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The market data is provided by the HitBTC exchange.
After the first signs of recovery, the opinion is divided on the current pullback in the market. Some say that it is only a dead cat bounce, while others believe that it is the start of a base building process that will result in a new uptrend. Michael Bucella of the crypto-focused investment firm BlockTower Capital said to CNBC that the smartest money has started investing.
Nonetheless, Paul Donovan, Global Chief Economist at UBS, has said the digital currencies can never be currencies and are “fatally flawed.” After the recent fall, many are questioning the longevity of cryptocurrencies. The past rallies and sharp plunges show that the nascent asset class swings between periods of extreme optimism and pessimism.
For the non-believers, this is not the space to be in. However, for the investors who believe in the long-term story of cryptocurrencies, Ric Edelman, founder and executive chairman of Edelman Financial Services, believes that it is a good time to start buying Bitcoin.
Will we or anyone pick the exact bottom? No! A bottom can only be identified in the hindsight. Therefore, the traders can scale in the position, gradually building a portfolio. Let’s see which virtual currencies are showing buy setups.
BTC/USD
Contrary to our opinion, the pullback in Bitcoin did not even reach the 38.2 percent Fibonacci retracement level of $4,712.89. It turned down from $4,471.1 on November 29. This shows that the bears are unwilling to wait for higher levels to sell.
There is a minor support at the small uptrend line, below which a retest of the lows at $3,620.26 is possible. A breakdown of the year-to-date lows is likely to attract further selling, dragging the BTC/USD pair to $3,000 levels. This is an important level that should hold: a break of this can result in a plunge to $2,410.
However, we expect the $3,500-$3,000 zone to hold. Hence, traders who went long on our recommendation can hold their positions. We shall close the position if we find that the bears are sustaining below $3,500.
If the price bounces from the current levels, it can move up to $4,712.89 and $5,050.4. We can add more positions as the virtual currency rises northwards.
XRP/USD
Ripple triggered our suggested buy level on Nov. 28, but it could not rise above $0.4. Currently, the price has turned down and might retest the intraday lows of Nov. 25.
The down trending 20-day EMA and the RSI below 40 levels will continue to attract sellers. A break below the support line of the descending channel can result in a drop to $0.24508. However, if the support holds, we anticipate a move back to the top of the range. Traders who have bought positions on our recommendation can hold with a stop loss of $0.3. The positions can be closed if the XRP/USD pair sustains below $0.3.
ETH/USD
The rebound in Ethereum fizzled out at $127.87. It continues to be in a downtrend but for the past seven days it has been trading inside the range $130.5-$102.2.
A breakout of the range might face a minor resistance at the 20-day EMA, but we expect it to be crossed. The ETH/USD pair will face a stiff resistance at $167.32 and if this level is crossed, it will be at the 50-day SMA. We suggest traders wait for a trend reversal to be signaled before attempting long positions in it.
BCH/USD
Bitcoin Cash has extended its stay in the tight range of $204.76-$148.27. The longer the price remains in the range, the stronger the eventual breakout or breakdown will be.
Both the moving averages are trending down and the RSI is in the oversold zone, which shows that the bears are in command. We had anticipated a breakout to the upside as the selling had been sharp and the BCH/USD pair was looking oversold. But a lack of buying and selling by the bears is threatening a breakdown of the range.
If the price sustains below $148.27, the slide can extend to the next support of $100. On the other hand, if the bulls hold the bottom of the range and breakout of $204.76, we expect a rally to $242.9 and $272.14. Aggressive traders can ride this move up but as this is a counter-trend trade, please keep the position size small.
XLM/USD
When a support breaks down, it becomes the new resistance. The stronger the support, the stronger the resistance will be. Stellar has turned down from close to the overhead resistance of $0.184.
The bears will try to breakdown the recent lows of $0.13427050 and plunge the XLM/USD pair to $0.08 levels. On the contrary, the bulls will try to defend the zone between $0.13427050 and $0.1547188. We shall turn positive on the virtual currency if the price sustains above $0.184.
EOS/USD
EOS is in a strong downtrend. After a day’s pullback, the fall has resumed and the price has made a new year-to-date low. The next support on the downside is at $2.4.
The failure of the EOS/USD pair to breakout of the downtrend line shows that the bears are in command. The traders should wait for the digital currency to put in a bottom and show signs of stabilizing before going long.
LTC/USD
Litecoin remains in a downtrend, with both the moving averages trending down and the RSI in the negative territory. The pullback stalled just above the $36 levels, which shows a lack of buying at higher levels.
The bears will attempt to make a new year-to-date low, while the bulls will try to defend the current lows. If the bears succeed, the LTC/USD pair can correct to $20 levels.
However, if the bulls use the current fall to buy and form a higher low, it will indicate strength. The digital currency will show first signs of a trend change, if it sustains above the downtrend line. Until then, it remains vulnerable to a bear attack.
ADA/USD
The sellers did not even wait for the recovery to reach the 20-day EMA before offloading their positions. Cardano can retest the recent lows of $0.033065 within the next few days. If the bears break the support and make a new year-to-date low, the drop can extend to $0.025954 levels.
On the other hand, if the bulls manage to hold the support, the ADA/USD pair might start a bottoming process. A trend change will be indicated when the price makes a series of higher highs and higher lows. Until then, the bears are likely to pounce on any pullback.
XMR/USD
The pullback in Monero was short-lived. Failure of the bulls to reach the first overhead resistance of $71 indicates lack of buying interest. The trend remains firmly down with both the moving averages sloping down and the RSI close to the oversold levels.
A break below the $53 levels will resume the downtrend and can plunge the XMR/USD pair to the next support at $40. If the bulls defend the psychological support of $50, it will indicate buying at lower levels and will increase the probability of a bottom formation. Traders should wait for a new buy setup to form before initiating any new positions.
TRX/USD
The sharp pullback in TRON ended just above the 20-day EMA. Currently, the bears are attempting to push prices towards the recent lows.
The trend remains down and the bears have successfully defended the first resistance level, which shows that the sellers are in command. If the TRX/USD pair sinks below $0.01089965, the next target on the downside is $0.00844479.
On the other hand, if the bulls manage to hold prices above the Nov. 25 intraday low, the digital currency might enter a consolidation. There are no signs of a trend reversal yet.
The market data is provided by the HitBTC exchange. The charts for the analysis are provided by TradingView.