 56% in year-to-date returns courtesy of a strong showing by bullish traders throughout the first half of August, when prices rose from $38,000 on Aug. 4 to around $48,190 on Saturday.

“The price has rebounded strongly now, but this upward move is showing some signs of short-term fatigue,” said Simon Peters, market analyst at trading platform eToro. “We could see a small retracement down to lower prices before the prevailing trend reasserts itself.”

BTCUSD Daily Chart Source: TradingView

Low levels of daily trading volume persist as bitcoin struggles to edge higher while short positions are building, according to Datamish data, pointing toward a return to lower supports near $44,000.

“Even though the trend has flipped bullish, a pullback is to be expected before continuation,” said Marcus Sotiriou, sales trader at U.K.-based digital asset brokerage firm GlobalBlock. “This is because there has been declining volume with an increase in price, as well as a bearish divergence in the RSI indicator on the daily time frame.”

Other notable cryptos in the top 20 by market capitalization over a 24-hour period are mixed with polkadot, solana and terra posting the highest gains while ether, XRP and stellar have shed the most over the same period.

Ethereum Price Analysis: ETH Forms a Bearish Divergence, is a Short-Term Correction Coming?

ETH/USD – Ether Bearish Divergence Continues At $3300

Key Support Levels: $3150, $3035, $3000.

Key Resistance Levels: $3350, $3400, $3540.

Ethereum saw some positive price developments toward the end of last week as it surged above the previous $3150 resistance on Friday. It continued to climb as high as $3330 over the weekend but could not break above it.

Yesterday, ETH dipped as low as $3100 but quickly rebounded to heads back toward $3300 when the candle closed.

Unfortunately, there are hints of bearish divergence between price action and the RSI, suggesting that the market could see a short-term retracement.

ETH-USD Short Term Price Prediction

Looking ahead, the first resistance lies at $3350 (bearish .618 Fib). This is followed by $3400, $3540 (1.618 Fib Extension), and $3700.

On the other side, the first support lies at $3150. This is followed by $3035, $3000, and $2960 (.236 Fib).

As mentioned, there is a bearish divergence between price action and the RSI as it makes lower highs while the price makes higher highs. This could suggest a retracement is imminent.

ETH/BTC – ETH Forms Short-Term Symmetrical Triangle Pattern

Key Support Levels: 0.069 BTC, 0.067 BTC, 0.066 BTC.

Key Resistance Levels: 0.07 BTC, 0.072 BTC, 0.074 BTC.

Ethereum is consolidating against bitcoin as it moves sideways inside a symmetrical triangle formation. The cryptocurrency surged higher at the start of August after breaking a long-term symmetrical triangle. It reached as high as 0.073 BTC but started to head lower from there.

The market is quickly approaching the triangle’s apex, where a breakout can be expected to dictate the next direction for ETH.

ETH-BTC Short Term Price Prediction

Moving forward, the first resistance lies at the upper angle of the triangle, around 0.07 BTC. This is followed by 0.072 BTC (bearish .618 Fib), 0.074 BTC, and 0.076 BTC (1.414 Fib Extension).

On the other side, the first support lies around 0.069 BTC (lower angle of the triangle). This is followed by 0.067 BTC (.382 Fib), 0.066 BTC (100-day MA), and 0.0651 BTC (.5 Fib Retracement).

The RSI is marginally above the midline, indicating weak bullish momentum.