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However, we believe that a 30 percent fall after such a stupendous rally this year should not come as a surprise. There have been many such corrections in Bitcoin’s journey to $5,000 and investors who had the stomach to sit through it have been rewarded handsomely.
Nevertheless, it’s difficult for many to digest this volatility and they prefer to trade the short-term swings. For such traders, we provide critical levels that can be kept in mind while initiating a trade. Let’s see the latest recommendations.
After the sharp fall, Bitcoin’s recovery hit a roadblock around the 50 percent Fibonacci retracement level of the fall from $4,975 to $2,974. Additionally, the downtrend line has offered resistance twice. Therefore, it also becomes a strong resistance point.
So, how far can the cryptocurrency fall?
Bitcoin has a strong support at $3,500 levels, from where it has risen on Sept. 16 and 17. If this level breaks, then the final support is at $3,409, which is the 61.8 percent Fibonacci retracement of the pullback from $2,974 to $4,113.15. Below this level, the digital currency is likely to retest the lows at $2,974.
Bitcoin is volatile. It turns around in a jiffy. What are the levels to watch out for if it turns around?
The first bullish sign is a breakout and closes above the downtrend line. This is where the aggressive traders should initiate long positions. However, this is a risky trade, therefore, please keep the allocation size small. Long positions can be added once Bitcoin breaks out and closes above $4,113.15.
Traders should refrain from buying on dips because a breakdown below $2,974 will be very bearish.
First signs of a recovery will be when the digital currency breaks out and closes above the downtrend line. Nevertheless, the rally is likely to face resistance from the 20-day EMA and the 50-day SMA.
Ethereum is likely to gain strength only above $312 levels. Therefore, traders should wait for a breakout above $312 to initiate any long positions.
We were correct in predicting a fall to $400 levels on Bitcoin Cash if it failed to breakout of the downtrend line. Now, if it breaks below the $400 support, it can fall to $357 and thereafter to $300 levels.
Ripple is likely to retest the lows at $0.15000 once again. Any recovery is likely to face resistance at the $0.19300 and the $0.20000 levels.
Litecoin is in a strong downtrend. If it doesn’t find support at $45, which is the 50 percent Fibonacci retracement of the pullback from $32.681 to $57.729, it is likely to fall to $42 and after that to $38 levels.