The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Market data is provided by the HitBTC exchange.
In December of last year, market participants were rejoicing as cryptocurrencies led by Bitcoin were soaring. The leading digital currency reached a high of close to $20,000 on Dec. 17 and investors were hoping for even higher levels.
A year later, after a massive bear market, the question in every investor’s mind is, can Bitcoin rise from the dead once again and stage a turnaround? While we believe that Bitcoin is closer to a bottom than ever, we do not expect a sharp rally from current levels. There is a huge overhang of positions that will liquidate when the virtual currency attempts a recovery. Hence, it will be a slow and laborious move higher.
Fundamental factors like actual utility, clear regulations and wider adoption of the technology will attract institutional investors who will drive the next leg up. All of this will require time and will not happen overnight. BitPay CEO Stephen Pair believes that it will take 3-5 years for blockchain-based currencies to be used in daily transactions. Therefore, investors should have a long-term horizon and not expect overnight riches.
Note: There is an opportunity for a short-term trade on a few cryptocurrencies. However, these are all countertrend trades because the trend on most of them is down. Therefore, traders should keep the position size small, about 30 percent of the usual and trade with a trailing stop to reduce the risk. They should take partial profits at resistances and trail the stops on the remaining positions to protect any paper profits. Long-term investors, however, can hold their positions.
Bitcoin is trying to pull back from the $3,500–$3,000 support zone. In this leg of the down move that started on Nov. 14, the pullbacks have not lasted more than three days. Hence, we remain cautious.
The downtrend line and the 20-day EMA are both placed at the same level. Therefore, we anticipate it to act as a major roadblock. If the bulls push prices above the 20-day EMA, the recovery can extend to $4,500 and above it to the $5,000 level. The major trend remains down. Therefore, we are not confirming a bottom yet. After the initial pullback, the next leg down will confirm whether the bottom is in place or if the BTC/USD pair has farther to go on the downside.
Our bullish view will be invalidated if the price turns down from the downtrend line and slumps below the Dec. 15 low of $3,236.09. Traders who are long can hold on to their positions. Depending on the performance at higher levels, we shall propose either adding or reducing the positions.
Ripple has again held the support line of the descending channel. It has bounced sharply and is likely to reach the 20-day EMA.
Above the 20-day EMA and $0.33108, the recovery can extend to the next overhead resistance of $0.40. We expect the bears to defend this level strongly. However, if the bulls scale $0.40, a move to the top of the channel at $0.50 is probable.
Our bullish view will be invalidated if the price turns down from the overhead resistance. In such a case, a fall to $0.24508 is probable. Traders can hold their long positions on the XRP/USD pair.
The current pullback in Ethereum can reach close to $102.50, which might act as a stiff resistance.
If the bulls sustain above the 20-day EMA, a move to $136.12 is possible. However, if the ETH/USD pair turns down from $102.50, it can slip back to $83. The 20-day EMA is showing signs of flattening out, which points to a consolidation. The RSI has also formed a positive divergence, which increases the probability of a recovery. Traders can wait for the digital currency to sustain above $103 to trade on the long side.
Stellar is attempting to recover after forming a new yearly low of $0.09285498 on Dec. 15. The pullback can reach the 20-day EMA, which is likely to offer a stiff resistance. If the bulls scale $0.13427050, the recovery can extend to $0.184, though we give it a very low probability of occurring.
There are no bullish patterns on the chart, barring the oversold condition of the RSI. Therefore, we have not suggested any trade on the XLM/USD pair. If the price fails to sustain the recovery, it can remain range bound for a few days. It will resume its downtrend below the Dec. 15 low.
EOS is attempting to pullback after a sharp fall. Though the main trend is down, a short-term recovery is probable. The bulls might face resistance at the 20-day EMA.
On breaking out of the 20-day EMA, the EOS/USD pair can pull back to $3.0510 and $3.5147 — 38.2 percent and 50 percent of the retracement levels of the down move from $5.4793–$1.55.
If the bears push prices down from the 20-day EMA, the virtual currency can remain range bound for a few days….