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The cryptocurrency universe has divided experts right in the middle. While one group says that digital currencies are in a bubble, the other group says this is only the start of a multi-year trend.
While it’s good to know others’ perspectives, we shall focus on the chart and chart patterns to forecast the next probable direction. The markets may move against our assumption several times, therefore we always advise a stop loss, because the first loss is the best loss.
So, let’s get down to analyzing charts.
On Aug. 15, we expected the fall in Bitcoin to push it towards the lower end of the channel. However, the digital currency rose from the trendline, which now becomes a critical support.
For the past six days, Bitcoin has been closing above the $4000 levels, which is a sign of strength. A breakout and close above the upper end of the channel will be very bullish, which will give it a pattern target of $5500. However, $4630 and $5000 are likely to act as resistances during the next upmove.
Our bullish forecast will be invalidated once Bitcoin breaks and closes below the trendline support. It will then turn the short-term picture negative, where the digital currency can fall to the lower end of the channel.
The last two weekends have been bullish for Bitcoin, marked as arrows on the chart. Let’s see if the digital currency can make it three in a row.
Ethereum has performed according to our forecast. It fell to the 20-day exponential moving average (EMA) where it found support. Traders who entered close to $270 levels on our recommendation should trail their stop loss and book profits above $320 levels, as this has been a strong resistance for the past several days.
Fresh positions can be initiated at $330, which will confirm a breakout above the resistance. The initial stop loss for the new trade should be kept at $280, just below the trendline support and the 20-day EMA. The breakout can carry the digital currency to $381 and thereafter to $400 levels.
Our bullish view will be negated once the price breaks down of the trendline support.
We had advised long positions on Bitcoin Cash following two closes above the downtrend trendline. This trade too proved to be profitable for our readers. Currently, the digital currency is in a pullback that is likely to be arrested at either $458 (38.2 percent Fibonacci retracement) or extend to $427 (50 percent Fibonacci retracement). Traders can watch for 240-minutes and buy, once the digital currency resumes its uptrend. The next target on the upside is $690.
If purchasing around $500 levels, please keep a stop loss of $420. However, if prices correct and the long position is initiated around $420 levels, please keep the stop loss at $390, because a pullback that falls below the 61.8 percent Fibonacci retracement levels usually retraces the whole rally completely.
Ripple continues to trade inside the bearish descending triangle pattern, which will complete on a breakdown and close below $0.135 levels. However, if the bearish pattern fails, it is a sign of strength. Therefore, we recommend a long position on a breakout and close above the downtrend line at around $0.2 levels. Until then, it is better to trade other cryptocurrencies that are trending.