Price Analysis, October 25: Bitcoin, Ethereum, Bitcoin Cash, Ripple, Litecoin
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In August 2017 Bitcoin split in two, which resulted in the appearance of Bitcoin Cash, and yesterday the network experienced the second fork, Bitcoin Gold. Whether this is an advantage or disadvantage for Bitcoin is up for debate. Both sides have their own explanations.
However, as traders, we look for historical precedence and attempt to trade using it.
After the first fork, Bitcoin prices took off, rallying from a low of $2,621.75 on Aug. 2 to an intraday high of $4,975 on Sep. 2. That is a blistering 89.75 percent rally in a month.
If history were to repeat itself, Bitcoin should rally to $10,443 by Nov. 24. That figure looks a little doubtful because most traders expect Bitcoin to fall now that the fork has been completed. They expect money to shift to the altcoins. We did see a spark of it in the last two days. However, that rally fizzled out.
Can the rumor of Amazon accepting Bitcoin become a reality and give another boost to the cryptocurrency? We have to wait and watch for it.
However, what do the charts forecast? Is it time to shift from Bitcoin to altcoins or will Bitcoin again attempt to resume its rally? Let’s find out.
We have not initiated any positions on Bitcoin for the past few days. Is this a good time to get back into the game?
In our previous analysis, we had forecast Bitcoin to find support between the $5,350 to $5.500 zone. Today, the digital currency fell to $5,356.95 levels, where buying emerged. As there are two critical supports – from the trendline and the 20-day exponential moving average (EMA) – this can be a good entry point.
However, we want to buy on the way up and not on the way down. Therefore, please initiate long positions at $5,650.
We don’t expect a huge rally from the current levels. We expect a retest of the recent highs. Traders should book partial profits at $6,000 and raise the stops on the remaining positions to break even, if the cryptocurrency rallies according to our expectation.
On the other hand, if Bitcoin turns around and breaks below $5,350 it can extend its fall to $5,000 levels. Therefore, please keep a stop loss of $5,300.
The negative divergence on the RSI is a cause of worry. Therefore, we shall keep the allocation size 50 percent below normal. This is a very risky trade.
Ethereum must have given some heartburn to our readers. It rallied from $275 to close to $320, and we could not catch it.
These volatile trades will be difficult to catch. At times, the support levels may break and at other times they may hold. The cryptocurrency had been falling for the past many days; therefore, we did not expect it to pullback so sharply.
Nevertheless, after the quick rally, Ethereum has given up most of its gains and is back below $300 levels.
Currently, the digital currency is likely to face resistance at the 20-day EMA and the 50-day SMA. It becomes bullish only on a breakout and closes above $315. Until then, we don’t see a reliable set up on it.
On the downside, the trendline is a formidable support, which is likely to hold. However, as the price is quoting below both the moving averages, we don’t consider it as a good level to initiate long positions.
That’s why we don’t recommend any trade on Ethereum at the moment.
Bitcoin Cash is attracting some buyers at the current levels. There have been two attempts in the past three days to push the cryptocurrency higher.
However, the 20-day EMA has been acting like a big hurdle on every pullback. If the price manages to break out of the 20-day EMA, it is likely to rally to the 50-day SMA, which is at $414, just above the upper end of the range.
However, the logical stop loss for this trade is below the lower end of the range at $280. This doesn’t give us a 1:1 risk to reward ratio. Therefore, it doesn’t seem to be a good idea to trade.
On the other hand, if the digital currency breaks down of the lower end of the range it can sink to $190.
After a continuous fall from the $0.3 levels, Ripple is attempting to hold the $0.18 levels. An attempt to pullback faced resistance from both the moving averages.
As a result, the cryptocurrency is again back at the $0.2 mark. If Ripple breaks down below yesterday’s low of $0.18211, it will resume its downtrend. The next stop is likely to be $0.165, followed by a retest of $0.15.
On the other hand, any pullback attempt will face selling at the moving averages and the downtrend line. The digital currency will become positive only after it breaks out of $0.238 levels.
Currently, there is no bullish setup. Therefore, we suggest no trade on Ripple.
Yesterday, Litecoin attempted to break out of the overhead resistance of $58; however, the bears pushed it back into the range.
The digital currency is again back into the range of $44 to $57.7.
The cryptocurrency will become bullish only on a breakout and close above the upper end of the range. We recommend a buy on Litecoin on a close above $57.7. Our target objective is $71. The stop loss for the trade can be kept at $51.
On the contrary, if the bears continue to pound the digital currency, it can fall to the lower end of the range at $44. Therefore, we recommend a buy only after the bulls are able to push Litecoin out of this range.