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Market data is provided by the HitBTC exchange.
2018 has not been a profitable year for most asset classes. Tightening interest rates by the United States Federal Reserve, slowing growth, trade wars and fears of a recession have led to a sharp slump in various markets.
Leading crypto companies like Beijing-based Bitmain Technology, the world’s biggest producer of cryptocurrency mining rigs, and Huobi Group, the operator of one of the world’s largest cryptocurrency exchanges, are planning layoffs. While this signals troubled times for crypto companies, such cycles are part and parcel of every industry.
However, it is only the crypto asset class that has been facing predictions of an impending demise. In 2018 alone, analysts have written Bitcoin’s “obituary” on numerous occasions. We believe that cryptocurrencies will bounce back in 2019, and will again catch investor’s attention.
Nevertheless, the recovery for cryptos will be a slow and gradual process. Unlike before, investors will wait for possibility to become a reality before pushing prices higher. Hence, institutional activity, regulations, and wider adoption will be some of the triggers that will be closely watched.
In the short-term, Morgan Creek Digital Assets founder Anthony Pompliano expects Bitcoin to break below $3,000. But what do the charts project? Let’s find out.
BTC/USD
Bitcoin turned down from the overhead resistance of $4,255 on Dec. 24 and has broken below the 20-day EMA. It is currently trying to stay above the support at $3787.33. The price is stuck between $4,255 and $3,787.33. A breakdown of the support will weaken the pullback and will increase the probability of a retest of the lows.
Conversely, if the price holds $3,787.33, it will again attempt to breakout of $4,255. If successful, the recovery can extend to $4,914.11 with a minor resistance at the 50-day SMA.
The 50-day SMA is still sloping down and the RSI has also dipped back into the negative territory. This shows that the bears are trying to regain their hold over the BTC/USD pair. If either level of the current range does not break, we can expect a few more days of consolidation.
There is an outside chance of an inverted head and shoulders pattern if the virtual currency breaks out and closes (UTC time frame) above the neckline. Such a breakout has a pattern target of close to $5,500.
We can confirm a bottom if the current dip forms a higher low and the next rally makes a higher high. The next few days are critical for the leading cryptocurrency.
XRP/USD
Ripple could not sustain above the $0.40 level. Profit booking has pushed prices back below $0.40 and the 50-day SMA.
If the XRP/USD pair rebounds from the 20-day EMA, it will again attempt to breakout of $0.40. If successful, it can rise close to the resistance line of the downtrending channel. The traders can hold their long positions with stops at the break-even point.
A break below the 20-day EMA and $0.33108 will weaken the pullback and plunge the digital currency back to the support line of the channel. The price action of the next 3–4 days will give us a better idea of what to expect.
ETH/USD
Ethereum turned down from close to $167.32 on Dec. 24 as we had expected. Currently, the bulls are trying to hold the 50-day SMA. If successful, we anticipate another attempt to breakout of $167.32.
On the other hand, if the ETH/USD pair fails to hold the 50-day SMA, it can slide to the 20-day EMA. If the support holds, we expect the digital currency to enter into a consolidation.
Our neutral to bullish view will be negated if the bears sink the price below $100. Any break below $83 will resume the downtrend.
BCH/USD
After its scintillating run, short-term traders booked profits in Bitcoin Cash close to the 50-day SMA. Currently, the bulls are trying to bounce off the 20-day EMA but are not finding buyers at higher levels.
The 20-day EMA is flat and the RSI is close to the 50. This points to a probable consolidation in the near term. This view will prove to be wrong if the bears sink the BCH/USD pair below the 20-day EMA. The next support on the downside is $100.
If the bulls bounce off the 20-day EMA and break out of $239, the digital currency will resume its recovery and can reach $262.43 and $307.01. If the price turns down from $239, a consolidation will ensue. We shall get a better picture within the next 3–4 days. Traders who have any partial positions left should continue to trail their stops.
EOS/USD
The recovery in EOS hit a major roadblock at the 50-day SMA. Currently, the bulls are attempting to hold the 20-day EMA. Below this level the next major support is $2.4050.
If one of these supports hold, we can expect another attempt to break out of the 50-day SMA. However, if the bears sink the EOS/USD pair below the supports, it can retest the lows.
The 20-day EMA is flat and the RSI is close to neutral territory. Hence, we anticipate a consolidation for a few days. Our view will be invalidated if the digital currency plummets below $2.
XLM/USD
As the bulls could not sustain the breakout of the 20-day EMA and $0.13427050, Stellar has again dipped back below the 20-day EMA.
If the XLM/USD pair does not climb back above $0.13427050 quickly, it can slip back to the Dec. 15 low. A breakdown of $0.09285498 will resume the downtrend. The digital currency continues to be an underperformer; hence, we remain neutral on it. We shall wait for the price to sustain above the 20-day EMA and a new buy setup to form before suggesting any trade in it.
LTC/USD
Litecoin could not breakout of the overhead resistance at $36.428 on Dec. 24, which started a pullback. The bulls are currently attempting to hold the support at $29.349. If successful, it might result in an inverse head and shoulders pattern that will complete on a breakout and close above $36.428. The pattern target of this breakout is $49.756.
However, if the bulls fail to defend $29.349, the pattern will be invalidated and the LTC/USD pair can again sink to the recent lows of $23.10. Any violation of the lows will resume the downtrend. We suggest traders wait for the completion of the inverse head and shoulders pattern before initiating any fresh positions.
BSV/USD
After failing to breakout of the top of the $123.98 and $80.352 range on Dec. 20 and 21, Bitcoin SV is likely to drop to the bottom of the range.
If the BSV/USD pair breaks down of $80.352, it can slide to the next support at $65.031. Any break of this level will result in a dip to the low of $38.528.
However, if support at $80.352 is held, we expect the consolidation to extend for a few more days. We shall watch the price action at the support and then suggest any fresh positions.
Contrary to our opinion, if the digital currency turns around from the current level and breaks out of the range, it can move up to $167.608. Therefore, we retain our buy recommendation on a close above $123.98.
TRX/USD
The current pullback stalled just below $0.025 on Dec. 24. TRON is finding buying support close to the strong support at $0.0183, which is a bullish sign.
The moving averages have completed a bullish crossover. We anticipate a strong support at the 20-day EMA. After the recent pullback, the TRX/USD pair might consolidate between the 20-day EMA and $0.025 for a few days. We shall watch the price action at $0.0183 and then take a call, as we do not find any buy setups at the current levels. If the 20-day EMA breaks down, the digital currency will weaken and again slide to the $0.0125 level.
ADA/USD
Cardano turned down from $0.051468 on Dec. 24. We were expecting a pullback and as such, had recommended trailing with a close stop loss.
Currently, the ADA/USD pair is finding support at the 20-day EMA, which is a bullish sign. However, if the bulls fail to bounce off this support quickly, it is likely to give way. The next support on the downside is $0.033065. We expect either one of the above supports to hold.
The 20-day EMA is flat but the 50-day SMA continues to slope down. This implies that the long-term trend is still down but the short-term trend is pointing towards a consolidation. We shall get a clearer picture within the next couple of days. A breakdown below the Dec. 7 low will invalidate our bullish assumption.
Market data is provided by the HitBTC exchange. Charts for analysis are provided by TradingView.