WEEKLY REVIEW OF THE TOP 5 CRYPTOCOINS 27TH AUGUST 2019
Hi Crypto Network,
A full-fledged trade war is in progress between the top two economies of the world. If this escalates further, it might turn ugly for the global economy. Both countries might debase their fiat currencies to gain advantage with exports.
The Winklevoss twins believe that Wall Street has been lagging in reaping benefits from the new asset class of cryptocurrencies. It is retail investors who have been ahead of the financial institutions and “a lot of people have done really well.”
Marcus Swanepoel, CEO of cryptocurrency exchange Luno, said that potential returns in cryptocurrencies are astronomical considering the risk. Hence, he suggested that portfolio managers should hold some cryptocurrency in their portfolio. Let’s see if we spot any buying opportunities in the top five cryptocurrencies by market capitalisation.
Bitcoin continues to trade in the upper half of the descending channel. While this is a positive, failure to breakout of the moving averages and the resistance line of the channel shows a lack of demand at higher levels. Both moving averages are flattening out and RSI is just below the midpoint, which points to a balance between bulls and bears. Therefore, we are not recommending buying at current levels.
A breakout of the channel will indicate that bulls are back in the driver’s seat, which increases the probability of a resumption of the uptrend. Therefore, we retain the trade recommendation given in the previous analysis.
Conversely, if the price does not break out of the channel within this week, we anticipate bears to make another attempt to break below the critical support at $9,071. If that happens, the sentiment will turn negative and a slump to $7,427 is possible.
Ether has been range-bound between 20-day EMA and $178 for the past few days with a negative bias. Both moving averages are sloping down and RSI is in the negative zone, which shows that bears are in command. If the price slips below $178-$171 support zone, the trend will turn negative and a drop to $143.64 is probable.
On the other hand, if the price bounces off the support zone and breaks out of 20-day EMA, it will indicate that markets have rejected the lower levels and a rally to $237 is likely. Though there is resistance at 50-day SMA, we expect it to be crossed. The cryptocurrency is likely to pick up momentum after it breaks out of $237. However, we do not find a reliable buy setup at current levels, hence, we are not suggesting a trade in it.
XRP is in a downtrend. It has not been able to breakout of 20-day EMA, which shows that sentiment is negative and bears are using relief rallies to sell. If bulls fail to scale above $0.28524 within the next few days, probability of a retest of the recent lows at $0.2365 is high. If this support also fails to attract buyers, the downtrend can extend to $0.18.
Buying in a downtrend is not advisable because the position can quickly turn negative. It is better to wait for the trend to signal a turnaround before attempting long positions.
The first sign of a change in trend will be if the price ascends $0.28524 and sustains it for three days. Such a move will indicate that markets have rejected the lower levels. Above 20-day EMA, we expect the digital currency to move up to $0.37 and above it $0.46669. Traders who attempt this trade can keep an initial stop loss of $0.23.
Bitcoin Cash has not been able to breakout of 20-day EMA for the past seven days. This is a bearish sign as it shows a lack of demand at higher levels. If bulls fail to push the price above the moving averages within this week, probability of a fall to the neckline of the head and shoulders (H&S) pattern increase.
The H&S pattern will complete on a breakdown and close (UTC time) below the neckline. This will be a huge negative and can result in a quick decline to $166.98 and below it to $105. The risk of a breakdown remains as long as the price stays below the overhead resistance of $344.
A breakout of $344 will be the first sign that markets have rejected the bearish pattern. Failure of a bearish pattern is a bullish sign. Therefore, if the price sustains above $344 for three days, it is likely to quickly rally to $432.94 and above it to $517.75.
Litecoin has been trading between $70 and $80 since Aug. 15. This tight range trading indicates a status of equilibrium between buyers and sellers. If the price breaks down of $70, it will tilt the advantage in favour of bears and result in a quick fall to $60. With both moving averages trending down and RSI in the negative zone, the path of least resistance is to the downside.
However, if bears fail to capitalize on the advantage, we anticipate the bulls to attempt to scale above 20-day EMA. If successful, a move to 50-day SMA and above it to $107 is possible. Since June 27, the bulls have not been able to achieve two consecutive closes (UTC time) above 20-day EMA. Therefore, if the price sustains above 20-day EMA for three days in a row, it will increase the likelihood of a quick move to $107.
Traders can initiate long positions after three successive closes (UTC time) above 20-day EMA with a stop loss of $69.5. This is a counter-trend trade, hence, keep the position size 50% of usual.
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Live from the Platinum Crypto Trading Floor.