Most major cryptocurrencies have broken down of their first support. Has the recovery from the lows come to an end?
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There is a large disconnect between traditional investors and crypto investors on how they approach cryptocurrencies. Billionaire investor Stanley Druckenmiller said that he would neither buy nor sell Bitcoin because he does not find inherent value in it. He also said that due to its sharp volatility, Bitcoin can never be a medium of exchange.
Another investor, Peter Boockvar, chief investment officer at Bleakley’s believes that Bitcoin can be used as a leading indicator to forecast the directional movement in the stock markets or gold. But he prefers to own gold over Bitcoin.
Compare this with analytical firm Delphi Digital recently terming Bitcoin as the “King of the Assets Class Hill” because of its huge outperformance in May, compared to traditional asset classes. It is worth noting the uncorrelated performance of Bitcoin, which makes it a valuable addition to any portfolio. Should traders buy now or wait for lower levels? Let’s take a look at the charts.
We had projected that the Bitcoin (BTC) rally is tiring out and that is what happened. It plunged on June 3 and 4, which pulled it back to the critical support of $7,413.46. Currently, the bulls are attempting to hold the level but the rebound lacks strength, which is a negative sign.
The bears will try to make use of this opportunity and sink the BTC/USD pair below $7,413.46. If successful, the pair can plummet to the 50-day SMA. This is a critical level to watch because the bears have not been able to close below it since February 18. A breakdown will indicate that the trend has changed.
Our view will be invalidated if the bulls defend $7,413.46. In such a case, a consolidation between $7,413.46 and $9,053.12 is possible. The cryptocurrency will pick up momentum above $9,053.12. We will wait for the correction to end before suggesting long positions once again.
Ethereum (ETH) corrected back close to the support of $225.39 on June 3 where buying emerged. The 20-day EMA is flattening out and the RSI has dipped closer to the center. This points to a consolidation in the near term.
If the bulls defend $225.39, the cryptocurrency might rally to $280 where it is again likely to face resistance. On the other hand, a breakdown of $225.39 will indicate weakness and can plummet the ETH/USD pair to the 50-day SMA. We expect a strong support at this moving average because the pair has taken support on it repeatedly since March. We are currently neutral on the digital currency.
We hope traders booked partial profits closer to $0.45 as we had suggested in our previous analysis. The repeated failure to scale above the overhead resistance of $0.45 attracted profit booking that has dragged Ripple (XRP) to the critical support of $0.37835. The failure of the bulls to defend the 20-day EMA is a negative sign.
Currently, the 20-day EMA has flattened out and the RSI is close to 50. This points to a probable range formation in the short term. Our view will be invalidated if the bears sink the XRP/USD pair below the $0.37835–$0.35660 support zone. Therefore, traders can protect the remaining long position with the stop loss of $0.35.
Bitcoin Cash (BCH) has broken down of the 20-day EMA. This is a sign that upward momentum has weakened. The earlier support of 20-day EMA will now act as a resistance. If the bulls fail to scale this level quickly, a drop to the 50-day SMA and below it to the support line of the channel is likely.
We anticipate strong buying between the 50-day SMA and the support line of the channel. If this zone holds, we might suggest long positions with a close stop loss, kept just below the channel.
However, if the bulls push the price back above 20-day EMA within the next couple of days, the BCH/USD pair can move up to $480. Presently, we do not find any reliable buy setup.
Contrary to our expectation, EOS did not find any strong buying close to the 20-day EMA and the critical support of $6.8299. This is a bearish sign. Currently, the bulls are attempting to hold the 50-day SMA but the weak bounce suggests a lack of demand. A breakdown of the 50-day SMA can sink the digital currency to the support line of the ascending channel, below which, a drop to $4.4930 is probable.
The 20-day EMA is turning down and the 50-day SMA is flattening out. The RSI is also back below 50, which suggests that the bears have a slight edge. Our view will be invalidated if the bulls quickly scale the overhead resistance of $6.8299 and sustain it. If that happens, the EOS/USD pair will again try to breakout of the channel. We will wait for the price to close (UTC time frame) above $6.8299 before suggesting any long positions.
Litecoin (LTC) is attempting to hold the 20-day EMA. This is a positive sign. It shows buying on dips. If the price rebounds from the 20-day EMA, the bulls will again try to ascend the overhead resistance zone of $121.9018–$127.6180.
On the other hand, if the bears sink the LTC/USD pair below the 20-day EMA, it can decline to $91. This is a strong support, which is likely to hold. The 20-day EMA is flat and the RSI is close to the midpoint. This suggests a range formation in the short term. The support of the range might be at $91 and resistance at $120. A breakdown of $91 will signal weakness and will attract further selling. Therefore, traders can maintain the stop loss on the remaining long position at $90.
But if the BNB/USD pair fails to sustain above the 20-day EMA, it can dip to the 50-day SMA. We expect strong buying close to this level. The bears have not sustained below the 50-day SMA throughout this year, barring the fall on May 9. This shows that buyers lap up the cryptocurrency on dips. Therefore, we will watch the price action at the 50-day SMA closely and propose long positions if we spot a bullish pattern.
Bitcoin SV (BSV) continues to be in an uptrend. Both the moving averages are sloping up and the RSI is in the overbought zone. This shows that the bulls are in command. The first stop on the downside is $176.083, which is the 38.2% Fibonacci retracement level of the recent rally. But if this level cracks, the fall can extend to the 50% retracement level of $152.015.
If the bulls arrest the pullback at $176.083, it will indicate strength and will increase the chances of a breakout above $254. If that happens, the BSV/USD pair can surge to $307.789 and above it to $340.248. Another possibility is that the pair enters into a range to consolidate the gains. We will propose a trade if we spot a setup that gives the traders a good risk-to-reward ratio.
Stellar (XLM) has broken down of the 20-day EMA and is presently trying to stay above the 50-day SMA. The horizontal support of $0.11507853 is also located just below the 50-day SMA, hence, we anticipate the buyers to step in to defend this level.
The flattish moving averages and RSI just below 50 suggests a balance between the bulls and the bears. If the XLM/USD pair rebounds off $0.11507853, it might rise to $0.14861760 and remain between these levels for a few days.
If the pair plummets below $0.11507853, it will indicate an advantage to the bears and a drop to $0.08641170 is probable. We withdraw our existing trade suggestion and will again give a recommendation if we spot a reliable buy setup.
Tron (TRX) turned down sharply after reaching our first target objective of $0.040. However, the price remains above the 20-day EMA, which is sloping up. This suggests that bulls have a minor advantage. If the 20-day EMA holds, we expect another attempt by the bulls to break out of $0.40.
On the other hand, if the 20-day EMA gives way, the TRX/USD pair can plunge to $0.02815521. A break of this support will be a negative sign and can drag the price back toward $0.02094452. Traders who have long positions can lighten up closer to $0.040. Until then, stops can be maintained at the breakeven.