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Latest trading review on the most popular cryptocurrencies.
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Research shows that big institutional money is currently staying out of Bitcoin. Should this worry us or keep us from trading cryptocurrencies? We don’t think so.
If one were to look back in time and check, very few investors saw the potential in Amazon and invested in it. Most kept calling it a bubble.
Major disruptions are not easy to understand and accept. Historical comparisons and metrics fail while judging these new concepts. Therefore, most traditional investors and money managers lose out on a great opportunity.
Currently, most big names in the investment industry are in denial about the rise and popularity of cryptocurrencies. They are just praying for a crash to say, ‘See, I told you so’.
The main complaint is that cryptocurrencies are very volatile. Well, with proper planning, we can certainly keep our risk under control, as we do here.
Let’s see, if we can find an opportunity to make money this week.
After days of rally, gravity is finally catching up with Bitcoin. So, is this dip a buying opportunity or can it fall further?
We were correct in avoiding a long position in Bitcoin around the $6000 mark. Though intraday the digital currency broke out of the ascending channel, it could not close above it.
Currently, the cryptocurrency is finding support just above $5500 levels. If the fall continues, Bitcoin can correct to the 20-day exponential moving average (EMA), which presently lies at $5359. The trendline support is also close to this level. Therefore, we expect the digital currency to bounce from this support zone of $5350 to $5500.
On the upside, the resistance line of the ascending channel will act as a major hurdle. A breakout of this will clear the path for a bigger rally.
However, the RSI is forming a negative divergence. The previous two negative divergences were followed by a sharp drop in prices. Additionally, we don’t find a reliable buy set up with a good risk to reward ratio.
Therefore, we don’t recommend any trade on Bitcoin.
We were expecting Ethereum to hold its support zone of $275 to $286, but it looks like the cryptocurrency has other plans.
When zoomed out, we find that Ethereum has formed a large equilateral triangle pattern. We can draw the trendline support in two ways (both drawn on the chart).
The first level of support is at $275, where we find both the trendline support and the horizontal support. We still believe that the cryptocurrency will attempt to hold this level. However, if this level breaks, the next lower support is in the zone of $252 to $240.
We believe that buying should emerge at these critical levels. We shall wait for clear signs of a bottom formation before recommending any trade.
Bitcoin Cash attempted a rally yesterday, however, it could not breakout of the 20-day EMA. After the failed attempt, the cryptocurrency is again down today.
While the bullishness of Bitcoin did not rub off on Bitcoin Cash, the bearishness certainly seems to be having its effect. The cryptocurrency is falling towards the lows of the range.
Though the digital currency has not broken below this low since Aug. 11, the pattern is looking weak. Chances are that Bitcoin Cash will fall below $282.
If the lower levels sustain for a day or two, then the fall will extend to $200 levels. Either way, we don’t see any buy set up until the cryptocurrency breaks out of $400. Therefore, we do not suggest any trade on it at the current levels.
Once Ripple broke below $0.2 levels, the fall gained momentum. The cryptocurrency seems to be in a hurry to sink to the $0.15 levels.
Now, the cryptocurrency is likely to fall to $0.166, where we expect some buying to emerge. However, the slide is likely to continue, and Ripple is likely to fall to $0.15 levels. While in our previous analysis we had recommended a buy at the $0.145 levels, we now believe that it is better to wait for a day or two and then take a position. Therefore, we are withdrawing our buy call on Ripple.
We prefer to wait and watch the price action at the support levels before buying it. We shall not buy until the cryptocurrency stops falling and indicates that it is ready to move higher.
Litecoin did not trigger our buy levels, recommended in the previous analysis on Oct. 21. As a result, we don’t have any positions on it.
The digital currency could not hold on to the $57.7 support level. It is back into the range of $44 to $57.7.
It has support at $50, below which it will fall to the lower end of the range at $44. Though the cryptocurrency had taken support at $44 earlier, we shall not buy right away. We shall wait for a day or two and buy Litecoin when it confirms a bottom.
The first signs of bullishness will be when the digital currency breaks out of the downtrend line and rallies above $58 levels. Until then, all pullbacks are likely to be sold into.
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