Bitcoin is facing profit booking at higher levels. Is this a warning sign of an impending correction? Let’s study the charts.
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Market data is provided by the HitBTC exchange.
CEO of BitMEX Arthur Hayes believes that Facebook’s Libra could make central and commercial banks irrelevant. It will be interesting to note whether this will force the commercial banks to walk down the crypto path. Investment banking giant Goldman Sachs certainly seems to be taking the first step. It has advertised a position for Digital Asset Project Manager, which points to the bank’s intention to pursue digital asset development.
Responding to a query on Twitter, the European Central Bank said that Bitcoin is “not a currency.” It termed Bitcoin as a volatile asset and denied that it had any plans to add it in its reserves.
However, fund managers and investors view Bitcoin differently. Chamath Palihapitiya, CEO of VC firm Social Capital believes that the leading digital currency is the best hedge against the traditional financial system. With risks of a recession rising, will Bitcoin continue its march northward? Let’s analyze the charts.
BTC/USD
Bitcoin (BTC) easily broke out of the $12,000–$12,500 resistance zone earlier today but did not manage to sustain above it. This shows profit booking at higher levels. If bulls fail to return the price above the resistance zone, the cryptocurrency might enter into a range.
Both the moving averages are sloping up and the RSI is close to the overbought level, which suggests that bulls have the upper hand. If the BTC/USD pair slips below $12,000, the first support on the downside is at 20-day EMA. If the pair bounces off this support, the bulls will again attempt to rise above the recent highs of $13,973.50. Above this level, the target to watch is $16,249.42.
Contrary to our assumption, if the pair breaks down of the 20-day EMA, a drop to the recent low of $9,727.55 is possible. The trend will turn down on a break below this support.
ETH/USD
Ether (ETH) faced resistance close to $320.840 before heading south. The failure to propel the price above the overhead resistance resulted in profit booking. The bears have broken down of 20-day EMA and the price is likely to drop to the support at 50-day SMA.
A breakdown of the 50-day SMA will signal weakness because the ETH/USD pair has not broken below this support since February 18. Below $270, the correction can extend to $226.538.
Both the moving averages are flattening out, which points to range-bound trading in the near term. If the pair bounces off the 50-day SMA, it can consolidate between $270 and $320.840. We withdraw our buy recommendation given in the previous analysis. We will wait for the price to sustain above $320.840 before suggesting a trade once again.
XRP/USD
Ripple (XRP) turned down from the 20-day EMA on July 9 and has plummeted below the first support of $0.37835. The bulls are currently attempting to defend the support at $0.35660. A breakdown and close (UTC time frame) below this support will indicate weakness and can result in a fall to $0.27795, which is a negative sign. The 20-day EMA is sloping down and the RSI is in negative territory, which shows that bears are in command.
However, if the XRP/USD pair rebounds from $0.35660, it can move up to the moving averages. A breakout of $0.415 can propel it to the critical resistance of $0.45. The pair has repeatedly failed to break out of $0.45. Therefore, we will wait for it to sustain above $0.45 before turning positive.
BCH/USD
Our buy recommendation in Bitcoin Cash (BCH) did not trigger as it could not close (UTC time frame) above $423. The price has turned down from the moving averages and is at the support line of the channel. This is a critical support below which the trend will turn in favor of bears.
If the BCH/USD pair breaks down and closes (UTC time frame) below the support line of the channel, it can fall to $280. Both the moving averages are close to completing a bearish crossover, which suggests that bears are back in the game.
Contrary to our assumption, if the bulls defend the support line of the channel, the pair might move up to the moving averages, above which a rally to $450 is probable. We will watch the price action closer to the support line of the channel before proposing a trade in it.
LTC/USD
Litecoin (LTC) turned down from the 20-day EMA on July 9 and has plunged below the support at $111.8994. This is a negative sign. It now can correct to the support line of the ascending channel, which is the critical support to watch out for. The moving averages are close to completing a bearish crossover, which indicates that bears have the upper hand. A breakdown of the channel can drag the price to the $66–$71 support zone.
However, if the LTC/USD pair holds above the support line of the ascending channel, the bulls will attempt to push it above the previous support-turned-resistance of $111.8994. If successful, it can move up to the moving averages where it is likely to face resistance. The pair will indicate strength if it sustains above the 20-day EMA. We will watch the price action at the support line of the channel before recommending a trade in it.
EOS/USD
The failure of EOS to rise above the 20-day EMA has attracted selling. It has resulted in a breakdown of the immediate support at $5.550, which is a bearish sign. The next support on the downside is $4.4930. We anticipate strong buying in $4.4930–$3.8723 zone.
The 20-day EMA is sloping down and the RSI continues to trade in the negative territory, which shows that bears have the upper hand. Any pullback will find stiff resistance at the 20-day EMA. We will wait for the correction to end and for a new buy setup to form before suggesting a trade in the EOS/USD pair.
BNB/USD
Our buy suggested for Binance Coin (BNB) in our previous analysis did not trigger as the price turned down from $34.2918 on July 8. The bears will now attempt to sink the price back to the critical support of $28.7168. The uptrend line is just below it, hence, we expect buyers to step in close to the support.
However, if the BNB/USD pair plummets below the uptrend line, it will signal weakness and a change in trend. The next support on the downside is closer to $20. Both the moving averages are on the verge of completing a bearish crossover, which is a negative sign. The pair has been one of the strongest among major cryptocurrencies as it has repeatedly made new lifetime highs. When the leader starts showing weakness, it does not bode well for the rest of the pack.
BSV/USD
Bitcoin SV (BSV) rose above 20-day EMA on July 9 but bulls could not sustain the higher levels, which shows lack of buying interest. The 20-day EMA is flat and the RSI is in the negative zone. This points to a range-bound action in the near term.
The balance will tilt in favor of bears if the BSV/USD pair slumps below the support of $172.910. The next support on the downside is way lower at $134.360. However, if the bulls defend the support at $134.360, the pair might attempt to scale above the moving averages and remain in a range. We will watch the price action at $172.910 and then make a call. Until then, we remain neutral on the cryptocurrency.
TRX/USD
The pullback above the 20-day EMA hit a wall close to $0.03550 on July 7 and 8 and turned down from there. For the past two days, bulls attempted to keep Tron (TRX) above the 20-day EMA but a failure to secure a strong bounce attracted selling.
The next support on the downside is at $0.030 below which the fall can extend to the trendline of the ascending channel. The TRX/USD pair has been trading inside the channel since end-November last year, hence, we anticipate strong support at the trendline of the channel. We will wait for the price to rebound off the support before suggesting a long position.
ADA/USD
The pullback attempt in Cardano (ADA) fizzled out just below the 20-day EMA on July 8. Currently, the price has nearly broken down of the $0.077–$0.073 support zone. The next support on the downside is at $0.06. The 20-day EMA is sloping down and the RSI is in the negative zone, which shows that bears have the upper hand.
The failure of bulls to defend the support zone indicates weakness. If the next support at $0.060 also cracks, the ADA/USD pair might give up a large part of its recent gains. However, if the bulls defend the support at $0.060, the pair might consolidate in a large range for a few days. We will wait for the price to stop falling and a new buy setup to form before proposing a trade in it.
Market data is provided by the HitBTC exchange.
