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Market data is provided by HitBTC.
The sentiment in cryptocurrencies turned sour following opposition to Facebook’s Libra project. However, Facebook co-founder and CEO Mark Zuckerberg said during a recent conference call that the company will address all the concerns of the regulators “and then figure out what the best way to move forward.”
However, Brad Garlinghouse, CEO of Ripple, fears that the regulator attention on Libra might create issues for the existing cryptocurrencies in terms of stricter regulation. The markets hate uncertainty. Hence, we have seen a lack of buyers in the past few days.
As we believe that the bottom is in place for most major cryptocurrencies, we view the current fall as a buying opportunity. Sharp falls in the short-term can sometimes provide a low-risk buying opportunity. Let’s see if we spot a trade in any of the top three losers of the past seven days.
TRX/USD
Tron (TRX) has been the worst performer in the past seven days. It has corrected over 20% during the period. The negative news flow regarding its founder, Justin Sun, has kept the prices under check.
Can it recover from the current levels or will it fall further? While it is difficult to predict the news flow, we can get some idea about the performance by analyzing the technical picture on the chart.
The TRX/USD pair has been trying to form a large base for the past one year. It is trading roughly between $0.040 on the upside and $0.017740 on the downside. The breakdown of this range on November 19 last year did not find sellers at lower levels and the price climbed back into the range on December 21.
Similarly, attempts by bulls to breakout of the overhead resistance at $0.040 failed in early-June and end-June this year. Currently, the price has again dropped to the immediate support of $0.022, below which a retest of $0.017740 is likely. If the digital currency breaks down of the range, it will be a negative sign. The downtrend will resume if the final support of $0.011240 also gives way. However, we give this a low probability of occurring unless a surprise negative news hits the market.
So, is it worth a buy at the current levels? While the downside is known, it is difficult to predict when the next up move will start. In a range, many times, the price can remain stuck, frustrating the investor. Therefore, it is best to wait for the pair to breakout of the downtrend line before turning positive.
NEO/USD
NEO is the second-worst performer among major cryptocurrencies in the past seven days. Let’s analyze its chart and try to project the next likely direction. The short-term trend is down. The price has corrected from a high of $20.96333 on June 26 to a low of $9.75735 on July 17. That shows a sharp fall within a short span of time.
However, a look at the chart shows that the NEO/USD pair has held the support at the uptrend line in the current fall. Since starting the recovery in mid-December of last year, the pair has repeatedly found support at the uptrend line (marked as ellipse on the chart). Hence, it becomes an important level to watch out on the downside. If bears sink the price below this support, a fall to the yearly low is possible.
On the upside, we find that every rally, after bouncing from the uptrend line has made a higher high (shown as rectangles on the chart). This is a positive sign. If the price rises above 20-day EMA and the recent high of $13.88772, a retest of $20.80 is probable. Therefore, the traders can buy on a close (UTC time frame) above $13.88772 and keep a stop loss of $9.50. However, as the trend is weak and the rallies are not sustaining, please keep the position size 40% of usual.
LINK/USD
Chainlink (LINK) was among the top three losers last week and it has again found a place this week. This shows that it is under bear pressure. We had suggested traders to buy on a breakout of 20-day EMA and the downtrend line in our previous analysis. Though the price broke out of the downtrend line, it has not been able to scale the 20-day EMA. Hence, our buy recommendation did not trigger. What should traders do now?
The LINK/USD pair broke out of the downtrend line on July 25. This suggests that the short-term trend has changed. Currently, the price is stuck in a range between $2.0531 and $2.8498. The 20-day EMA is gradually falling while 50-day SMA is sloping up. This shows that the short-term trend is weak but the medium-term trend remains up. Therefore, we expect the pair to breakout of the range and start an up move.
The traders can wait for the price to breakout and close (UTC time frame) above $2.8498 before initiating any long positions. The stop loss can be kept at $2 and the target levels to be kept in mind are $3.6465 and $4.50. Due to new buy levels suggested in this analysis, we withdraw the buy recommendation given in the previous analysis.
Contrary to our assumption, if the price turns down from either 20-day EMA or the top of the range and plummets below $2.0531, it can correct to $1.3202.
Market data is provided by HitBTC.