Cryptocurrency Trade Analysis: Tuesday July 10, 2018Jul 10, 2018, 11:34AM
Major cryptocurrencies rebounded slightly last week, although optimism is not high as institutional investors are yet to enter the market.
The previous week showcased a slight upside recovery for some of the major cryptocurrencies and altcoins. Bitcoin saw two bounces which pushed the price up to the $6,700 mark. However, there was not much optimism to keep buying beyond this point as institutional investors are yet to enter the market in full swing. What has been taking place this week is a few big names taking advantage of buying the dips at $5,600 and $5,800 and raking in some short-term profits. This looks likely to be the trading pattern on BTC for some time to come, especially as governments like China and India continue their onslaught on cryptocurrency trading, and as the SEC continues to hound many ICOs and altcoins.
Cryptocurrency exchanges are also facing renewed onslaughts from hackers on one end, and from the organized banking system on the other. Exchanges are devising new ways of beating the banking restrictions, and exchanges like Binance seem to be seeking newer, more receptive markets in emerging market countries.
Most of cryptocurrency trading continues to be dominated by retail investors, meaning that a lot of emotion and sentiment will keep coming to play in the trading of the top cryptocurrencies.
So, what does the start of the week hold for the top 5 cryptocurrencies?
Bitcoin recently hit new lows for the year at $5,703 and $5,808, but saw strong buying interest at these levels which have pushed it well beyond the $6,000. However, it has been unable to cross the major resistance at $6700, testing this level twice in the last few days. So what is the outlook for BTC/USD?
The issue with the price of Bitcoin is that all these years, retail money is what has been driving prices. However, the overall bearishness of the market has largely scared off retail money, and those within the system are only there out of fear of losing huge amounts. Many retail investors bought into the hype that Bitcoin prices would be hitting $50,000 in 2018 and many of such investors bought above the $10,000 mark. Some of these have sold at a loss and others are holding on shakily for dear life. The major trigger for a huge upside move would have to come from inflow of institutional funds. Until this happens, Bitcoin/USD is going to be stuck in a range with $5,500 (the low predicted by Citi last year) as the floor and $7,000 as the ceiling.
We therefore expect trading to occur within this range for some time to come. Intraday trades with pivot points show prices for the day oscillating between R1 ($6,699) and S1 ($6,514), with a bearish bias.
The long term daily chart shows that the 23.6% Fibonacci level of $6,706 remains a strong resistance, with RSI remaining flat at 51.0 and OBV turning downwards. The 20 EMA is also flat at this point. This indicates that any bullish moves for the day are effectively off, and the negative bias remains. However, price would need to break below the minor support for the week at $6,374 to resume further downside to $6,328 and below.
Presently, the mood of the market is bearish, and many traders look for opportunities to sell on brief rallies. The pivot points will aid the trader in this regard. At this time, the price is decidedly pushing hard for the S1 pivot from the central pivot point on the hourly chart. Violation of the S1 pivot ($6,514) will see prices pushing towards S2 at $6,438.
Ethereum has been under pressure for quite some time, and the bearish pressure persists at the present time. Price has broken below the 20 EMA, indicating that the bearish push is firmly on. On an intraday basis, the price picked up the day’s trading at $464, which was below the central pivot. In a few hours since, price has broken below the S1 and S2 pivot points.
We also need to point out the presence of a rising wedge on the daily chart, which has effectively been broken to the downside. The OBV is also turning downwards, confirming the bearish sentiment on the ETH/USD pair.
We expect the bearish move on the ETH/USD pair to continue, at least until the most recent support at $393. If this level is broken to the downside, then the price will push for the support formed in March 2018 at $325.
Ripple continues to underwhelm in the market. Fundamentally speaking, Ripple Labs is struggling to increase adoption of its product in the marketplace, and has resorted to improve the appeal of its tokens in the cryptocurrency market by offering a series of airdrops. The company is also facing a third class action lawsuit in three months. These factors have had a negative impact on the price of its token. Ripple continues to dally around its 2018 support level, with price currently at $0.42, and has been stuck at the $0.39 to $0.43 range since June 2018.
The long-term daily chart shows a descending triangle which is at the point of confluence. Trade volumes are presently very thin, and a lot will hinge on the outcome of the class action suits and the SEC declaration on whether Ripple is a securitized token or not.
We see the XRP/USD currency pair remaining within the range of $0.38 to $0.45 at least for the next week. If the SEC declares Ripple as a security, this could spur renewed rounds of selling, which will prompt resolution of the descending triangle, thus driving the price steeply down. The trading range will continue to remain tight until determination of Ripple’s status by the SEC.
Bitcoin Cash has not made significant moves to the upside or downside, being stuck in a range that is presently encapsulated in a descending triangle pattern.
There is presently very little upside impetus to be able to break the downtrending resistance line, and we also see the 20 EMA forming a strong resistance to further upside price action. There is an increase in bearish sentiment which is further strengthened by the 20 EMA resistance, the downtrending trendline component of the descending triangle and the break of the OBV support line in the indicator window.
We therefore have a solidly bearish view of the BCH/USD and expect the price action to push to downwards to the next level of support at between $650 and $671.
EOS seems to have found itself firmly in the grip of bears, as it fell by 12% overnight. This is coming as the cryptocurrency’s owners continue with the process of implementing the Mainnet technology for its token.
The bias for the EOS/USD is bearish. Further upside is presently limited by the blue upper trendline, which is poised to hold at a resistance level of $8.00 heading into the second half of the week. Price is presently pushing hard at the currency support level of $7.51. This is also where the trendline support on the weekly chart is found.
We expect this support level to hold in the short term and to be tested several times. Therefore, our view is that price will bounce between the two trend lines that constitute the symmetrical triangle on the first chart in the short term. Price will have to be accompanied by significant volumes to be able to break out of either side of the triangle.
Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.