The previous trading week brought a lot of disappointing news for cryptocurrency investors as most of the coins were trading under the heavy selling pressure, charting new low levels. The market volume had lost a significant part as pessimistic traders’ sentiment kept weighing on the price action. As a result of seven days trading cycle, cryptocurrencies declined with Bitcoin Cash leading the losses (-36%). EOS (-28%) and Litecoin (-21%) were also among the weakest performers, while an additional demand during the weekend trading sent some of the cryptocurrencies soaring. Bitcoin managed to recover some of the previous losses, finishing the trading week with 12.6% losses, while the second largest assets, from the market cap point of view, lost 13.6% of its value. The technical outlook suggests further downside pressure on the long-term perspective. However, some preliminary sings have been noticed for a potential bullish reversal and a deeper recovery in the heaviest volume-weighted assets in the cryptocurrency market.
The long-term downtrend is obvious for Bitcoin, however, we would not recommend shorting BTC/USD directly from current levels. Two possible scenarios are on the table. The first one suggests a bearish continuation and further slide of Bitcoin price, given the strength of the selling pressure. The second one suggests a bullish retracement and it’s more likely, in our opinion amid several technical signs. BTC/USD has been extremely oversold recently as fast RSI oscillator did not chart such low value within the whole history on record. MACD slow indicator points to a bullish divergence on lower lows of the price and higher lows of its lines. That divergence is confirmed by the same RSI pattern which is a bullish reversal signal. The last time the same divergence occurred was noticed on June 29 when Bitcoin bounced off the local lows and retraced for almost $2000 in 18 days before continuing the downtrend. The current situation is a bit different to the previous example, as the price breached the blue descending trendline, which used to work as the support, holding prices three times since the market crash at the beginning of 2018. Another doubtful factor for the retracement scenario is that BTC/USD already tested that line from downside and failed to break it through. Nevertheless, shorting Bitcoins from current levels would not be a correct idea from the technical point of view, as the conservative strategy suggest the test of two crucial levels before the further decline: $4277.2 and $5896.8 (89-days simple moving average). Aggressive traders might consider going long on Bitcoin, setting a tight stop-loss order slightly below the recent bottom, and targeting the levels mentioned above.
Etherium bounced from the bottom range of the descending channel, coming back above $100 mark after testing local bottom around $83. The bears would wait for ETH/USD to retrace towards 21-days exponential moving average before renewing further activity. Additional technical tools such as Bollinger %R and Williams %R oscillators are headed towards 50% levels, measuring the bearish momentum. Intraday traders should monitor those indicators in order to understand the market's intentions around the level of approximately $120. If the bulls would not be able to shart a clear daily close above those resistances, we might see a further decline of Etherium with fresh short positions to be considered. Otherwise, a bullish extension would be on the table if the price breached $120 clearly. In that case, postponed buy-stop orders could be set, targeting the upper range of the descending channel which is currently places slightly above $180. If-done orders should contain stop-loss order in the range of $109/110, while the take-profit orders should be relevant to traders’ money management rules. Conservative traders should consider waiting for ETH/USD to retrace towards the resistance indicated above and monitoring Wliiams %R oscillator for the overbought level to signal the bearish reversal before going short on Etherium, as the long-term downtrend is still in place.
We expect Ripple to bounce to 61.8% Fibonacci Retracement level of the recent fall started on November 06. The target also represents a strong psychological resistance at $0.40000 (round figure). The bears were unable to reach the descending median line which connects the top on July 03 with the local bottom on October 11. The static horizontal support at 0.26330 (the lowest daily close recently) represents a strong bullish defence line, below which stop-loss orders have to be hidden for those traders who are aggressively bullish on Ripple. Another technical analysis tool, Williams %R oscillator, confirmes the suggestion of the bullish retracement as its line has crossed the oversold level of -20 indicating a further strength to -50 mark at least. An intermediate resistance to check the bullish momentum sustainability is placed at $0.35440 (78.6% Fibo). The price action should be assessed on the market’s behaviour around that level, as well as partial profit from long positions has to be taken there.
EOS has been showing bullish reversal performance at the time of writing this outlook. First of all, EOS/USD had bottomed at $1.6838 (lowest close price on the H4 chart below) on Friday, while Bollinger Bands with the period 21 showed a clear buy-signal as the price failed to break through the bottom of the range. Second, the bullish run was not halted by the middle BB line, accelerating the momentum towards the upper line of the range. If the close price was able to breach the upper BB line, the next resistance would come near the descending trendline. Once the last bearish barrier is overcome, the reversal pattern will be completed and a new uptrend will start. ADX and DI indicator confirmes the previous suggestions with its lines narrowing the range and crossing in other to be placed in order for the bullish run. Aggressive longs are possible, however, any whipsaw down would be even better to use buy-dips trading approach.
Litecoin has already completed the bullish reversal pattern on H1 timeframe, according to Ichimoku Cloud trend indicator. The cloud turned positive, all of the lines are in the bullish continuation mode, and, what is more important, LTC/USD managed to get out of the span’s uncertainty. The recent peak represents resistance at $27.858 and breaking it is just a matter of time. The real target for the bulls is placed at $30.662, the highest price of Thursday’s retracement. We doubt that the market would be so kind as to give us a deeper entry level than currently, so going long on Litecoin would be a lucrative trading strategy, given the fact that it’s one of the first cryptocurrencies showing preliminary signs of a possible bullish reversal. Stop-loss orders would be rather deep for such a position. The upside risk persists as long as LTC/USD is trading above the lower range of Ichimoku Cloud ($26.637) and the latest bottom (23.384).