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The market data is provided by the HitBTC exchange.
Just a few days back we were discussing whether cryptocurrencies have entered a bull phase. Now, after the recent slump in prices, analysts are predicting a huge fall on Bitcoin (BTC).
Bloomberg Intelligence analyst Mike McGlone believes that Bitcoin will plunge to last year’s average level of $4,000.
Jeff deGraaf, head of technical research at Renaissance Macro Research has a more dire warning for the Bitcoin bulls. He said that “once the top is complete”, it may even mean “game-over” for Bitcoin. DeGraff is a highly respected voice in the technical analyst community, hence, his forecast should be kept in mind.
However, it is important to note that technical analysts can quickly change their opinion according to the chart patterns. While it is beneficial to know their views, the trades should only be taken based on the current chart patterns. Additionally, every position should be protected by a stop loss to protect the capital, should the markets go opposite to our expectation.
BTC/USD
The bulls have defended the critical support level at $6,075.04 for the past two days. Although this is a positive sign, a sharper pullback would have given us greater confidence that the bulls are aggressively buying at these levels. As the recovery has been weak, we will have to rely on other signs to predict the next probable direction on Bitcoin.
The moving averages are on the verge of completing a bearish crossover, which is a negative sign. On the other hand, the RSI is close to the oversold territory, which shows the selling has been overdone and a pullback is likely.
Any pullback will face a stiff resistance at the downtrend line of the descending triangle and then at the moving averages. The virtual currency will show the first signs of bullishness once it sustains above $7,200.
There is a possibility for the BTC/USD pair to remain range bound between $6,000 and $8,500. We have come to this conclusion because the bottom — around $6,000 — and the top — around $8,500 — have held twice since May of this year. Therefore, aggressive traders can enter long positions at $6,800 with the stops below $5,900 and expect a rally to $8,500. This is a risky trade because we are jumping the gun, so we suggest using only 30 percent of the usual allocation. Positions can be added after the price sustains above $7,200.
Our view of the formation of a range will be invalidated if the bears sink prices below $5,900. Under such circumstances, the downtrend can extend to the next support levels at $5,400 and $5,000.
ETH/USD
Ethereum is struggling to bounce off the critical support at $358. On August 8, the fall to $346.35 was the lowest level since November 19 of last year. The pullback on August 9 was unimpressive as the price retreated from $370.39.
If the bears push the prices below $346, the fall can extend to $280. Though the RSI is already in oversold territory, we are not confident about a bounce yet because during the previous fall in late March of this year, the RSI had become deeply oversold before a recovery happened.
We shall turn positive on the ETH/USD pair once it sustains above the 50-day SMA. Until then, we suggest traders remain on the sidelines.
XRP/USD
Ripple fell to $0.32 on August 8, just below our proposed target of $0.32862. If this level also breaks, the next stop is at $0.24001.
Though the RSI is in a deeply oversold territory, the weak attempt to pull back on August 9 shows that the buyers are in no hurry to buy the cryptocurrency.
We shall wait for the XRP/USD pair to form a bullish pattern before turning positive on it. The first sign of strength will be when the price sustains above the 50-day SMA.
BCH/USD
Bitcoin Cash made a new year-to-date low on August 8 when it fell to $564.9304. The pullback attempt on August 9 faced a roadblock at $619.7510.
The BCH/USD pair can now retest the support at $537.8221, which is the intraday low made on November 8 of last year. This is a major support; hence, we anticipate a strong buying in the zone of $537.8221 — $619.7510. The pair will gain strength if the price sustains above $620.
Conversely, if the bears break below $537.8221, the coin can slump to $400.
EOS/USD
After a failed pullback attempt on August 9, EOS is likely to stretch its downward move to the next support zone of $3.8723 — $4.3396.
We like that the EOS/USD pair is still quoting well above its year-to-date lows. The oversold levels on the RSI point to a probable rebound from the zone between $3.8723 and $4.3396. We shall wait for a strong bounce to materialize before recommending any buys on the pair.
Our bullish view will be invalidated if the bears break and sustain below $3.8723.
LTC/USD
Litecoin has retraced all the way back to the levels last seen in mid-November of last year. This is a negative sign.
An attempt to pull back on August 9 fizzled out at $65 and currently the bears are trying to extend the decline to the next target of $57.
Between late September to early November of last year, the LTC/USD pair repeatedly found support close to the $48 — $52 zone. Therefore, we expect this zone to act as a strong support during the current fall.
Any pullback will face a stiff resistance at the 20-day EMA and at $74.074. We shall wait for the trend to change before suggesting any long positions on it.
ADA/USD
The pullback attempt on August 9 could not scale above the $0.13 line. The previous strong support will now act as a strong resistance. Unless Cardano quickly rises above $0.13, it is at risk of breaking down of $0.111843.
Below $0.111843, the next level to watch out for is $0.078215. Any fall below this level will push the ADA/USD pair into uncharted territory, which is a bearish sign.
We shall turn positive on the cryptocurrency after it stops falling, breaks out of the downtrend line and climbs above $0.15.
XLM/USD
Stellar bounced sharply on August 9, which is a positive sign. This shows that the bulls are keen to own it on dips.
The level of $0.184 is one to watch out for on the downside because it has held since December of last year. Though it was broken on a few occasions, the bears could not sustain the prices below $0.184. Therefore, we expect the support to hold this time as well.
If, contrary to our expectation, the cryptocurrency sustains below $0.184, it will become negative and can slump to $0.09. As we are relatively bullish on the XLM/USD pair, we might suggest a buy once it sustains above the moving averages.
IOTA/USD
The oversold level on the RSI has failed to attract buyers. IOTA continues to look weak on the charts, with a probable drop to the pattern target of $0.5721. If this level also breaks, the next stop can be at $0.5 — $0.52.
Historically, an oversold level on the RSI has resulted in a pullback. On the previous two occasions when the RSI was close to oversold levels, the IOTA/USD pair remained in a range for a few days before moving up.
So, if the bulls defend one of the above-mentioned support levels, the pair might attempt a pullback. Any recovery attempt will face a strong resistance at the previous strong support of $0.9150. We shall wait for a bullish pattern to develop before suggesting any long positions.
TRX/USD
Tron is struggling to bounce off the critical support at $0.022806. Though the bulls have defended the support for the past two days, they have failed to achieve a meaningful pullback.
The bears will now attempt to break the support at $0.022806. If successful, the TRX/USD pair will become extremely negative. The lower levels to watch out for are $0.018297 and $0.01095383. However, both of these are not very strong support levels, hence, it is difficult to predict where the buyers will step in.
Our bearish view will be invalidated if the bulls buy the dip below $0.022806 and push the prices above $0.02801344. Long positions should be avoided until the prices stabilize.
The market data is provided by the HitBTC exchange. The charts for the analysis are provided by TradingView.
