Total crypto market capitalization has held the $200 billion mark for the past few days. This is a positive sign, as it shows that market participants are not panicking at lower levels but are using dips to buy. The first leg of the bull phase was led by Bitcoin, which saw its dominance rise from just above 50% at the start of the year to about 71% in early-September.
In the last few days, the action has been gradually shifting to altcoins, which can be seen from the gradual decrease in Bitcoin’s dominance, which is down to 66.7%. This increases the possibility that the next leg of the uptrend might see outperformance by select altcoins.
If our assumption proves to be correct, altcoins offer an excellent buying opportunity because most of them are still well below their 52-week highs. Let’s see if we can spot any reliable buy setups in the major cryptocurrencies.
Is Bitcoin (BTC) likely to enter a bear phase? Let’s analyze this possibility and arrive at a conclusion based on the chart patterns that have formed. As the price is trading below both downsloping moving averages and the RSI is close to oversold territory, the trend favors the bears.
However, after the recent fall, the BTC/USD pair has been finding support close to the critical support of $7,337.78, which is the 61.8% retracement of the rally from the yearly lows of $3,236.09. Though deep, a 61.8% Fibonacci retracement does not break the uptrend. So, as long as the price remains above this level, the possibility of the resumption of the uptrend remains.
The first sign of strength will be if the bulls push the price above the downsloping flag and the 20-day EMA. This will indicate that the bulls are using lower levels to accumulate. Above this, the next resistance is likely to be at the 50-day SMA and above it at the downtrend line. Either of these levels can act as a roadblock for the up-move, but if the bulls can push the price above the downtrend line, a resumption of the uptrend is likely.
Conversely, if the bears sink the pair below $7,337.78, it is likely to trigger several stop losses. The next support on the downside is $6,933.90 and below that $5,533.90, which is the 78.60% Fibonacci retracement of the rally. However, we give it a low probability of occurring. Therefore, aggressive traders can hold their long positions with the stops at $7,700.
Ether (ETH) has been struggling to rise above the moving averages. This shows that buying dries up at higher levels. The failure to push the price above the moving averages will attract sellers who will attempt to break down the cryptocurrency below the support and resume the down-move. The 20-day EMA has been moving down gradually, which shows that bears have a slight advantage.
However, if the bulls can push the price above the moving averages, it will indicate demand at lower levels. Above $185.566, a rally to $223.999 and above it to $235.70 is possible. This will keep the ETH/USD pair range-bound between $163.755 and $235.70 for a few days. Therefore, aggressive traders can hold the long position with a stop loss at $160.
After staying below the 20-day EMA for the past few days, XRP has made a decisive move and risen above the 50-day SMA with force. This shows that lower levels have seen accumulation by stronger hands.
If the price sustains above the 50-day SMA, it will increase the possibility of a move to $0.34229. Therefore, traders can buy on a close (UTC time) above the 50-day SMA and not wait for the price to break out and close (UTC time) above $0.27795. The stop loss can be kept at $0.215.
Our bullish view will be invalidated if the XRP/USD pair turns down and plummets below $0.215. However, we give it a low probability of occurring.
The bulls are attempting to propel Bitcoin Cash (BCH) above the overhead resistance of $236.07 and the 20-day EMA. If successful, a rally to the neckline of the head and shoulders pattern is possible. We anticipate a stiff resistance at this level.
If the bulls push the BCH/USD pair above the neckline, the downtrend will be over and a rally to $360 will be in the cards. As the risk-to-reward ratio is attractive, we suggest long positions on a breakout and close (UTC time) above the 20-day EMA with stops at $202.
However, if the pair reverses direction from the overhead resistance and plummets below $203, the next level to watch on the downside will be $166.98.
Litecoin (LTC) has been trading in a tight range of $50–$58.2512 for the past few days. This shows that selling has subsided but the bulls are not yet buying aggressively. A breakout of $58.2512 will be the first sign that bulls are back in action. However, we will wait for the buyers to push the price above the downtrend line of the wedge and signal a trend reversal before suggesting a trade in it.
Contrary to our expectation, instead of a breakout, if the LTC/USD pair plummets below $50, it will resume its downtrend that can sink the price to the support line of the descending wedge pattern. A break below this support will be a huge negative.
After consolidating in a tight range, the bulls are attempting to push EOS above the overhead resistance of $3.1534. This shows that buyers are not waiting for lower levels to buy, which is a positive sign.
A breakout of $3.1534 and the downtrend line will indicate a change in trend. Therefore, traders can wait for the EOS/USD pair to break out and close (UTC time) above the downtrend line before buying. The stop loss for the trade can be kept at $0.24001 because if this support cracks, a retest of the yearly lows will be in the cards.
Contrary to our assumption, if the pair fails to break out of the downtrend line, it might remain range-bound for a few days.
Binance Coin (BNB) has been trading between $14.2555 and $16.4882 for the past few days. Though the trend is down, this consolidation offers an opportunity to the bulls to stage a reversal. A breakout of $18.30 will be the first sign that the buyers are back in action.
However, the bulls have repeatedly failed to push the price above the 50-day SMA. Therefore, we will wait for the BNB/USD pair to break out of the 50-day SMA and the descending channel before turning positive.
On the other hand, if the bears sink the price below the critical support of $14.2555, a drop to $12.0228 and below that to the support line of the channel is possible.
Bitcoin SV (BSV) has been trading in the bottom-half of the $78.506–$90.40 range for the past few days, which is a bearish sign. A breakdown of this range can drag the price to the recent low of $66.666, below which a quick fall to $50 is possible.
Conversely, if the bulls push the price above $90.40 and the 20-day EMA, a move to $107 is possible. A breakout and close above the 50-day SMA will indicate that buyers are back in the game. We will wait for the BSV/USD pair to form a reversal pattern before proposing a trade in it.
The bulls are attempting to push Stellar (XLM) above the moving averages. This is a sign that sellers are losing their grip and the bulls are utilizing these low levels to buy. On a break above the 50-day SMA, a rally to $0.88708 is possible. Therefore, traders can initiate long positions as suggested by us in an earlier analysis.
Contrary to our assumption, if the XLM/USD pair fails to scale and sustain above the moving averages, it will indicate a lack of buyers at higher levels. The next dip is likely to retest the recent lows of $0.051014, below which the downtrend will resume. However, we give this a low probability of occurring.
After defending the critical support of $0.0357780 for the past few days, the bulls are attempting to push Cardano (ADA) above the moving averages. This shows buying at lower levels. Above the 20-day EMA, the next resistance is likely to be at the 50-day SMA.
If the momentum can carry the ADA/USD pair above the 50-day SMA, a rally to $0.0560221 is possible. Though a pullback is likely, we will wait for a reliable buy setup to form before proposing a trade in it. If the pair turns down from either moving averages, the bears will attempt to sink the price below $0.0357780 once again.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Market data is provided by HitBTC exchange.