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The market data is provided by the HitBTC exchange.
Can Bitcoin witness a scorching rally in the remaining part of the year? Tom Lee, Head of Research at Fundstrat Global Advisors certainly thinks so and he has his reasons. He is still hopeful that the leading digital currency can reach $25,000 by the end of the year.
We, however, have maintained throughout that the people who are hoping for a repeat of the previous year’s rally will be disappointed. With a number of traders reeling under huge losses, it will take a lot of effort to turn sentiment around.
A trade war between the top two economies of the globe, or a currency crisis could certainly provide a big boost, but we believe that the recovery in cryptocurrencies will be gradual and will take time. A few of the top cryptocurrencies are showing signs of bottoming out.
Let’s find the ones that look good to lead the recovery higher.
Bitcoin is the only virtual currency among the top 10 that has been trading above the 20-day EMA for the past three days. On August 24, the price again broke out of the downtrend line of the descending triangle, which is a bullish sign. This shows that buyers are gradually returning at these levels. The 20-day EMA is slowly turning up while the 50-day SMA is flat.
The critical level to watch on the upside is $6,955.79. The 50-day SMA is also located close to this level. If this critical resistance is crossed, the BTC/USD pair will pick up momentum and move up to $8,566.40. If the bulls fail to scale the $7,000 level, the digital currency will spend some more time in a bottom formation. We suggest traders hold their long positions with a stipulated stop loss.
On the downside, the critical support zone to watch is $5,900–$6,000. If this breaks, lower levels of $5,450 and $5,000 will become a reality.
Ethereum has been trading close to the $280 level for the past seven days. In the last two days, the intraday range has shrunk sharply. This low volatility phase is unlikely to sustain for long.
Any pullback attempt on the upside will face a stiff resistance at the 20-day EMA and above that at the downtrend line. The ETH/USD pair will show signs of a change in trend if it sustains above $358.
We will wait for the price to break out of the 50-day SMA before suggesting a long position.
The range in Ripple has shrunk in the past three days. The market participants are interested in neither buying or selling at these levels. This state of equilibrium is unlikely to continue for long.
A breakout of the 20-day EMA is likely to carry the XRP/USD pair to the 50-day SMA at $0.40, with minor resistance at the downtrend line 2. Above the 50-day SMA, the downtrend line 1 is the next major resistance point. Short-term traders can piggyback on this pullback trade, but only with a smaller position size because the trend is still down.
On the downside, any break of the $0.30 line will result in a drop to the August 14 low of $0.24508. We will wait for a buy setup to form before recommending any positions.
Bitcoin Cash has been trading in a tight range of $513.60–$544.5476 for the past four days. Such a small range bound action is unlikely to continue for long.
The BCH/USD pair will either break out or breakdown sharply within this week. On the upside, once above the 20-day EMA, the downtrend line will act as a stiff resistance. Once the bulls scale above the downtrend line, a rally to $900 is probable.
If the bears break below the support zone of $473–$500, a retest of the $400 level will be in the cards. We will wait for the price to close (UTC time frame) above the downtrend line before suggesting any long positions.
The bulls have held EOS above $4.50 for the past 10 days, but have been unable to break out of the 20-day EMA.
The zone between the 20-day EMA and $5.65 might offer stiff resistance, above which a rally to the 50-day SMA is probable.
We will turn positive on the EOS/USD pair after the bulls close (UTC time frame) above the 50-day SMA. As an early entry point, we might suggest initiating a small position if the bulls break out of $5.65 with force. Until then, we suggest to stay on the sidelines.
Stellar continues to trade close to the bottom of the range. During the previous two instances, the consolidations ended with a breakout to the upside.
If the bulls succeed in breaking out of the current consolidation, a move to the downtrend line is probable. The up move will pick up momentum after breaking out of this resistance. The longer the XLM/USD pair remains inside the range, the stronger the breakout will be.
Therefore, we suggest initiating a long position at $0.25 if the price sustains the level for about four…