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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.
BTC/USD
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.
ETH/USD
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.
XRP/USD
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.
BCH/USD
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/USD
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.
XLM/USD
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 the up move can face resistance at the downtrend line, we have suggested a buy because a breakout after a long consolidation is likely to be strong enough to carry the pair to the $0.35 mark.
If the bulls fail to scale the overhead resistance, the range bound action might continue for a few more days.
LTC/USD
Litecoin has broken out of the 20-day EMA but is finding it difficult to sustain above the range. The pattern target of a breakout of the range is $75.32, but we anticipate the 50-day SMA and the downtrend line to act as a strong resistance on the upside.
Currently, the 20-day EMA has turned flat, but the 50-day SMA is still sloping down. As the LTC/USD pair has been in a strong downtrend, we believe traders should wait for it to change its trend before buying into.
If the bears push the prices back below the 20-day EMA, the virtual currency will continue to trade in the range.
ADA/USD
Cardano has broken out of the 20-day EMA but is facing resistance at the downtrend line. A break out of the $0.111843 levels has a pattern target of $0.14044 but if the bulls fail to break out of the overhead resistance, the digital currency will extend its stay inside the trading range of $0.083192–$0.111843.
While the 50-day SMA is still declining, the 20-day EMA has turned flat, which confirms that the near-term selling pressure has subsided.
The trend in the ADA/USD pair will change if it breaks out and sustains above the 50-day SMA. We shall wait for a new buy setup to form before proposing any trades on it.
IOTA/USD
IOTA has pulled back sharply in the past two days and has reached the 50-day SMA. The zone between the 50-day SMA and $0.9150 might act as a strong overhead resistance. Therefore, we suggest traders book partial profits on the long positions recommended in the previous analysis at $0.82.
We don’t want to book profits on the complete position because if the bulls succeed in breaking out of the strong overhead resistance, a rally to $1.24 is probable.
If the IOTA/USD pair turns down from the current levels, the zone between $0.5750 to the 20-day EMA might act as a strong support.
XMR/USD
Monero broke out of the 20-day EMA on August 27 but is currently facing resistance from the horizontal line at $109.22. Even if the bulls scale this level, the 50-day SMA and the long-term downtrend line will invite selling.
The first sign of a change in trend will be when the bulls scale above the downtrend line because the XMR/USD pair has turned down from this resistance on three occasions.
We suggest traders buy a small position on a close above the long-term downtrend line. We don’t recommend to use more than 30 percent of the usual allocation because the pair might spend some time in a range, forming a bottom before embarking on an uptrend.
The initial stop loss can be kept at $90, which is just below the 20-day EMA. The first target on the upside is a rally to $150.
Our bullish view will be negated if the bears push prices below the 20-day EMA. In such a case, the consolidation is likely to continue for a few more days.
The market data is provided by the HitBTC exchange. The charts for the analysis are provided by TradingView.
