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The market data is provided by the HitBTC exchange.
Fundstrat Global Advisors co-founder Tom Lee continues to be bullish on Bitcoin. He expects Bitcoin to trade roughly at 2.5 times the mining cost, which according to him will increase from the current levels of $7,000 to $9,000 by the year end. Lee has a target of $20,000 and higher for Bitcoin by the end of 2018.
We don’t concur with his target levels from the technical analysis point of view. $10,000 and $12,000 are likely to be two price points that will be difficult to cross for the bulls.
However, if cryptocurrencies witness a flood of institutional investing, then those resistance levels will be easily crossed. While the retail investors are largely staying away in fear of a further fall, the professional traders are using the current downtrend as an opportunity to enter crypto trading.
Amsterdam-based speed trader Flow Traders NV, one of the largest securities traders in Europe, has entered the cryptocurrency market, as reported July 5. The arrival of such giants is a clear indication that the larger players are taking the plunge and these lower levels are unlikely to remain for long.
So, what can the traders buy now? Let’s find out.
Though Bitcoin is sustaining above the 20-day EMA, it is finding difficult to break out of the overhead resistance at $6,953.38. Once this level is crossed, there is no resistance until $7,750.
We also find that the BTC/USD pair is forming an inverted head and shoulders (H&S) pattern that will complete on a breakout and close above $6,953.38. This pattern has a target of $7,996.11, which is close to the resistance from the downtrend line.
The 20-day EMA has turned flat, which shows that the bears are losing momentum. We might see a small dip, which will form the right shoulder of the inverted H&S pattern. Once we get this dip, it will help us trail the stops higher and we will also have a new stop loss position for any fresh purchases.
Our bullish view will be invalidated if the bears sink the cryptocurrency below $5,900. Therefore, please retain the stop losses at the recommended levels for the long positions initiated at $6,650.
Ethereum has been trading in a tight range for the past three days. The bulls have kept it above $450 while the bears have capped the upside at the 20-day EMA.
If the bulls break out of the intraday highs of July 3, a move to $550 and thereafter to $600 should be on the cards. Therefore, the traders can enter a long position at $500 and keep an initial stop loss at $400, which can be subsequently raised to $450. If the ETH/USD pair struggles to break out of $550, the stops can again be raised to breakeven to reduce the risk.
Our bullish view will be invalidated if the bears break and sustain below $450. The digital currency will turn negative if it breaks below $400 levels. Please keep the position size about 40 percent of normal.
Ripple is unable to bounce off the critical support level at $0.45. It failed to break out of the downtrend line for three days in a row.
Even if the bulls scale above the downtrend line, the digital currency will face another round of selling at the $0.56270 mark.
The XRP/USD pair might remain range bound between $0.45 – $0.56 for the next few days, forming a basing pattern. Our view of a range will be invalidated if the bears break below the June 29 low of $0.4242. Ripple remains weak. Hence, we shall wait for a new buy setup to form before suggesting any trades on it.
Bitcoin Cash did not trigger our buy recommendation made in the previous analysis. It turned down without breaking out of the intraday high reached on July 3.
The bulls are currently trying to hold the $736 level. If successful, a break out above $838 should result in a rally to $1,200 with a minor resistance at $934. Therefore, we retain the buy recommendation provided in the previous analysis.
Our bullish view will be invalidated if the bears sink the BCH/USD pair below $736, which can result in a fall to $657.
EOS has been trading inside a tight range for the past three days. The bulls have failed to break out of the 20-day EMA, which increases the possibility of a breakdown of the support at $8.4840.
If the bears sustain below $8.4840, the EOS/USD pair can slump to the bottom of the range at $6.8926.
The digital currency will gain some strength once it breaks out of the downtrend line. Currently, we don’t find any bullish setups; hence, we are not proposing a trade on it.
Litecoin has been falling inside a descending channel for the past few days. It has turned down after failing to break out of the 20-day EMA and the resistance line of the channel for three days in a row.
A breakout and close above the 20-day EMA can propel the LTC/USD pair to the overhead resistance zone at $102 – $107.
If the bears break below $79, a decline to the June 29 low of $74.074 is probable. We expect the coin to form a base before starting a new uptrend. Hence, we shall wait for a new buy setup to emerge before recommending any long positions on it.
The failure of the bulls to sustain above the 20-day EMA has attracted selling and Cardano has again turned down towards the recent lows.
The ADA/USD pair should find a strong support in the zone of $0.13 – $0.111843. If this zone breaks, the next support is way lower at $0.78.
On the upside, if the bulls break out and close above $0.162, a rally to $0.23 is possible. Though there is a minor resistance at $0.181617, we expect this level to be crossed. We shall wait for the breakout before suggesting any trades on it.
After consolidating close to the 20-day EMA for the past four days, Stellar has turned down. It might retest the support zone between $0.184 – $0.16767780, which should hold.
The XLM/USD pair will become positive if it rises and sustains above $0.225. Though there is a minor resistance at $0.245, we expect it to be crossed. The first target on the upside is a rally to $0.30.
Our bullish view will be invalidated if the bears break below the June 29 lows.
Our recommendation to buy IOTA on a close above the downtrend line was filled on July 04. However, the price quickly turned southwards and has broken below the 20-day EMA. Our suggested stop is just below the June 24 lows.
The failure to sustain above the 20-day EMA and the downtrend line is a negative sign, which shows that the sellers are active at higher levels.
If the IOTA/USD pair doesn’t find support at $1, chances are that it will again slump to the $0.9150 levels.
We shall wait for a couple of days and then take a call whether to close the position at a loss or to hold it.
NEO has found a place in our analysis after a long time. It rebounded sharply from the year-to-date low of $27.03 hit on June 29 to an intraday high of $48.9 on July 4, which is a gain of about 81 percent within a span of six days. So, is it still a buy?
The pullback had broken out of the downtrend line on an intraday time frame but could not sustain the highs. For the past two days, the bears are defending the downtrend line.
Currently, the NEO/USD pair is at the 20-day EMA. If this level holds, we may see another attempt by the bulls to scale above the downtrend line. We shall turn positive once the digital currency closes (UTC time frame) above $41.
On the downside, if the zone between $35.38, which is the 61.8 percent retracement of the recent pullback, and the 20-day EMA breaks, a retest of the $30 levels is probable.
The market data is provided by the HitBTC exchange. The charts for the analysis are provided by TradingView.
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