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Many cryptocurrencies are in a pullback which may be viewed as a buying opportunity. What are the critical levels to watch out for?
The sentiment in the crypto markets had turned bullish on the news that Chinese President Xi Jinping has called for businesses and government bodies to support the development and adoption of blockchain technology. However, just days after the comments, the Chinese state media warned that support for blockchain should not be interpreted as an endorsement for cryptocurrencies.
During the recent Bitcoin (BTC) rally, institutional interest picked up, which also resulted in a spike in Bitcoin futures volumes on the Bakkt platform. Along with targeting the institutional players, Bakkt dove into the mobile payments sector. Earlier this week the company announced that a partnership with Starbucks would potentially allow “consumers to convert their digital assets into US dollars” at coffee shops across the country. Mike Novogratz, head of cryptocurrency merchant bank Digital Galaxy, said that this was a major step that would speed up crypto mass adoption.
Daily cryptocurrency market performance. Source: Coin360
A recent study by tech giant IBM and the Official Monetary and Financial Institutions Forum has concluded that central banks have realized that digital currencies, in some form or the other, are here to stay and will soon play a part in the global monetary system. Hence, global central banks are likely to issue their own digital currency to rise up to the competition.
With every passing day, the fundamentals of the asset class continue to improve. Can this boost prices? Do the technicals on the major cryptocurrencies signal a buying opportunity? Let’s analyze the charts.
Bitcoin is currently in a pullback, which has support at $8,829.05 and below that at $8,467.54, being 50% and 61.8% retracement levels of the recent rally. If the leading cryptocurrency bounces off this support zone, we expect the bulls to retest the recent highs of $10,360.89. A breakout of this level will signal the start of a new up move towards $13,973.50. Therefore, traders should view the dip as a buying opportunity.
Contrary to our assumption, if the bears sink the price below $8,467.54, a drop to $7,297.21 will be on the cards. If this level also breaks down, we anticipate long liquidation by the bulls that can result in a quick drop to $5,533.90.
Though we remain bullish, we will wait for the pullback to end and the cryptocurrency to resume the uptrend before proposing a trade in it.
Ether (ETH) is facing stiff resistance at $196.483. If the price dips below the 20-day EMA, it can remain range-bound between $161.056 and $196.483 for the next few days. The flattening moving averages and RSI close to the midpoint suggests a balance between the bulls and the bears.
The ETH/USD pair will start a downtrend if the bears sink the price below the recent low of $151.829. Therefore, traders can keep the stop loss on the long positions at $150. The pair will pick up momentum above $196.483 and move up to $235.70.
The failure of the bulls to push the price higher has attracted profit booking that can drag XRP to the 20-day EMA and below it to the 50-day SMA. As both the moving averages have started to turn up, we expect the bulls to defend the support levels.
A bounce off the moving averages will be a positive sign that is likely to push the price towards the next target objective of $0.34229 where traders can book partial profits.
Alternatively, if the bears sink the XRP/USD pair below the moving averages, it can dip to the next support at $0.24508. For now, traders can retain the stop loss on the long position at $0.24.
Bitcoin Cash (BCH) is facing resistance at the neckline of the head and shoulders pattern. This is an important level to watch out for, above which a rally to $360 is likely. The moving averages are also on the verge of a bullish crossover, which suggests a likely change in trend. Therefore, the traders can hold their long positions but trail the stops higher to $235.
Our bullish view will be negated if the BCH/USD pair turns down from the current levels and breaks below the support at $241.85. Such a move will increase the possibility of a retest of the recent low of $197.84. A break below this will resume the downtrend.
Though the bulls have failed to propel Litecoin (LTC) above the overhead resistance of $62.0764, they have not given up much ground, which is a positive sign. If the altcoin bounces off the 20-day EMA, it is likely to breakout of $63.3876 and rally towards $80.2731. Therefore, the traders can hold their long positions with a stop loss of $47.
Contrary to our assumption, if the LTC/USD pair bears break below the 20-day EMA, it can dip to $50-$47.1851 support zone. This is an important area to watch out for because if it breaks down, the downtrend will resume. However, if the support zone holds, the pair might remain range-bound for a few more days.
The failure of the bulls to sustain above $3.37 has attracted selling. If EOS breaks below the moving averages, it will increase the possibility of a range-bound action between $2.4001 and $3.37.
On the other hand, if the EOS/USD pair turns around from the moving averages, we expect another attempt by the bulls to scale above $3.37. If successful, a rally to $4.8719 is likely. Therefore, the traders can initiate long positions on a break above $3.58 and keep a stop loss of $2.95.
Binance Coin (BNB) has held above the downtrend line for the past three days, which is a positive sign. After breaking out of a critical level, usually the price retests the breakout point. We are seeing that play out as the altcoin retests $18.30.
If the BNB/USD pair bounces off this support, it will be a positive sign. The moving averages have completed a bullish crossover, which suggests that bulls are in command. Above $21.2378, the pair can move up to $23.5213 and above it to $32.
Our bullish view will be negated if the price re-enters the descending channel. A break below the moving averages can drag the price to $16.50. The traders can trail the stop loss on the long position to $16.
After forming inside day candlestick patterns for three days, Bitcoin SV (BSV) has turned down. The bulls are currently attempting to defend the support at $129.589, which is 38.2% Fibonacci retracement level of the recent rally. If successful, we anticipate another attempt to clear the overhead resistance of $155.380. Above this level, the rally can extend to $188.690.
However, if $129.589 fails to hold, the pullback to extend to $121.743, which is 50% retracement of the recent rally. Though we are positive, we do not find a reliable entry point at the current levels, hence, we are not recommending a trade in it. Our bullish view will be invalidated if the BSV/USD pair dips below the 20-day EMA.
Tron (TRX) has turned down from close to its target objective of $0.0234338. It can now dip to $0.018660 and below it to the 20-day EMA. If the price bounces off $0.018660, it will be a positive sign as it will indicate that the bulls are not waiting for a deeper correction to initiate long positions.
The 20-day EMA is sloping up and the RSI is in the positive territory, which suggests that the bulls have the upper hand. Therefore, traders can watch the price action at the support level and initiate long positions on a strong bounce off it. If the bulls can propel the price above $0.0234, a rally to $0.030 is likely.
Contrary to our assumption, if the TRX/USD pair breaks below the 20-day EMA, it will be a negative sign and might result in a range-bound action for a few days.
The bulls again failed to sustain Stellar (XLM) above the downtrend line on Oct. 29. This is likely to result in profit booking as the short-term traders will bail out of their positions. The bears will try to take advantage of the situation and sink the price below the moving averages.
If successful, the XLM/USD pair can dip to the immediate support at $0.056. This is an important support, below which the drop can extend to $0.051014. The traders can retain the stop loss on the long positions at $0.051.
Conversely, if the pair bounces off the support at $0.056, we anticipate another attempt by the bulls to scale the downtrend line. A break above $0.070 will be a positive sign and can carry the price to $0.088708.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Market data is provided by HitBTC exchange.