The global economy is on weak footing. This has led to rate cuts by several central banks across the world and many are planning to implement additional measures to support their respective economies. This has ballooned the balance sheets of the central banks and there appears to be no end in sight. Since mid-September, the Federal Reserve has resumed its bond buying initiative, leading its balance sheet to expand by $210 billion. The Fed’s balance sheet is now about $3.97 trillion.
While the supply of fiat currencies has been steadily increasing for the past few years, Bitcoin’s (BTC) block rewards has reduced at each halving. The rate of supply will reduce further following the halving in 2020. Previous instances of halving resulted in a sharp price increase and for this reason analysts are anticipating a repeat rally as the 2020 block reward halving approaches.
Cryptocurrency daily performance. Source: Coin360
Does the Bitcoin chart suggest a bottom formation? Should investors just dig in and purchase now? Or is it more likely that Bitcoin’s price will fall further? Let’s analyze the charts.
Bitcoin bounced sharply on Oct. 20 from the key support level of $7,702.87. This is the fourth time the bulls have successfully defended this level, which confirms that buyers are accumulating on dips close to $7,702.87.
Currently, the leading cryptocurrency is facing resistance at the 20-day EMA, which is sloping down. However, we expect it to be crossed. Above this level, the next level to watch on the upside is $8,777.89.
We anticipate a stiff resistance in the overhead zone of $8,777.89 to $9,080. If this zone is crossed, a move to the downtrend line of the triangle is likely. If the bulls can push the BTC/USD pair above the downtrend line, it will invalidate the bearish setup.
The failure of a bearish pattern attracts buyers, hence, a move above the downtrend line can start an up move that has a medium-term target of $13,973.5. The intermittent resistance levels to watch out are $11,000, $12,000 and $13,000. However, we expect all these levels to be crossed. We will suggest traders add to their long positions above the downtrend line. For now, the stops can be maintained at $7,700.
Contrary to our assumption, if the bulls fail to scale above the 20-day exponential moving average (EMA), the bears will attempt to break below the critical support at $7,702.87. If successful, the downtrend will resume.
The bulls have been buying the dip close to $169 for the past three days. This is a positive sign because the buyers are not waiting for Ether (ETH) to drop to the bottom of the range at $161.056.
If the bulls can push the price above the moving averages, a rally to the top of the range at $196.483 is possible. A break of this level can carry the price to $235.70 with minor resistance at $223.999. We might suggest adding positions if the price sustains above $196.483. For now, aggressive traders can continue to hold the long positions with stops at $160.
Our bullish view will be invalidated if the bears sink the ETH/USD pair below the critical support zone of $161.056 to $151.829. If this zone breaks down, the decline can extend to $122.
XRP again bounced off the 20-day EMA on Oct. 20 but the bulls failed to sustain the price above $0.29227. This shows profit booking at higher levels.
The bears will now try to use the opportunity to sink the price below the moving averages. If successful, a drop to $0.24508 is possible. This is an important support, below which a retest of $0.22 will be on the cards.
However, with the 20-day EMA sloping up and the RSI in positive territory, the advantage is with the bulls. If the support at the moving averages hold, we anticipate another attempt by the bulls to clear the overhead resistance zone of $0.29227 to $0.30368. If successful, the XRP/USD pair can move up to $0.34229. Traders can retain the stop loss on the long positions at $0.24.
Bitcoin Cash (BCH) bounced sharply on Oct. 20. This is a positive sign as it shows demand close to the bottom of the tight range. If the bulls can sustain the price above the 20-day EMA, it can move up to the overhead resistance at $241.85.
A breakout of $241.85 can extend the relief rally to the neckline of the head and shoulders pattern. If the bulls can push the price above the neckline, a move to $360 is likely.
Conversely, if the BCH/USD pair turns down from the neckline, the bears will attempt to resume the downtrend. A break below $203.36 will be a huge negative. We will wait for the price to sustain above $241.85 before proposing a trade in it.
The range in Litecoin (LTC) continues to tighten further as the price is stuck between the 20-day EMA and $50. This shows that both the bulls and the bears are undecided about the next directional move.
A breakdown of $50 will be a bearish sign as it can drag the price to $40. The downsloping moving averages and the RSI in the negative territory shows that bears have the upper hand.
The first sign of a change in trend will be a break above the downtrend line of the falling wedge and the 50-day SMA. If this resistance zone is scaled, the LTC/USD pair can move up to $80.2731. We will wait for the price to close (UTC time) above the 50-day SMA before proposing a trade in it.
The bulls have kept EOS above the immediate support of $2.8129 for the past few days. However, the failure to achieve a strong bounce off the support is a negative sign. It shows that bulls are in no hurry to buy even at these levels.
If the bears sink the price below $2.8129, a drop to the recent lows of $2.4001 will be on the cards. If this level also fails to hold, the downtrend will resume. The next support on the downside is much lower at $1.55.
Our bearish view will be invalidated if the EOS/USD pair rebounds sharply from current levels and scales above $3.37. Traders can initiate long positions as suggested in an earlier analysis.
The range in Binance Coin (BNB) has tightened further, which is similar to a coiling spring. Both moving averages are flat and the RSI is close to the midpoint, which shows a balance between the bulls and the bears.
We expect the price to snap out of this range within the next few days. If the price resolves to the downside, a drop to $16.5 and below that to $14.2555 is possible.
Conversely, if the next dip holds above $16.50, the bulls will again attempt to push the price above the descending chanel. If the BNB/USD pair breaks out and closes (UTC time) above the channel, a rally to $23.5213, and above it to $32.60 is possible. As the pair is showing signs of a turnaround, we retain our buy recommendation given in an earlier analysis.
Bitcoin SV (BSV) has broken out of the tight range it had been stuck in since Sep.24 of this year. The price has now reached the overhead resistance zone between the 50-day SMA and $107.
The BSV/USD pair has not broken out of the 50-day SMA since July 11, hence, a break will indicate a likely change in trend. If the price sustains above $107, it can gradually move up to $188.69 in the medium-term. As the risk to reward ratio is attractive, we will suggest a long position after the price sustains above $107.
The 20-day EMA has flattened out and the RSI has risen into positive territory, which suggests that the selling pressure has reduced. Our bullish view will be invalidated if the price turns around from $107 and plunges below $78.506.
The range in Stellar (XLM) has shrunk further in the past two days and it is clinging to the moving averages. Both moving averages have flattened out and the RSI is close to the midpoint. This suggests a balance between the bulls and the bears.
If the bears sink the price below $0.057, a drop to $0.051014 is possible. A break below this level will be a huge negative as it will resume the downtrend. Therefore, traders can retain the stop loss on their long positions at $0.051.
However, if the price jumps up from the current levels and rises above $0.066628, it could reach the downtrend line, which will act as a stiff resistance. If the momentum can push the price above the downtrend line, a rally to $0.088708 is possible.
Tron (TRX) has been trading close to the moving averages for the past five days. This shows that both the bulls and the bears are not taking any large bets. Flat moving averages and an RSI close to 50 points to further consolidation over the short-term.
A range expansion to the upside could carry the price to the overhead resistance at $0.018660. We anticipate a strong defense of this level by the bears but if the bulls can scale above it, a new uptrend is likely. Therefore, we have retained the buy suggested in an earlier analysis. Conversely, if the range expands to the downside, a drop to $0.011240 is possible.
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.