Was the current pullback an opportunity to go long or will the relief rally reverse direction and catch many aggressive bulls off guard?
The theft of 342,000 Ether (ETH) from South Korean cryptocurrency exchange Upbit could have halted the current relief rally taking place in the crypto market. However, Lee Seok-woo, the CEO of Upbit’s operator, Dunamu said that the company will cover for the losses. This erased some of the initial concerns of the market participants and improved sentiment. When sentiment is negative, the markets fall quickly but take a lot longer to rise.
This week a bullish bit of news came from Bitcoin ATM firm Bitstop. The company intends to install Bitcoin ATMs at several Simon Malls locations in the United States. Ahead of the holiday season, Bitstop has already installed Bitcoin ATMs at five locations. Andrew Barnard, Bitstop co-founder and CEO said that the “customers can conveniently buy Bitcoin while doing their Black Friday and Christmas holiday shopping,” as it is the “perfect gift for family and friends.”
Daily cryptocurrency market performance. Source: Coin360
While the crypto markets are well below their yearly highs, the US S&P 500 is on a tear, as it has been making new all-time highs for the past few days. As market participants want to end the year on a strong note, they usually follow momentum. They tend to sell the underperformers and buy the outperforming asset classes. This might also be one of the reasons that has been dragging the crypto markets lower in the past few days.
Currently, Bitcoin and numerous altcoins are posting gains as the top digital asset strongly broke above a key resistance at $7,400. Let’s analyze the charts to see which cryptocurrencies are showing buy signals.
Bitcoin (BTC) has been facing stiff resistance at $7,337.78 for the past four days. This line had acted as a strong support previously, hence, we anticipate the bears to defend it aggressively.
BTC USD daily chart. Source: Tradingview
If the price reverses direction from the current levels, the bears will try to sink it below the recent low of $6,512.01. If this support cracks, the drop can extend to the 78.60% Fibonacci retracement level of $5,533.90.
Conversely, if the bulls can push the price above the overhead resistance of $7,337.78, a move to the 20-day EMA is likely. This will again act as a stiff resistance but if crossed, a rally to $9,080 is possible.
As the 20-day EMA is sloping down and the RSI is in the negative zone, the advantage is with the bears. Therefore, we will wait for the BTC/USD pair to indicate strength before recommending a trade in it.
The level, which acts as a strong support on the way down behaves as a strong resistance once broken decisively. Therefore, $151.829 is acting as a strong overhead resistance. The failure of Ether (ETH) to break above $151.829 will attract sellers.
ETH USD daily chart. Source: Tradingview
If the bears can sink the price below the recent low of $131.484, the downtrend will resume. The next support on the downside is $120.
However, if the bulls can propel the price above $151.829, the ETH/USD pair will pick up momentum. The next move can be to the 20-day EMA and above it to $173.841. We will wait for the price to sustain above $151.829 before recommending a trade in it.
XRP is looking weak. Even though the RSI is in oversold territory, the relief rally is struggling to sustain above the first overhead resistance at $0.22. This suggests that the market participants are still not confident that the decline has ended.
XRP USD daily chart. Source: Tradingview
The bears will try to reverse the direction from current levels and resume the downtrend by breaking below the low of $0.20041 made on Nov. 25. A new yearly low is likely to result in panic selling that can drag the price to $0.18.
Our bearish view will be invalidated if the XRP/USD pair rallies above $0.22 to $0.24508 resistance zone. We will wait for the trend to change before recommending a long position in it.
Bitcoin Cash (BCH) has been stuck inside a tight range of $218.57 and $192.52 for the past four days. If the bulls can propel the price and sustain it above the range, a move to $241.85 is likely. As the 20-day EMA is located just below this level, we expect the bears to aggressively defend $241.15.
BCH USD daily chart. Source: Tradingview
If the next dip finds buyers at $218.57 or at $203.36, it will indicate demand at lower levels. Such a move will offer the traders an attractive risk to reward ratio on the long side. Hence, we might suggest a long position if we spot a bottom.
Nonetheless, if the BCH/USD pair turns down from the current levels and slides below $192.52, the downtrend will resume. The next support to watch on the downside is $166.98.
The bears are defending the overhead resistance zone of $47.1851 to $50. This is a negative sign as it shows a lack of urgency among buyers even at these levels. If Litecoin (LTC) turns around from the resistance zone and breaks below the recent low of $42.0599, a drop to $36 is possible.
LTC USD daily chart. Source: Tradingview
However, if the bulls can propel the price above the overhead resistance zone, a move to $62.0764 is possible. Above $50, though the moving averages will act as a resistance, we expect the LTC/USD pair to scale above it. We might suggest a long position if the price sustains above $50.
The bulls are attempting to carry EOS to the 20-day EMA. In a strong downtrend, the relief rallies last between one to three days. The 20-day EMA is sloping down and the RSI is in the negative territory, which suggests that bears are in command.
EOS USD daily chart. Source: Tradingview
If the price turns down from the 20-day EMA, the bears will try to sink the price below the critical support at $2.4001. If successful, a retest of the yearly low is possible.
Conversely, if the bulls defend the next dip towards $2.4001, it will indicate demand at lower levels. The EOS/USD pair will pick up momentum on a breakout of the moving averages. We will watch the next dip before proposing a trade in it.
Binance Coin (BNB) is stuck inside the range between $16.50 and $14.2555. A consolidation near the strong support usually results in a breakdown. If the bears can sink the price below $14.2555, the downtrend will resume. The next target on the downside is $11.30.
BNB USD daily chart. Source: Tradingview
Conversely, if the bulls defend the support at $14.2555, the BNB/USD pair will extend its stay inside the range for a few more days. A breakout of $16.50 will be the first sign that buyers are back in action. Until then, we remain neutral on the pair.
The relief rally in Bitcoin SV (BSV) hit a barrier close to the 20-day EMA. The failure of the bulls to sustain the price above $107 in the past two days shows a lack of demand at higher levels. However, the buyers jumped in to support the price during the intraday dip today, which suggests accumulation at lower levels.
BSV USD daily chart. Source: Tradingview
The BSV/USD pair will pick up momentum after it breaks out of the moving averages. Alternatively, if the price again turns down from the moving averages, the bears will attempt to sink the pair below the support at $92.693. If successful, a drop to $78.506 is possible. We will wait for the price to sustain above $107 before turning positive.
The pullback in Stellar (XLM) has been weak. This shows that buyers are not confident that a bottom is in place yet. The bears will try to break below the $0.056 to $0.051014 support zone. With the 20-day EMA sloping down and the RSI close to oversold territory, the advantage is clearly with the bears.
XLM USD daily chart. Source: Tradingview
If the support zone gives way, the downtrend will resume. Though the pattern target is much lower, we will watch the $0.040 levels closely.
Conversely, the bulls will attempt to carry the XLM/USD pair to the 20-day EMA. If the price breaks out of the moving averages, a move to $0.088708 is possible. We will watch the price action for signs of a reversal before suggesting a trade in it.
Tron (TRX) is struggling to scale above the overhead resistance at $0.0157773. This is a negative sign as it shows that the sentiment is to sell the rallies than buy the dips. The downsloping moving averages and the RSI in the negative territory indicate that bears are in command.
TRX USD daily chart. Source: Tradingview
The bears will try to resume the down move by plunging the TRX/USD pair below the critical support at $0.0136655. If this support cracks, the next stop might be the $0.0116262 to $0.011240 support zone.
Conversely, if the bulls push the price above the moving averages, a move to $0.020 and above it to $0.02340 is possible. We will wait for the price to confirm a bottom before proposing a trade in it.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Market data is provided by HitBTC exchange.