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With the launch of Bitcoin derivatives contract by the CBOE, we can expect more high-profile investors to enter the fray. However, as some investors believe that cryptocurrencies are in a bubble, we might see large positions being built on both sides of the trade. Hence, volatility is likely to spike for a few days once derivatives trading starts.
Traders should, therefore, reduce their position size when the volatility increases. In the meanwhile, let’s see what do the charts forecast.
BTC/USD
While the bears had their opportunity to put brakes on the rally in Bitcoin, they could not capitalize on it. As a result, the uptrend remains intact and strong.
After consolidating for the past five days, Bitcoin has resumed its uptrend. The bears have one last chance to stall the rally at the resistance line of the channel; however, the chart pattern points to a likely breakout.
Though the negative divergence on the RSI is still intact, a breakout of the channel will invalidate the pattern, because the RSI will trend higher.
What are the targets that we can work with?
A few bears are likely to attempt to fade the breakout of the channel around the $8,750 mark. Above this, the next target is $9,000 and $9,969.13.
Our bullish view will be invalidated if the digital currency turns down from the channel resistance line and breaks below $7,400 levels. Until then, the uptrend in Bitcoin remains intact.
ETH/USD
Until last time, we had been showing a symmetrical triangle on the charts. This week, we have drawn an ascending triangle pattern. This is just to show that the charts are dynamic in nature and formations keep developing in real time.
Our readers are sitting on huge gains, as they had entered long positions way lower at $315. Corresponding to my philosophy of taking profits at critical resistances, we have already booked profits on 50 percent of our original purchase. For the remaining position, should we book profits at the current levels or will Ethereum rally further?
The pattern target from the breakout of the ascending triangle pattern is $652.
However, it is unlikely to be a straight dash to these levels. We should see a pullback towards the $420 levels in the next few days.
Therefore, I would recommend booking another 50 percent profits at the current levels and hold the remaining positions with stops at $390. I will raise the stops on the existing positions again within the next few days.
BCH/USD
After the correction, Bitcoin Cash has resumed its uptrend and our traders must be carrying long positions from $1,360 levels, as advised in the previous analysis.
Presently, the digital currency is in a pullback, having reached close to the 50 percent Fibonacci retracement levels of the fall from $2,800 to $854.3135. If Bitcoin Cash holds the critical support level of $1,507, it will indicate strength.
The ensuing rally is likely to breakout of $1,827 and move up to $2,056 levels, which is the 61.8 percent Fibonacci retracement levels.
On the other hand, if the support at $1,507 fails, the digital currency is likely to fall back into the range. As I don’t believe in carrying huge risk, I recommend raising the stops to breakeven.
XRP/USD
Ripple has been a huge disappointment. It has not gained momentum even after breaking out of critical resistance levels. I hold long positions in the digital currency initiated back on Nov. 16 at $0.22713. Should we hold or fold our positions?
The moving averages have completed a bullish crossover, with the 20-day EMA moving above the 50-day SMA. This is a bullish sign.
Additionally, the digital currency has not given up its gains. The uptrend is likely to gain momentum once Ripple sustains above $0.245 levels.
Nevertheless, as always, I want to limit my risk. So, I suggest raising the SL from $0.17 to $0.2 levels. I do not want to stick with the trade if it falls back into the range and below the downtrend line once again.
My target on the upside remains $0.3, where the traders can book 50 percent profits. The remaining position should be held with a trailing stop loss.
LTC/USD
Litecoin has been nudged into the sixth position by Dash. Will the digital currency rally from the current levels and regain back its position?
I’m holding long positions in Litecoin from the $60.4 levels. The digital currency has gained momentum after breaking out of the resistance at $72.
However, we may see another two to three days of consolidation at the current levels, as this is the final resistance before the virtual currency can challenge the lifetime highs.
I, therefore, recommend holding the positions with stop loss at $70. If Litecoin fails to breakout of $84 within two days, please book partial profits and raise the stop loss on the remaining position.
DASH/USD
Dash has found a place in our analysis based on its stupendous run, which has propelled its market capitalization to just under $4.8 bln, making it the fifth largest coin by market capitalization.
Any cryptocurrency that makes a new high and sustains it denotes strength.
Dash broke out to new highs on Nov. 12. Thereafter, it successfully completed a retest of the breakout levels at $415. Subsequent rally again made a new lifetime high. After a two-day correction, the digital currency has resumed its rally today.
Its immediate target is $650, above which a move to $729.8 is also possible. Our bullish view will be invalidated if the digital currency breaks down to the $547 levels.
As the risk to reward ratio is not attractive, I don’t recommend a fresh trade at the current levels at the moment. However, traders with existing positions can manage their trade using the above-mentioned support and target levels.
* BTC/USD, ETH/USD, LTC/USD and BCH/USD market data is provided by the HitBTC exchange.