The crypto market entered into a correction period this past week as most of the cryptocurrencies bounced off multi-month highs, and the market capitalisation was wiped out, and the trading volume fell. Double-digits losses were noticed for most of the Altcoins led by Bitcoin’s bearish trade as BTC/USD slid more than 10% in the 7-days period, while its rate dropped back below $7700 support level. Other cryptocurrencies also charted weak performance, while the weakest Altcoins were EOS (-18.29%), Bitcoin SV (-16%), Bitcoin Cash and Ripple (both lost -13.5%). The only gainer was Litecoin, which overperforms the general crypto market recently. Although the retracement was widely expected, some of the technical signs point to a further slide or corrective trade. Various crucial technical levels should hold rates from declining, otherwise, analysts would have to conclude the reversal pattern in the long run.
Bitcoin still has the bullish bias on long-term charts, but we decided to take profits and get a wait-and-see position as a more profound decline is possible. The Ichimoku Cloud indicator on the daily timeframe has a positive surplus, but BTC/USD dropped below the Base Line support, pointing to a potential test of the cloud’s upper range of $6981/7133. A conservative trading strategy suggests lower entry price for long positions, while the market’s momentum has to be assessed on the approach of support ranges. In contrast, aggressive traders had already jumped in, increasing the volume for speculative positions as several daily candlesticks have long downside shadows starting from June 4. Despite the mixed technical outlook, a breakthrough trading strategy is an option for a bullish scenario if the buyers were able to lift rates above the double resistance in the range of $8057/148. Therefore, a postponed buy-order is not something unusual for the crypto market, given the recent speed of the bullish action.
The support level we highlighted last week worked well, limiting Ethereum’s decline this past weekend. Fibonacci 61.8% Retracement at around $230 is not an easy nut to crack for the bears as a large volume of postponed buy-orders is hidden below that defensive barrier. Investors gladly entered the market, and if the support held, we might see ETH/USD coming back to the bullish action. The only condition for that is not to remain in the tight sideways range between two blue horizontal lines for quite a while. If the bulls had a strong momentum to breach the upper resistance, Ethereum could edge higher than the latest peak at $288, entering the ascending bullish channel in the same way it did at the end of May. We’re still long on Ethereum despite the recent retracement.
Although Litecoin’s daily chart has a mixed technical bias, we’re still bullish on the cryptocurrency as it was the only Altcoin gaining strength this past week. Parabolic SAR changed the sentiment as its dots jumped above the current price. However, LTC/USD charted a higher high this past week, suggesting the bullish strength. ADX mainline edged lower but remained above the threshold while +DI and -DI lines kept the positive surplus. Litecoin could re-test the support at around $112.50, and we’ll be watching intraday charts for entry signals in order to renew long positions, targeting our mid-term goal of $125.42 for the week ahead and $180.00 for this summer. An additional argument for the bulls to continue the buying pressure is related to the fact that the daily timeframe charted a continuation pattern of a flag with a base at $102.27 printed on June 4 (long downside shadow on the chart below).
EOS came back to the ascending green channel, which used to work in April this year. The price bounced off the high year-to-date levels as the bulls failed to perform sustainable gains above, while some speculators took profits, exiting the market. The daily chart setup reminds a head-and-shoulders reversal pattern, and the only thing missing is the right shoulder above the left one. If the H&S pattern was confirmed, EOS/USD could enter the long-term bear phase with the nearest target at $4.82. The bears have to overcome the support curve of 55-days exponential moving average before falling that deep. We’d go short on EOS once that happened.