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After a bumper 2017, the cryptocurrency market is attracting new traders who wish to make a fortune in short time. While this is a bullish development, it is also fraught with risk. Most newbies entering the markets believe that it is a ‘get rich quick’ scheme.
However, a majority will end up investing in coins that are likely to vanish from the scene in a few years. Too many inexperienced traders willing to buy at any price can lead to a bubble, which will end with a sharp downturn that does not bounce back quickly.
Hope, we are smart enough to identify the bear market beforehand and emerge with minimum losses. Traders should always keep an eye on the risk so that they can last in this business for the long-term.
Bitcoin could not sustain above $17,000 levels, which encouraged profit booking and selling at the higher levels. It has broken below the 20-day EMA and the trendline support, hitting our trailing stop loss at $15,000.
Therefore, if the bears succeed in sustaining below the 50-day SMA, it will indicate weakness.
The head and shoulders pattern is still intact and if the price breaks below the neckline, traders should brace themselves for lower levels, even below $10,000.
Our bearish view will be invalidated if the BTC/USD pair takes support and turns around from any of the above-mentioned support levels and breaks out of $17,200 levels.
Ethereum broke out of the ascending channel yesterday, Jan. 7, and rose to $1,191 levels, where it witnessed profit booking. We had mentioned $1,200 as one of the possible targets in our previous analysis. If bulls manage to break out of $1,200, the next target on the upside is $1,310, which is arrived at by adding the width of the channel to the breakout point of the channel.
If the bulls fail to propel the ETH/USD pair back above the channel quickly, we most likely see a fall to $820, which is the trendline support of the channel increase.
Bitcoin Cash could not break out of the $2,800 levels yesterday, Jan. 7. As a result, it has now formed a range between $2,291 and $2,770.6933.
But if the range breaks down, it is likely to attract further selling, which can sink the BCH/USD pair to the 50-day SMA, close to $2,000.
For the past three days, Ripple has been trading inside the large range formed on Jan. 5. The support on the downside is between $2.13492, the 38.2 percent Fibonacci retracement level, and $2.15777, the low on Jan. 5.
It’ll prove to be wrong if the price breaks out to new lifetime highs.
Our current suggested stop loss is at $2.85. Although considering the weakness in Bitcoin and most other top currencies, we recommend raising our stop loss to $3.5.
We shall initiate long positions again when the IOTA/USD pair falls to the bottom of the range at $3.032.
The attempts by the bulls to resume the uptrend in Litecoin hit a wall on Jan. 6, at $307.992.
A breakout from the triangle and the overhead resistance at $307.992 is likely to resume the uptrend in the cryptocurrency.
On the other hand, a breakdown from the triangle will be bearish, which can result in a sharp fall if the price breaks below $175.199.
As long as the LTC/USD pair trades inside the triangle, it is likely to remain volatile and trendless.
On the upside, the bulls will face a stiff resistance between $1.9 and the lifetime highs.
After the large range day on Jan. 5, Cardano remained in a small range on Jan. 6 and Jan.7.
However, if the ADA/BTC pair holds the support levels, we may see another attempt to resume the uptrend. Any long positions should only be initiated once the price breaks out of 0.00006655.
The market data is provided by TradingView.