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The market data is provided by the HitBTC exchange.
The total market capitalization of the crypto universe jumped from the $233 billion levels on June 29 to about $260 billion on June 30. That’s a jump of about 11.58 percent within a day. This shows that the cryptocurrencies still have the vigor and can recover sharply when the trend changes.
There have been many comparisons between Bitcoin’s plunge in 2014 to its current correction. However, we believe that the recovery will not be similar because four years back, the leading digital currency had little reach outside of its core supporters, whereas, in 2018, it is being covered extensively by the media.
Still, the influx of institutional money, whenever it happens, will be a major event and will cause a lot of upheavals in the price of different cryptocurrencies.
Mohamed El-Erian, a chief economic advisor at Allianz, wants to buy Bitcoin if it declines to $5,000 levels. This shows that the traditional investors are waiting to enter this space. Various analysts and investors have their own targets on how high can Bitcoin rise.
Arthur Hayes, the co-founder and CEO of BitMEX, believes that Bitcoin can rally to $50,000 levels by the end of the year. While we believe that it is too much to ask for that kind of a rally, we believe that it is closer to the bottom than ever before.
Let’s see if we find any buy setups on the cryptocurrencies.
The bulls made their presence felt on June 29 and June 30, as Bitcoin lead from the front. The pullback from $5,910.65 has cleared the downtrend line and the 20-day EMA. Failure of the bears to take advantage of the breakdown below $6,000 levels shows that they are losing their grip.
If the BTC/USD pair sustains above $6,650, it is likely to rally to the $7,750 levels. Though there is minor resistance at $6,877.36, we expect it to be crossed.
Therefore, we propose buying 50 percent of the desired allocation at $6,650 and the rest 50 percent at $6,900. The initial stop loss can be placed at $5,900.
If the bulls defend the $5,900 levels, then our initial assumption of a large range in Bitcoin between $6,000 to $12,000 will come into play. However, if the bears break below $5,900 we shall change our view accordingly.
As traders, we are not rigid in our analysis. We shall alter our strategies according to the development on the charts.
The pullback in Ethereum from the June 29 lows has reached the 20-day EMA after briefly stalling at the downtrend line. The bears will try to defend the 20-day EMA, which is at $481 levels.
If the ETH/USD pair returns from the current levels and drops below $400, it will become negative and can decline to the critical support at $358.
If the bulls break out and close above the 20-day EMA, a rally to $600 levels can be expected with minor resistance at $550.
Therefore, traders can enter long positions closer to $500 with the stops at $400. Please keep the position size about 40 percent of usual because the initial risk to reward ratio is not very attractive. However, we need to reduce the risk by quickly trailing the stops higher.
The buyers have still not returned to Ripple. It has failed to reach the 20-day EMA or the downtrend line one.
Unless the bulls force a sharp bounce from the current levels, the XRP/USD pair will be vulnerable for another round of selling.
We shall turn positive only after the bulls succeed in breaking out and sustaining above the $0.56270 levels. Until then, it’s best to remain on the sidelines.
Bitcoin Cash has bounced back from the $657 levels and has broken out of the downtrend line. It is currently facing resistance at the 20-day EMA. A break out of this is likely to start an up move, which can carry it to $934 and then to $1,200 levels.
If the bears defend the 20-day EMA, the BCH/USD pair can slide back to the June 29 lows of $657.8. It will become negative if it breaks below this level.
Therefore, we recommend a long position on a close (UTC) above the 20-day EMA with the SL at $650. As the initial risk to reward ratio is not very appealing, please use only 40 percent of the usual position size for this trade.
EOS had been trading inside a tight range for the past eight days. The current break out of this range can propel the digital currency towards the downtrend line, which is likely to act as resistance.
The short-term traders can benefit from this probable up move, but positional traders are better off waiting until a new buy pattern shows up. We shall turn positive on the EOS/USD pair after it sustains above the downtrend line for a couple of days.
As long as the price remains below both the moving averages, the rallies will attract selling by the bears.
Litecoin is attempting to stay above the downtrend line, which shows that the downward momentum has reduced. Still, the bulls will face stiff resistance at the 20-day EMA and again between $100-$107.102.
If the bears force a reversal from the overhead resistance and break below the $74 levels, the downtrend will resume. If the lows hold, the LTC/USD pair might consolidate for a few days before starting a new uptrend.
We should suggest a long position only after we find a new buy setup on it.
Though the bears broke below the support at $0.13, they could not sustain it. Cardano has pulled back to the 20-day EMA, which will act as stiff resistance.
During the previous fall to the $0.13 levels in March-April of this year, the ADA/USD pair had changed its trend once it broke above the 20-day EMA.
This time, we expect the digital currency to pick up momentum once it breaks above $0.182. Until then, we suggest traders to remain on the sidelines.
On the downside, $0.13 to $0.111843 will act as strong support.
The bulls scripted a smart recovery in Stellar from the $0.16767780 levels on June 29 and have broken out of the downtrend line. Though this shows that the decline has been arrested, it still doesn’t qualify as a buy.
The XLM/USD pair has not risen above the 20-day EMA convincingly since May 09 of this year. Therefore, we recommend waiting until the bulls break out and close above the 20-day EMA for a couple of days.
On the downside, $0.16767780 to $0.184 will act as a strong support zone. Any breach of this zone can sink the digital currency to $0.138 levels.
For now, the bulls have succeeded in defending the $0.9150 levels on IOTA. The pullback from the supports is encouraging because it increases the possibility of the formation of a large range on the cryptocurrency.
The bulls will face stiff resistance at the 20-day EMA and the downtrend line. Once these two levels are crossed, we anticipate a rally to $2 levels. This offers us an attractive trade setup.
But the traders should wait for the price to close (UTC) above the downtrend line to avoid getting caught in false breakouts. The stop loss on the trade can be kept below the June 24 lows.
Our bullish view will be invalidated if the bears force a turnaround on the IOTA/USD pair from the 20-day EMA and plunge it below $0.885 levels.
Tron is trying to climb back above the overhead resistance at $0.03738021. On the upside, it will face stiff resistance at the 20-day EMA, a level it hasn’t been able to cross since May 23 of this year. Once this level is crossed, a retest of the downtrend line is likely.
The TRX/USD pair will turn positive after it sustains above the downtrend line for a couple of days.
The positive divergence on the RSI also points to a probable uptick in prices. However, we shall suggest a long position only after the formation of a new buy setup.
The market data is provided by the HitBTC exchange. The charts for the analysis are provided by TradingView.