The views and opinions expressed here are solely those of authors/contributors and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk; you should conduct your own research when making a decision.
Back in June this year, everyone was talking about the flippening, an event where Ethereum’s market capitalization overtakes that of Bitcoin. However, fast forward two months we find that Bitcoin has extended its lead over Ethereum by a huge margin. While Bitcoin’s market capitalization is about $66 bln, Ethereum is far behind at approximately $27 bln.
Usually, a rising tide lifts all boats, which is not happening now. Only Bitcoin is marching ahead, leaving the rest behind. This divergence between the top currencies is unlikely to continue for a long time. Soon, either Ethereum and the others will play catch up, or Bitcoin will correct.
Let’s see, what is more likely to happen.
Today, after reaching a high of $4,434.42 and trapping aggressive bulls, Bitcoin reversed direction and is in free fall.
It is a normal correction, which had been expected. Now, to what point can Bitcoin fall?
It is trading within the channel. The price has returned from the upper end of the channel resistance. Its next target on the downside is close to the $3,600 levels, where it should find some support. However, if $3,600 breaks, the fall can extend to the $3,000 levels, which should be a major support.
Therefore, traders should not be in a hurry to enter long positions until a strong support is visible either at $3,600 or at $3,000.
Ethereum is slowly correcting towards $270 where it has support from the trend line and the 20-day exponential moving average (EMA). We expect to see a bounce from the support levels.
Therefore, traders can watch for about three to four hours and go long near the trend line if the support holds and buying is visible. A close stop loss is advisable because if the support level breaks, Ethereum can fall to $215 levels.
However, if the price turns around and rallies from the current levels, traders can go long above $330 and keep a stop loss below the recent lows with a target objective of $400. It is better to wait for the breakout to reach about three percent above the overhead resistance, therefore, instead of going long at $324, we have suggested going long at $330.
NEM has strong support at $0.00004749 levels that have not been broken since the first week of May. It looks like aggressive traders can go long on NEM close to the support levels with a stop loss at $0.00004700.
However, let’s see if we can fine tune our entry point. For timing our entry, we shall look at the hourly chart.
NEM has seen a waterfall decline from about $0.00008500 to $0.00004850 levels. Currently, the price is below the downtrend line and the 50-period simple moving average. Traders can go long, once price trades above $0.00006000 levels with a target of $0.000073, which is the 61.8 percent Fibonacci retracement level of the recent fall.
However, this is a risky trade as we are buying in a strong downtrend. Therefore, it might be a good idea to keep the positions small.
Bitcoin Cash did break out of the downtrend line, but only for a short period of time. Sellers used the rally to initiate short positions. Presently, the bulls are defending the $290 levels. Any break below this can see a fall to the next support level of $265.
Therefore, traders should wait for a fall to lower levels to initiate long positions. If, however, the price turns around and rallies, traders can wait for two confirm closes on the 240-minute bars above the downtrend line and then go long keeping the recent lows as a stop loss.
Follow us on Facebook