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Have cryptocurrencies bottomed out? This is the first question to pop up in any crypto investor’s mind following the recent pullback from the lows.
Arthur Hayes, a Bitcoin bull and co-founder of one of the largest crypto exchanges Bitmex is not convinced that a bottom has formed yet. He believes the current leg of the pullback can reach anywhere between $8,000 and about $10,000 before plunging again. He opines that the bottom will be formed around the level of $5,000.
Boris Schlossberg of BK Asset Management, a known Bitcoin bear, said that the current pullback could go above $8,000.
As has been the case for the past few weeks, it is hard to resist writing about the institutional investors. Digital asset management fund Grayscale Investments has said that 56 percent of all new investments into their products in the first half of 2018 have been made by institutional players.
In fact, the total investment inflow in June was one of the strongest fundraising periods since 2013, Grayscale claimed in its first-ever crypto investment report.
So, with all this institutional money flowing in, has the crypto market bottomed out or is this a dead cat bounce? Let’s find out.
Bitcoin completed an inverse head and shoulders pattern on July 17 with a break above the neckline at $6,953.38. The pattern target of this breakout is $7,996.11.
However, the BTC/USD pair has a strong resistance at $7,750, which acted as a major hurdle in early June. The downtrend line of the descending triangle is also close to this level at $7,600.
Therefore, we suggest traders take partial profits close to $7,500 and raise the stops on the remaining position initiated at $6,650 to break even. We are recommending booking partial profits because Bitcoin will pick up momentum once the bulls break out and close above $7,750 as that will invalidate a bearish pattern. Failure of a bearish pattern is a bullish sign with the next targets at $8,500, $10,000 and $12,000.
We believe that the bottom is in place at $6,000 - we foresee the possibility of a retest of the $7,000 mark in the next few days, but it should hold. The bullish crossover of the moving averages adds to our confidence but unlike 2017, it will be a slow climb to the higher levels this year.
All these forecasts are done based on the current chart structure. If and when the charts change, we shall review our levels and revise them accordingly.
The bulls have failed to defend the 20-day EMA, which increases the possibility of a fall to the bottom of the range at $404.99. The flattening moving averages point to a consolidation between $404.99 and $496.36.
The ETH/USD pair will gain strength only above $500. If the next bounce fails to break out of the overhead resistance, we might suggest closing the position without waiting for the stops to be hit. For now, we suggest to hold the position with the stops at $400.
Ripple turned down from the 50-day SMA on July 18, after rallying for three days. It has given up all its gains and is currently back at the critical support level of $0.45351.
If the XRP/USD pair breaks below $0.45351, a retest of the June 29 low of $0.42420 is probable. If this support breaks, the slide can extend to $0.33.
If the bulls succeed in defending the support zone between $0.42420 and $0.45351, the virtual currency is likely to spend a few days in a range, trying to form a bottom.
The first indication of a change in trend will be when the price sustains above $0.563. Presently, there are no buy setups on it.
Bitcoin Cash rose above $850 on both July 17 and July 18, thereby triggering our buy recommendation made in the previous analysis. However, it could not sustain above the 50-day SMA and turned down from there. It has broken below the downtrend line and is currently trying to take support at the 20-day EMA.
Both moving averages have flattened out, which increases the probability of a consolidation between the 20-day EMA and the 50-day SMA for the next few days.
On the upside, the zone between $838.9139 and $934.2316 will act as a stiff resistance. The BCH/USD pair will pick up momentum once it breaks out of $935, which can result in a rally to $1,200.
We suggest traders hold their long positions with the stops at $650.
EOS broke out of the 20-day EMA and the downtrend line but could not rise above the $9.4456 mark.
The bulls have failed to defend the 20-day EMA on the way down, which increases the possibility of a slump to $6.8926.
The EOS/USD pair will gain strength once it breaks out of the overhead resistance at $9.4456. This gives an upside target of $15 with a minor resistance at $11.64.
Both moving averages are flattening out, which points to a range bound action for the next few days.
Litecoin has broken out of the overhead resistance at $91.146, turning down from the 50-day SMA. It is currently taking support at the 20-day EMA.
If the LTC/USD pair sustains above $91.146, we anticipate a rally to $107. However, this is unlikely to be a straight move up. The zone between $102 and $107 will offer a stiff resistance.
If the bears break below the 20-day EMA, a retest of the $74.074 level is probable. We expect the pair to spend some time between $74 and $107 while forming a bottom. Therefore, we are not recommending any buy positions on it at the moment.
Though the ADA/USD pair broke out of the minor resistance at $0.181617 on July 18 and July 19, it could not sustain it. This has resulted in profit booking at the current levels that has dragged the prices down. The $0.161413 line is expected to offer a strong support on the downside.
Once the bulls sustain above $0.181617, a rally to $0.23 is probable. If the virtual currency doesn’t make a move to the upside within a couple of days, we might advocate closing the long position.
Stellar rallied sharply from the lows in the wake of favorable news, triggering the buy suggested in our previous analysis for the investors. Though it broke out of the overhead resistance at $0.31312212 on July 18 and July 19, it could not sustain the higher levels.
A failure to scale $0.31312212 and an overbought reading on the RSI has attracted profit booking by the short-term traders. The pullback can drag the XLM/USD pair to $0.2544. Any break of this will be the first sign that the bulls are losing ground.
The moving averages are completing a bullish crossover, which is a positive sign. The next leg of the upward move will start once the price sustains above the overhead resistance at $0.31312212.
The investors can hold their positions with the designated stops, whereas the traders should wait for a buy setup to form before initiating any long positions.
The bulls could not sustain above the downtrend line on IOTA. After reaching close to the 50-day SMA, it has turned down and broken below both the downtrend line and the 20-day EMA.
The bulls are currently trying to hold above $0.97, below which a retest of $0.9150 is likely. On the upside, the $1.2579-$1.33 levels will offer a stiff resistance. The IOTA/USD pair might remain range bound between $0.9150 and $1.33 for the next few days.
We suggest to hold the existing long position with the recommended stop loss.
The recovery in Tron has scaled above the 20-day EMA and the downtrend line but hit a wall at the 50-day SMA.
The bulls could not provide support to the TRX/USD pair at the 20-day EMA on the way down. So, a retest of the $0.03275 level is on the cards. A break of this can sink the price towards the next support at $0.022806.
Even in February of this year, the recovery from the lows was not a straight line. The pair spent a couple of months in a range before finally breaking out of it. We anticipate a similar range formation near the lows this time as well.
We shall wait for a new buy setup to form before suggesting a trade on it.