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The market data is provided by the HitBTC exchange.
The total crypto market capitalization has grown by about $30 billion in 15 days. This shows that the market is rebounding from its lows. Failure of the bears to break below the $5,900 mark in Bitcoin in the past few days has encouraged some buying by the bulls.
Various investment firms are launching new products in a bid to attract institutional players. This confirms demand from the larger market participants. However, it is too early to announce the start of a new trend.
Last time, the bulls were too eager to call a bottom and proclaim the end of this bear phase, but cryptocurrencies quickly gave up all their gains and plunged to new lows.
During the decline, Bitcoin managed to sustain above its critical lows, but most of the top altcoins broke below their support levels and made new year-to-date lows. Therefore, we want to wait and watch for the next few days before proclaiming the start of a new uptrend.
Bitcoin broke out of the 50-day SMA on August 28, which is a positive sign. However, the question now is: can the bulls sustain above the 50-day SMA? If the bears sink the price and keep it below $6,955.79, the current breakout can be considered a bull trap. The critical support on the downside is the 20-day EMA.
The next couple of days are critical as they will give us a better idea of whether the bottom is in place or this is just a dead cat bounce.
If the BTC/USD pair sustains above the 50-day SMA, out next target is a rally back to $8,566. However, it is unlikely to be a straight dash.
The pullback will face resistance at $7,198.3, which is the 50 percent Fibonacci retracement of the decline from $8,496.53 to $5,900.06. Above this, the next resistance is at $7,504.68, which is the 61.8 percent retracement.
Traders can hold their long positions with the suggested stop loss. We shall book partial profits and trail the stops higher if the pair moves up. We should get a better clarity within the next couple of days.
Ethereum is not participating in the current pullback. It has not even risen above the 20-day EMA, which shows that the buyers are not keen to jump on it.
The 20-day EMA is flattening out but the 50-day SMA is still sloping down. The trend will remain a downward one for as long as the ETH/USD pair keeps trading below the downtrend line and the 50-day SMA.
We shall wait for the cryptocurrency to form a reliable buy setup before suggesting any trades on it.
Ripple has broken out of the 20-day EMA, but is facing resistance at the downtrend line 2. The 20-day EMA has turned flat but the 50-day SMA is still sloping down.
Above the downtrend line 2, the XRP/USD pair is likely to face a stiff resistance at the 50-day SMA. If the bulls break out of the 50-day SMA, the pullback can extend to $0.5. The short-term traders can stay on the long side, but the positional traders should wait for the trend to change before initiating any long positions.
If the bears can defend the 50-day SMA, the virtual currency can remain stuck inside the range of $0.3–$0.4 for a few more days.
Bitcoin Cash has pulled back to the 20-day EMA but the recovery lacks momentum. The buying has been weak and is likely to face resistance at the $600 mark. Both moving averages are still sloping down, which shows that the sellers are still in command.
The BCH/USD pair will pick up momentum if it scales above the downtrend line and the 50-day SMA. If the bulls sustain above the 50-day SMA, the rally can extend to $900.
On the other hand, if the bears fail to break out of $600, the cryptocurrency can remain range bound between $500 and $600.
EOS broke out of the 20-day EMA and the overhead resistance at $5.65 on August 28. It has extended its pullback and is close to the 50-day SMA, which might act as a stiff resistance.
The EOS/USD pair has not broken out of the 50-day SMA since June 10. Therefore, if the bulls can sustain above this level, it will indicate a probable change in trend.
The traders can initiate a long position on a close (UTC time frame) above the 50-day SMA with a stop loss of $4. The targets on the upside are $9 and $11.5.
Our bullish view will be invalidated if the virtual currency turns down from the 50-day SMA.
We have been bullish on Stellar for the past few days because it has held above the year-to-date lows in the recent downswing. As it has not broken down of $0.184, it still remains inside the large range of $0.184–$0.47766719.
The 20-day EMA and the 50-day SMA both have turned flat as the digital currency has been stuck inside a tight range of $0.184–$0.24987525 since August 5.
The trend will change when the XLM/USD pair breaks out of the range. Though…