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The market data is provided by the HitBTC exchange.
Trading cryptocurrencies can be extremely risky, but equally rewarding, especially for someone who is positioned on the right side of the markets. While a buy and hold strategy is profitable when the trend is outright bullish, it is a better strategy to get in and out of positions when the price is inside a range.
We believe that Bitcoin has formed a bottom around the $6,000 mark for this year, but we don’t anticipate a vertical rally from the current levels, unless the world sees a full-fledged trade war between the top two economies.
Meanwhile, we continue seeing opposing views on the future prospects of cryptocurrencies. Pantera Capital Bitcoin Fund, which recently had its fifth anniversary, has projected a target of $21,000 for the end of this year and $67,500 for year-end 2019. On the other hand, Nobel Prize–winning economist Paul Krugman believes that “a total collapse” of cryptocurrencies “is a real possibility.”
While we keep track of such stories, we believe in studying the charts to form our own opinions. So, let’s see what’s in store for the next few days.
BTC/USD
Ideally, if the trend is strong, we want to see the first support line holding, which in this case was $7,750. As Bitcoin has broken below this support, it shows that the sellers are overpowering the buyers. Currently, the bulls are trying to defend the 20-day EMA, which is the next major support.
Any break of the 20-day EMA will result in a fall to $7,200 and below that to $6,800. Hence, we had suggested trailing the stops on the existing long positions higher to $7,400.
On the upside, $7,750 will once again act as a strong overhead resistance, above which the move can extend to $8,400.
The BTC/USD pair will remain strong as long as it keeps trading above the 20-day EMA.
ETH/USD
Ethereum broke down of the trendline on July 30 and quickly dropped to the critical support at $404.99. Currently, the bulls are trying to defend this line.
Any recovery on the ETH/USD pair will face resistance from both moving averages, which have turned down.
On the downside, any break of the $404.99 line can result in a fall to the next support at $358. Therefore, we suggest closing the long position if the price dips to $400.
XRP/USD
Ripple has again held the strong support at $0.4242 for the fourth time since June 29. We like the way the RSI has formed a positive divergence. Currently, the bulls are attempting to carry the bounce above $0.47.
If successful, the XRP/USD pair can move up to $0.51978. The zone between $0.51978 and $0.56270 is expected to act as a stiff resistance. The trend will change once the price sustains above the long-term downtrend line for a couple of days.
Any break of the $0.4242 level will indicate weakness that can lead to a steeper fall. The next major support visible on the chart is way lower at $0.24.
We shall wait for a reliable buy setup to form before suggesting any trades on it.
BCH/USD
Bitcoin Cash has broken below both moving averages and the intraday low of July 21. This increases the possibility of a fall to the trendline and below that to $670. Hence, we had recommended trailing the stop loss to $740 in our previous analysis, which was hit today.
Both moving averages are more or less flat right now, which shows that a range formation is likely, unless the bears break below $650.
On the upside, the BCH/USD pair will show signs of life above $838.9139 but will become positive only above $935. We suggest traders wait for a new buy setup to form before initiating any long positions.
EOS/USD
EOS has been stuck in a range of $6.8926 — $9.4456 since June 23. We have been waiting to buy the breakout of this range but instead of moving up, the price has declined to the bottom of the range.
A breakdown of the range gives the EOS/USD pair a lower target of $4.3396. However, it is unlikely to be a straight fall, as there is a support at $5.1.
The 20-day EMA is turning down, which shows increased selling pressure, but the RSI is still showing a positive divergence. Hence, the short-term traders can buy closer to the bottom of the range and book profits on a move to the top of the range.
Others should wait for the virtual currency to break out and close above the range before buying.
LTC/USD
From the top of the range at $91.146, Litecoin has corrected to the bottom of the range at $74.074. This is the third time the cryptocurrency reaches these levels since June 24.
The 20-day EMA has turned down after remaining flat for the past few days, which is a negative sign. The 50-day SMA continues to decline. This shows that the bears have an upper hand. A breakdown from the range has a pattern target of $57.
If the bears defend the support lines and initiate a bounce, the LTC/USD pair can reach the top of the range at $91.146. Short-term traders can buy at the current levels and sell on any bounce. We shall wait for a break out of the range to sustain for a couple of days before recommending a buy.
ADA/USD
The existing long position on Cardano was closed at $0.14 on July 31. We suggested closing the position because the breakdown from the descending triangle pattern has a lower target of $0.109567.
Currently, the bulls are defending the $0.13 level and both moving averages have levelled out, which increases the probability of a range formation. However, if the bears break below $0.13, the digital currency can fall to $0.12 and below that to $0.111843.
On the upside, the ADA/USD pair will turn positive above $0.181617. We shall wait for a new buy setup to form before suggesting any buy calls.
XLM/USD
The bulls have failed to defend the 20-day EMA and Stellar is back at the support line at $0.2544. To keep our risk under control, we had suggested closing positions below the 20-day EMA, which was just above our suggested buy.
The XLM/USD pair is currently holding the $0.2544 line and both moving averages have flattened out. This increases the probability of a consolidation around the current levels. Once we know the boundaries of the range, we shall again try to buy it close to the bottom.
If the bears break below $0.2544, the next support is at the 50-day SMA, below which the drop can stretch to $0.184. We shall wait for a new buy setup to form before proposing any trades again.
IOTA/USD
IOTA has corrected to the support at $0.9150 for the fourth time since June 22. In doing so, it has formed a bearish descending triangle pattern, which will complete on a breakdown and close below $0.9150.
The IOTA/USD pair will show signs of life if it breaks out of the downtrend line of the triangle. Meanwhile, if the bears sink the prices below the June 29 low of $0.8851, the fall can extend to $0.5721, with a minor support at $0.666.
After having recommended closing 50 percent of the existing long position around $0.98, we suggest traders retain the stops at $0.8850 on the remaining position.
TRX/USD
After failing to break out of the 50-day SMA and the downtrend line, TRON has drifted towards the critical support at $0.03275.
If this support breaks, the TRX/USD pair can decline to $0.028 and below that to the long-term support at $0.022806.
On the upside, a break out of the downtrend line will be the first indication that the buyers are back. Until then, it is best to remain on the sidelines.
The market data is provided by the HitBTC exchange. The charts for the analysis are provided by TradingView.