The crypto markets are going through a phase of uncertainty with several cryptocurrencies failing to show a firm trend. This is because the markets lack a catalyst that can either pull prices higher or plunge them lower.
However, a developing catalyst could be the launch of the China-backed central bank digital currency (CBDC). Jack Lee, a founding partner at HCM Capital, believes that China’s central bank is ready and the digital currency could be launched within the next two to three months. If this experiment is successful, it would likely force the other developed nations to follow suit.
Daily cryptocurrency market performance. Source: Coin360
Another catalyst that could prove bullish for the crypto market is the continuous inflow of institutional money. However, this has not yet materialized due to a variety of reasons. Bakkt has announced that it has received approval from the New York Department of Financial Services to offer crypto custody services to any institution. Bakkt expects this move to increase institutional adoption.
However, not everyone is bullish on the crypto space. The European Central Bank’s former president Jean-Claude Trichet is “strongly against Bitcoin” and does not consider it as a currency.
Therefore the question must be asked. Should traders view the current dip in Bitcoin price as a buying opportunity, or can the leading cryptocurrency surprise investors with additional moves to the downside? Let’s study the charts to see what signals the market is providing.
Bitcoin (BTC) attempted to rebound off the critical support at $8,777.89 on Nov. 10 but the bounce fizzled out just above the $9,080 mark. This shows that higher levels are attracting profit booking.
Currently, the price has again dipped to the support at $8,777.89. If this level fails to hold, the BTC/USD pair could dip to $8,467.54, which is 61.8% retracement of the most recent up move. This is an important level to watch out for because if it cracks, a drop to $7,297.21 is possible.
Conversely, if the pair bounces off the 50-day SMA, the bulls will again attempt to clear the downtrend line and retest the recent highs of $10,360.89. We will wait for the pair to breakout and close (UTC time) above the downtrend line before recommending a trade.
For the past few days, Ether (ETH) has been trading within the intraday high and intraday low made on Oct. 26. A breakout of $197.75 will be a positive move that can carry the price to the overhead resistance zone of $223.999 to $235.70.
Conversely, if the bears sink the price below the support at $173.841, it can decline to $161.056-$151.829 support zone. If this zone holds, the ETH/USD pair might remain range-bound for a few more days.
Our view will be invalidated if the pair breaks below $151.829. In such a case, the downtrend will resume. Therefore, traders can protect the long positions with stops at $150.
XRP is looking weak as it hardly bounced after the steep fall on Nov. 7 and 8. This shows that the bulls are not using the dips to buy as they expect the price to slide further. The next support to watch on the downside is $0.24508. If this support also cracks, a retest of $0.22 will be on the cards. Therefore, traders can protect their long positions with stops at $0.24.
Contrary to our assumption, if the XRP/USD pair reverses direction from the current levels and breaks out of $0.31491, it can rally to $0.34229. However, with the moving averages starting to turn down and the RSI in the negative territory, advantage is with the bears and a rally looks unlikely.
Bitcoin Cash (BCH) has again hit a wall close to the neckline of the head and shoulders pattern. This suggests that the bears are aggressively defending this resistance level. If the price slips below the 20-day EMA, it can decline to $241.85. Therefore, traders can trail the stop loss on the long positions to $267.
However, if the BCH/USD pair turns up from the current level and sustains above the neckline, it can rise to $360. This is a significant resistance, hence, traders can book partial profits closer to $360 and keep a close stop loss on the rest of the position.
Litecoin (LTC) is struggling to find buyers above $62.0764. It has again dipped to the 20-day EMA. If the bears sink the price below the moving averages, the altcoin can drop to the critical support at $50. A breakdown of $47.1851 will be a huge negative and will resume the downtrend.
However, if the support at $50 holds, a few days of consolidation is possible. The flattening moving averages and the RSI just above 50 level also suggests a range formation.
Alternatively, if the LTC/USD pair bounces off the moving averages and rises above $66.1486, it can move up to $80.2731. The traders can protect their long positions with stops at $47. We shall trail the stops higher at the first available opportunity.
EOS is sandwiched between 20-day EMA and $3.69 for the past few days. The bears are aggressively defending the downtrend line. If the altcoin breaks below $3.3137, a drop to $2.9980 is likely. A break below this level will be a huge negative as it can drag the price to $2.4001.
Conversely, if the EOS/USD pair bounces off the 20-day EMA and breaks out of the downtrend line, it is likely to pick up momentum and rally to $4.24 and above it to $4.8719. Traders can continue to hold their long positions with a stop loss of $2.95.
Binance Coin (BNB) has been trading between the 20-day EMA and $21.2378 for the past few days. A breakout of $21.2378 can push the price to $23.5213 and above it to $30. However, if the bears sink the price below the 20-day EMA, a drop to the 50-day SMA is likely.
The 50-day SMA, the horizontal support and the uptrend line are all situated close to each other. Hence, we expect the bulls to defend it aggressively. If the BNB/USD pair bounces off this support, it will consolidate between $18.30 and $21.2378 for a few days.
The pair will turn negative if it breaks down of the critical support and re-enters the channel. For now, traders can keep the stop loss on the long positions at $16. We will recommend trailing the stops higher within the next few days.
Bitcoin SV (BSV) is trading inside a channel that is descending down marginally. The next decisive move will start after the price escapes the channel. If the bulls manage to push the price above the channel, a move to $188.69 is likely. Though there is a resistance at $155.38, we expect it to be crossed.
Conversely, if the price breaks down of the channel, a drop to $107 is possible. The short-term traders can buy on a bounce off the support line of the channel and book profits closer to the resistance line of the channel. However, we suggest positional traders wait until the BSV/USD pair breaks out and closes (UTC time) above the channel for establishing any positions.
Stellar (XLM) bounced sharply from the 20-day EMA in the past two days. However, it is facing profit booking just above the $0.080 mark. This shows that bulls are keen to buy on dips to strong support levels and the bears are attempting to defend the overhead resistance levels. This could result in a consolidation for a few days until one party emerges victorious.
The critical level to watch on the upside is $0.088708. If this level is scaled, the XLM/USD pair can move up to $0.145. On the other hand, if the pair breaks below the 20-day EMA, it can drop to the 50-day SMA. We do not find any buy setup that offers an attractive risk to reward ratio, hence, we suggest traders remain on the sidelines.
Tron (TRX) has been clinging to the support for the past three days. However, the failure to bounce off it indicates a lack of urgency among buyers. If the bears sink the price below $0.0183603, a drop to the 50-day SMA is likely.
Both moving averages are flattening out and the RSI has dipped close to the midpoint. This suggests a consolidation for a few days.
However, if the TRX/USD pair bounces off the current levels and breaks above $0.0204880, it can move up to $0.02340. We will turn positive above $0.0204880. Until then, we remain neutral on the pair.
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.