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A bullish rumor doing the rounds was that the Chinese ban on bitcoin trading is likely to be lifted. That news boosted Bitcoin’s price higher yesterday. However, a parting message by Huobi poured cold water on the expectations. As a result, Bitcoin prices are correcting from their highs.
While Warren Buffett, Jamie Dimon, and a few others are warning of a bubble in Bitcoin, the legendary investor Bill Miller is smiling away to the bank. His fund is up 70% this year. Miller had invested about 30% of his fund’s assets in Bitcoin in early-2016.
Elsewhere, a few central banks are trying to stifle the use of Bitcoin by banning it. Nevertheless, the beauty of cryptocurrencies is that they are not controlled by anyone. The market shall decide the value. Though the ban might make it difficult to use Bitcoin in the marketplace, it is unlikely to affect trading activity.
Bitcoin has rebounded sharply from the trendline support and is attempting to breakout of the ascending channel.
If the cryptocurrency fails to breakout and sustain above the resistance line of the ascending channel, it can again fall to the trendline support. It will become negative, only if it breaks down of the trendline support and the 20-day exponential moving average, which is at $5623.
Ethereum continues to trade in a range. It has still not been able to breakout of the overhead resistance at $315.
If the cryptocurrency breaks out of the resistance at $315, chances are that it will start a new uptrend. This time, we expect ethereum to breakout of $353 and head higher towards $366 levels. Therefore, we recommend a buy on Ethereum at $319 with a stop loss of $289.
Partial profits can be booked at $350 levels and the stop loss on the remaining position can be trailed higher.
On the other hand, if the digital currency fails to break out of the range, a fall to the trendline is likely. Ethereum will become negative if it breaks down and sustains below the trendline.
Therefore, we recommend a buy, only on a breakout.
Traders who initiated long positions on our recommendation would have earned a quick 22% return within a day. They would have entered at $422 and exit at the target objective of $518 on October 29.
We, however, don’t find any reliable buy set up at the current levels, which offers us a good risk to reward ratio. Therefore, we don’t recommend any long position at the current levels. We shall wait for a small consolidation to re-establish the positions.
Ripple has still not triggered our buy levels. It continues to trade in a tight range. The longer it trades in this range, the farther it will run when it starts a new uptrend or downtrend.
The breakout is likely to carry the digital currency to $0.23955 and $0.25311 levels, which are 50% and 61.8% Fibonacci retracement levels of the fall from $0.29699 to $0.18211.
Traders should raise their stops to breakeven once the cryptocurrency rallies to $0.23955. We suggest booking partial profits at $0.25311. The stop loss on the remaining position should be trailed higher.
If the breakout fails to sustain, ripple is likely to remain range bound for a few more days. It will become negative only on a breakdown below $0.18211.
We, now, recommend buying Litecoin at $59 with a stop loss of $53. Our profit objective remains $71, where we recommend booking 50% profits. The remaining position can be held with a trailing stop loss because if the digital currency breaks out of $71, it can rally to $82 levels.
However, if the cryptocurrency fails to breakout and sustain above the range, it can again fall towards the $51 levels.