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The market data is provided by the HitBTC exchange.
The current hot debate is whether bitcoin will continue to rally while altcoins languish. Many have been outspoken in support of the largest cryptocurrency as it maintains its market dominance above 62%. Though bitcoin is the undisputed leader, it is unlikely that it will remain the only cryptocurrency that will see a sharp increase in price.
We believe that after the recent rally, bitcoin will take a breather while traders shift their attention to altcoins. However, unlike the previous bull market, this time, the market will differentiate between altcoins depending on their use cases. Therefore, a few altcoins might outperform while others continue to struggle to move up.
Traders should not buy tokens that have corrected sharply from their highs in hopes that their price will also recover. Their prices are near the lows for a reason. A better approach is to buy cryptocurrencies that have started to move up as it shows trader’s interest in them. Let’s look at the top five performers of the past seven days and analyze their charts.
XMR/USD
Monero (XMR) has risen by 8% in the past seven days and is the best performer among the top 20 cryptocurrencies by market capitalization. If the market sentiment improves, can it continue its outperformance in the next few days? Let’s look at the charts.
The sharp fall in the XMR/USD pair from close to $120 in the week before found buyers at the critical support of $81. This is a positive sign because it shows that bulls are keen to buy on dips. This is the third time that $81 has held since mid-May, hence, this now becomes the new floor for the pair.
Both the moving averages are on the verge of a bullish crossover on the weekly charts. This shows that the trend is changing and traders should utilize dips to buy.
The cryptocurrency is likely to trade between $81 and $150 for the next few weeks. As the range is large, traders can initiate long positions at the current levels and keep a close stop loss just below $78. The target objective is a rally to $150. Though there is a minor resistance at $120, we expect it to be crossed. This trade has an attractive risk to reward ratio. Our view will be invalidated if bears sink the price below $81. The next support on the downside is at $60.
BTC/USD
With the recovery in prices, bitcoin (BTC) bulls are getting confident again. Sky-high targets are back on the table. Anthony Pompliano, co-founder of crypto asset management firm Morgan Creek Digital Assets, expects bitcoin to hit $100,000 by the end of 2021. Pompliano has walked the talk and has invested 50% of his wealth in bitcoin.
A report by Binance shows that the correlation between bitcoin and altcoins has decreased from 0.73 in Q1 2019 to 0.61 in Q2 2019. In the current leg of the up-move, bitcoin futures volumes have spurted. This shows that large traders are investing in the cryptocurrency. However, institutional traders are unlikely to continue their buying spree as prices skyrocket higher. Therefore, we do not expect the rally to sustain. What is a good level to buy? Let’s analyze the charts.
The uptrend from the lows ended with the BTC/USD pair forming a gravestone doji in the week before. Though buying was seen below $10,000, as suggested by us in the previous analysis, failure of bulls to sustain highs of the week shows that traders stuck at higher levels are bailing out of their positions closer to $12,000. If buyers fail to break out and sustain the price above $12,000 in the next week, it will attract further profit booking that can drag the price below $10,000 levels once again.
If bears plummet the price below the 38.2% Fibonacci retracement level of $9,965.48, the price can extend the correction to $8,727.40, which is the 50% retracement of the recent rally. A breakdown of this level can drag the price to the uptrend line. The upsloping 20-week EMA is also just below this line. Hence, we anticipate strong buying if the cryptocurrency corrects to this level. As the trend has changed from down to up, traders should use these dips to buy.
Contrary to our assumption, if the bulls propel the price above $12,000, the digital currency can retest $14,000. A breakout of $14,000 will resume the uptrend but we give it a low probability of occurring in the short term. We believe traders should wait and buy on dips instead of chasing the price higher.
BNB/USD
Binance is planning to launch futures trading in bitcoin with leverage of up to 20x. While leverage can be useful to an experienced trader, it can easily destroy a novice trader, so use it judiciously. The leading cryptocurrency exchange has switched tether deposit and withdrawal addresses from Omni-based addresses to ERC-20-based addresses, which will be the standard going forward. Dogecoin (DOGE) prices spurted higher on the announcement that Binance will list it. With fundamentals remaining strong, can Binance Coin (BNB) resume its uptrend?
While most cryptocurrencies are still struggling well below their lifetime highs made in the previous bull market, the BNB/USD pair continues to trade close to its lifetime highs. The 20-week EMA is sloping up and the 50-week SMA is also turning up gradually. This is a positive sign and shows that the pair is in a strong uptrend.
Any dip to strong support levels offers a low-risk buying opportunity to traders. The first support on the downside is $28.7168. If this support breaks, the fall can extend to the uptrend line. The 20-week EMA is also close to this line, hence, we anticipate strong buying at this support. Traders can watch the price action at the above-mentioned levels and buy in a phased manner.
After the sharp up-move from the lows, the digital currency is likely to remain range-bound for a few weeks and consolidate the gains. The next leg of the up move will start on a breakout and close (UTC time frame) above $40.
ETC/USD
Recently, the Atlantis hard fork entered its testing stage. The update is scheduled for September. ETC Labs and Metronome also announced that chainhop functionality had been enabled between Ethereum and Ethereum Classic (ETC) blockchains. Though the cryptocurrency was backed by positive news on the fundamental front, how does its chart look?
The recovery in the ETC/USD pair hit a wall close to $10.040. This shows profit-booking at higher levels. However, a minor positive is that bulls have kept the price above the 20-week EMA during the pullback.
If the price rebounds off the 20-week EMA, bulls will again try to push the price above the $10.040–$11.880 resistance zone. This is likely to start a new uptrend that can carry the price to $15 and above it to $20. Traders can buy part of their intended position size above $10.040 and add the rest on a breakout above $11.880.
Conversely, if the bears sink the price below the 20-week EMA, the pair can slip to $5.22. Therefore, we suggest traders wait for the price to break out before initiating fresh positions.
XRP/USD
Xpring, Ripple’s ecosystem initiative, claims to have committed $500 million on XRP projects to over 20 companies since May of last year. The goal is to support projects that create use cases for Ripple’s XRP token. Let’s see what its chart projects.
The XRP/USD pair has been a laggard during the recent recovery in crypto prices. The bulls have repeatedly failed to sustain the price above $0.450, which shows a lack of demand at higher levels. Currently, the pair is taking support closer to $0.370. Both the moving averages are also located at this level. Hence, this is an important support to watch out for.
If the price bounces off this support, bulls will again attempt to scale above the overhead resistance zone of $0.450 to $0.5050. We anticipate the digital currency to start a new uptrend and pick up momentum after it sustains above $0.5050.
However, if the price breaks below the moving averages, it can slide to $0.27795. A breakdown of the $0.27795–$0.24508 support zone will be hugely negative for the cryptocurrency. As the price is stuck inside the range, we believe that the best approach is to stay neutral on it until it starts a new uptrend. Notwithstanding, for traders who want to trade it, the best strategy would be to buy closer to the support and sell near the resistance.
The market data is provided by the HitBTC exchange.