WEEKLY REVIEW OF THE TOP 5 CRYPTOCURRENCIES
Bitfinex and Tether were in the news as the New York Attorney General’s office alleged that the exchange had secretly transferred funds from Tether to coverup its $850 million loss. Tether, on its part, categorically denied the allegations. The markets have given the benefit of doubt to Tether as its price has clawed back after dumping initially on the news.
After the initial pullback from the lows, the altcoins are currently facing profit booking. As a result, Bitcoin’s dominance that had slipped to about 50% in the early part of the month has again climbed to 54.9%. Tom Lee, managing partner and head of research at Fundstrat Global Advisors, believes that the bear market in Bitcoin is over and the price is now headed higher. He expects the leading cryptocurrency to reach lifetime highs sometime in 2020.
We, however, believe that the next bull market will face a lot of hurdles as the investors stuck at higher levels will liquidate their positions at intermittent intervals. Hence, it will be a gradual move higher. Investors should be careful at what levels they are investing in. Even Masayoshi Son, the billionaire founder of SoftBank Group Corp., had to book a $130 million loss on Bitcoin due to an ill-timed purchase. Let’s see if we find any reliable buy setups on the major cryptocurrencies.
Bitcoin turned down from close to the overhead resistance of $5,777 on April 25. Since then, the bulls have been attempting to defend the 20-day EMA but have failed to pull off a meaningful bounce off this support.
The 20-day EMA has flattened out and the RSI has also dipped to the midpoint. This points to a consolidation in the near term. The cryptocurrency might remain range bound between $4,778 and $5,777 for the next few days.
Our view will be invalidated if the bears sink the price below the support of $4,778 and the 50-day SMA. Such a move will dampen sentiment and result in a quick fall to $4,000 levels. On the upside, the overhead resistance zone of $5,777 to $6,000 is a difficult hurdle to cross.
We shall wait for the boundaries of the range to be clearly defined before recommending any trades in it. Currently, we remain neutral on the leading digital currency.
Ethereum plummeted below the 20-day EMA on April 25 and re-entered the ascending channel. This is a negative sign, as it invalidates the breakout of the pattern. The 20-day EMA is sloping down and the RSI has dipped into the negative zone. This shows that the bears have the upper hand in the short-term.
Currently, the bulls are attempting to hold the 50-day SMA for the past five days. This is a small positive. However, if the price doesn’t scale above the 20-day EMA within the next couple of days, the probability of a breakdown of the 50-day SMA increases. The next support on the downside is the trendline of the triangle. If this also gives way, a drop to $100 is possible.
Conversely, if the bulls succeed in ascending the overhead resistance of $160 once again, a rally to $180, followed by a move to $187.62 is likely. The digital currency will pick up momentum if it sustains above $187.62. Hence, we retain the buy recommendation given in our previous analysis.
After failing to breakout of the moving averages, Ripple plunged to the critical support at $0.28524 that held. The failure of the cryptocurrency to participate in the recent recovery is a sign of weakness.
The digital currency is currently range bound between $0.28524 and $0.350. However, if the bears sink the price below the support of the range, a drop to the yearly low at $0.24653 is probable.
On the upside, the bulls will face stiff resistance at the moving averages and above it at $0.35. The trend will signal a change only after the price sustains above the range for a few days. We expect the digital currency to pick up momentum above $0.38353. Currently, we don’t find any buy setup on it. We might suggest a long position on a breakout and close (UTC time frame) above $0.35.
After holding the 20-day EMA for three days, EOS dived below it on April 24 that carried it to the 50-day SMA. Since then, the bulls have been trying to defend this support but have not been able to push the price back above the 20-day EMA. This is a negative sign.
The 20-day EMA has turned down and the RSI has also dipped into the negative territory. This shows that the bears have the edge in the short-term. If the bears breakdown the support of the 50-day SMA and the uptrend line, a drop to $3.2 is probable.
On the contrary, if the price rebounds from the current levels, it will face resistance at the downtrend line. If this resistance is crossed, the cryptocurrency can move up to $5.68 and above it to $6.276077. We shall wait for a reliable buy setup to form before suggesting a trade in it.
Litecoin is currently in a pullback after facing profit booking at the overhead resistance of $94.39. The price has broken down of both the moving averages, which is a negative sign.
The moving averages are on the verge of completing a bearish crossover and the RSI has dipped into the negative zone. This has turned the short-term trend in favour of the bears. There is minor support at $60, below which a fall to $50 and below it to $44 is probable.
Contrary to our assumption, if the bulls reverse direction from the current levels and breakout of both the moving averages, the cryptocurrency can move up to $84.73 and above it to $94.39. We shall wait for the price to stabilize or to close (UTC time frame) above $95 before proposing a trade in it.
The Platinum Formula:
Perfect Fundamentals + Perfect Technical Analysis + Perfect Logic + Perfect Risk Management = Perfect Trade
THE PLATINUM WAY
Download our Crypto ebook to read about the various Trading Patterns that work in the Financial Market. Watch Trades of the Week Videos in our video gallery. Subscribe to Platinum’s Crypto Newsletter.
Hopefully, you have enjoyed today’s article. Thanks for reading!
Have a fantastic day!
Live from the Platinum Trading Floor.