What is going on with the crypto market’s top currencies?
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The huge volatility in Bitcoin on Nov. 29 caught a number of novice investors off-guard. This serves as a reminder to the traders that cryptocurrency trading should be taken seriously.
Additionally, this fall is likely to renew the debate among the believers and the non-believers.
Joseph Stiglitz, the Nobel Prize winner, went as far as to demand a ban on Bitcoins. On the other hand, John McAfee, founder of McAfee Associates, has gone ahead and raised his target on Bitcoin to $1 mln by the end of 2020.
Nonetheless, other than for the long-term investor, these sky-high targets are unlikely to be of much use. The trader is more concerned about the next 20-40 percent move. So, let’s try to jump into the charts and attempt to forecast the next direction.
On Nov. 25, I had forecast a rally to $9,969, which proved to be a very conservative target. Bitcoin launched a vertical rally on Nov. 24, which peaked on Nov. 29 at $11,420.82 levels.
Vertical rallies are unsustainable and lead to a crash. Hence, it is good that the rally stalled. The present correction is likely to find support at the resistance line of the ascending channel. The trendline, green color on the chart, also coincides with the channel support. So, I expect the zone of $8,750 to $9,100 to act as a formidable support.
If, however, the bears succeed in breaking down this support, the 20-day EMA at $8,530 will act as the next support, below which a decline to $8,000 is possible.
On the upside, yesterday’s high of $10,570.49 and the lifetime high of $11,420.82 will act as a stiff resistance.
The volatility is likely to remain high for another four to five days when both the bulls and the bears will try to establish their supremacy. Thereafter, I expect the volatility to subside.
The risk to reward ratio in the current volatile environment is not conducive for trading. Hence, I don’t recommend any trade today. It is better to stay safe and preserve capital than lose money in the whipsaws.
Luckily, we had booked 50 percent profits on the existing positions in Ethereum at $483 levels. I had been expecting a retest of the breakout levels, but I had not envisaged a fall below $393. Therefore, I had recommended an SL of $390. Nevertheless, I was proven wrong and the SL was hit yesterday.
However, the ascending triangle pattern is still intact. If Ethereum manages to stay above the $393 levels, it is likely to resume its uptrend and attempt a rally towards its pattern target of $652.
On the other hand, if the digital currency breaks down of $390, it is likely to slide to $350. Below this, a fall to $290 is also possible.
I will prefer to stay on the sidelines and watch the setup develop over the next two days before any trade.
I had forecast a rally to $1,827 and $2,056 on Bitcoin Cash in my previous analysis. However, the digital currency could not breakout of the $1,758 levels.
After trading within a range of $1,507 to $1,758, the virtual currency broke down on Nov. 28.
Currently, the bulls are attempting to take support at the 20-day EMA. If this level breaks down, a fall to $1,150 is likely. This is the final support, below which, the decline can extend to the 50-day SMA at $827.
On the other hand, if the buyers step in at the 20-day EMA, a retest of $1,507 and $1,758 is likely.
A very risky trade setup is a buy above $1,420 with a stop loss of $1120. The target objective on the upside is a retest of $1,758 levels. Only aggressive traders should take a shot at this trade and with only 50 percent of the normal position size.
I had anticipated a rally to $0.3 on Ripple; however, it could not cross the $0.28 mark. From there, it plunged back to the critical support of $0.22.
I expect the $0.22 levels to hold, at least in the short-term. The rebound is likely to face a stiff resistance at $0.25 levels, which is the 50 percent Fibonacci retracement of the fall from $0.281 to $0.2195. Just a few days back also, $0.25 had acted as a strong resistance.
Once above this level, a rally to $0.28 and thereafter to $0.3 is likely.
Contrarily, if the $0.22 level breaks down, it can sink Ripple to $0.18 levels. Aggressive traders can attempt to go long at $0.251 and keep a stop loss of $0.218. The target objective on the upside is $0.28 and $0.3. This is a risky trade; hence, the position size should be less than 50 percent of usual.
In my previous analysis, I had suggested a probable retest of the lifetime highs, which proved to be correct.
However, only the nimble-footed trader would have benefitted from the rise, because the digital currency plunged to about $76 levels on the same day.
The positive news is that the 20-day EMA has not broken down, which keeps the uptrend intact.
The next rally will face resistance at the $93 levels and at the lifetime highs. On the other hand, a decline is likely to take support at the 20-day EMA. However, if this support breaks, a fall to $64, to the 50-day SMA is possible.
I will wait for the volatility to subside before recommending any trade.
I had forecast a price target of $650 for Dash in my previous analysis, which was easily surpassed. In fact, this is one of the rare cryptocurrencies that was left untouched in the overall cryptocurrency market Nov. 29.
Currently, Dash is at the resistance line of the ascending channel, which is likely to be a difficult level of cross.
I expect a couple of days of consolidation before the bulls attempt to resume the uptrend.
The breakout and close above the ascending channel gives it a pattern target of $960.
On the other hand, any correction is likely to find support at the trendline of the ascending channel, around the $680 mark.
However, at the current levels, I don’t find any setups on the charts that offer a good risk to reward trading opportunity. Therefore, I have no recommendations a trade on it so far.
* BTC/USD, ETH/USD, LTC/USD and BCH/USD market data is provided by the HitBTC exchange.
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Author: Rakesh Upadhyay