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Market data is provided by the HitBTC exchange.
Though institutional players have been dabbling in cryptocurrencies, they are yet to take sizeable positions. This might change with the launch of Bitcoin trading by Fidelity. According to certain sources, the financial giant is only weeks away from offering cryptocurrency trading for institutional clients.
While Bitcoin futures trading is already available, an unnamed official of the Commodity Futures Trading Commission said that the regulator can allow ether (ETH) futures trading if it fulfills the requirements. Futures trading is likely to increase liquidity and allow institutional players to hedge their positions. As the markets grow, these instruments will be used more and more by the large players to keep their risk under control.
However, not everyone is bullish on cryptocurrencies. Legendary investor, Warren Buffett, and American economist and Nobel Prize winner Joseph Stiglitz have recently reiterated their reservations on cryptocurrencies. We believe, with advancements in technology, gradually, most people will realize the potential of cryptocurrencies and blockchain technology. Until then, pockets of opposition is to be expected.
When the market is trending up, even minor positive news is lauded by investors. When the price stops to moving up even with bullish news, it is time for consolidation or a minor correction. After the strong recovery, will the rally continue or will hit a roadblock? Let’s find out.
BTC/USD
As expected, Bitcoin (BTC) did not clear the overhead resistance of $5,900 at the first instance. However, we like the way it has not given up any ground. The bulls are trying to hold the price above $5,600, which is a positive sign.
Both the moving averages are sloping up and the RSI is close to the overbought zone. This suggests that the bulls are in command. If the cryptocurrency consolidates close to $5,900, it increases the probability of an upward breakout and a rally to $6,480.54. We anticipate a stiff resistance in the $6,000–$6,480.54 zone, from where the price might either correct or enter into a range.
Any dip below $5,600 is likely to find support at the 20-day EMA. The BTC/USD pair has not closed (UTC time frame) below the 20-day EMA for two days in a row since breaking above it on February 8. This is a positive sign and it also confirms the 20-day EMA as a strong support.
But if the bears sink the pair below the 20-day EMA, it can fall to $4,914.11. The 50-day SMA is also close to this level, hence, the bulls are likely to defend this zone. We suggest traders retain the stop loss on remaining long positions at $5,400.
ETH/USD
Ethereum (ETH) has held above the 20-day EMA and the support of $167.20 after breaking out of it. The intraday dips below the supports were purchased, which shows buying at lower levels. The moving averages have gradually started to slope up and the RSI has jumped into positive territory. This suggests that the bulls are at an advantage.
If the ETH/USD pair breaks out of $180–$190.54 resistance zone, it is likely to pick up momentum and rally to $225 and above it to $256. Therefore, we retain the buy recommendation given in the previous analysis.
Contrary to our expectation, if the pair reverses direction from the overhead resistance and plummets below the 50-day SMA, it will indicate weakness. The next few days are critical for the digital currency as it will determine the next leg of the trend.
XRP/USD
Ripple (XRP) again failed to scale above the 20-day EMA and the downtrend line. This shows a lack of buyers at higher levels. The price has again slipped to the bottom half of the range. If the bears sink the digital currency below $0.27795, it can retest the yearly low of $0.24508. This will be a major sentiment breaker.
If the support at $0.27795 holds, the XRP/USD pair might remain range bound for a few days. The first sign of strength will be a breakout and close (UTC time frame) above $0.33108. It will pick up momentum above $0.37835. As the pair has been a huge underperformer, we shall wait for it to show sustained buying before recommending a trade in it.
BCH/USD
Bitcoin Cash (BCH) is range bound between $255 and $335.62. The bulls are currently attempting to hold the price above the 20-day EMA. If successful, it can rise to the top of the range. A breakout of the $335.62–$363.30 resistance zone will indicate strength and can carry the cryptocurrency to $424.02 and higher.
On the other hand, a breakdown of the 20-day EMA will drag the BCH/USD pair to the support at $255. The 50-day SMA is also located close by, hence, we expect a strong defense by the bulls at this level. The trend will turn in favor of the bears if the pair sinks below the intraday low of April 29 at $227.70. Currently, we do not find a trade which offers a good risk to reward ratio, hence, we are not recommending any positions in it.
LTC/USD
Litecoin (LTC) reversed direction from $82.68 on May 4. It has currently fallen to the 50-day SMA. A break of this support can sink the cryptocurrency to $70.3549. If this support also breaks, the next stop is $62.45. The trend will turn negative below this level.
Both the moving averages have flattened out, which points to a range formation in the short term. Our view will be invalidated if the LTC/USD pair rebounds off the current levels and breaks out of $91.
A breakout and close (UTC time frame) above $91 will complete a cup and handle pattern, which has a target objective of $158.91. We will wait for the breakout before recommending a trade in it.
EOS/USD
EOS turned down from $5.4507 on May 3 and again dipped below the 20-day EMA. This shows a lack of demand at higher levels. The price is currently at the critical support of the uptrend line of the wedge. A breakdown of the wedge has a pattern target of $3. Though the $4.4930–$3.8723 zone is a strong support, we expect it to break after holding out for a short period of time.
Contrary to our assumption, if the EOS/USD pair bounces off the support and rallies above $5.50, it can move up to $6.0726 and above it $6.8299.
The 20-day EMA is flattening out and the RSI is close to the midpoint. This suggests a consolidation in the near term. We currently remain neutral on the digital currency.
BNB/USD
Binance Coin (BNB) continues to trade close to the 20-day EMA. Both the moving averages are trending up, which is a positive sign, but the negative divergence developing on the RSI is a red flag.
If the BNB/USD pair slips below the 20-day EMA, it can drop to the 50-day SMA. A breakdown of this support will complete a bearish rising wedge pattern that can drag the price to $15 and lower.
On the other hand, if the pair bounces off the 20-day EMA or the 50-day SMA, it will try to rise to new highs once again. We will wait for a buy setup to form before recommending a trade in it.
XLM/USD
Stellar (XLM) turned down from the moving averages and broke below the uptrend line once again. The bears are currently attempting to defend the immediate support zone of $0.09750928–$0.09478125. If this support breaks, it can drag the price to $0.08. The down sloping 20-day EMA and the RSI in the negative zone shows that the bears are in command.
Our bearish view will be invalidated if the XLM/USD pair reverses direction from the current levels and rises above the 50-day SMA. In such a case, it can move up to $0.12039489 and above it to $0.13250273. We will wait for a reversal pattern to form before suggesting a trade in it.
ADA/USD
Cardano (ADA) turned down from the moving averages, which is a negative sign. It has dipped back to the support. A break of $0.063230 will weaken it further. The moving averages have completed a bearish crossover and the RSI is in the negative zone. This shows that the bears have the upper hand.
But if the ADA/USD pair bounces off the support and rises above the moving averages, it can move up to $0.082952 and if this level is crossed, it can reach $0.094256.
The pair will complete a cup and handle pattern on a breakout and close (UTC time frame) above $0.094256. This gives it a pattern target of $0.161275. We шиll wait for the digital currency to complete the bullish pattern before proposing a trade in it.
TRX/USD
Tron (TRX) is finding it difficult to break out of the moving averages but the positive thing is that it has not given up ground. This increases the probability of a breakout and a move to the top of the range at $0.02815521.
The TRX/USD pair will signal strength after it sustains above the range. It will confirm the start of a new up move after it rises above the overhead resistance of $0.03278079. Therefore, we retain our recommendation of going long in two batches outlined in our earlier analysis.
Contrary to our expectation, if the pair turns down from the current levels, it can drop to $0.02094452 and if this support breaks, it can correct to $0.01830.
Market data is provided by the HitBTC exchange. Charts for analysis are provided by TradingView.