The crypto markets have rebounded somewhat, with a long-term Summer rally is still not very likely. But what to expect in the short term?
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The market data is provided by the HitBTC exchange.
What is the future? Cryptocurrencies, gold or fiat currencies? The debate rages on. The traditional investors continue to view digital currencies with an eye of suspicion while the crypto supporters consider it as a tool to free the society from the clutches of the central banks and the governments.
Any new asset class that challenges the existing system will have its detractors. While a few nations are taking steps to attract the new technology, others remain skeptical.
After the current fall, most of the traders who wanted to become millionaires overnight are either sitting on huge losses or have sold out their positions. Only investors who believe in the potential of virtual currencies remain invested or are looking to make a fresh investment after the fall.
We believe that a repeat of last year’s Summer rally is unlikely. The cryptocurrencies might spend some time forming a large base upon which the next bull market will be built. Hence, the investors should not get unsettled by the daily fluctuations and should stay invested.
The traders, however, should enter only after the trend changes. So, do any of the top 10 cryptocurrencies qualify as a buy? Let’s find out.
Bitcoin held the 20-day EMA support on July 03, which is a bullish sign. The immediate resistance on the upside is at $6,877.36, which is the intraday high of June 19. The bears will defend the zone between $6,877.36 and the 50-day SMA aggressively, but we expect it to be crossed.
50 percent of our recommended position got filled at $6,650 and the remaining position will be purchased at $6,900.
We are buying on this rise because this is the first time the BTC/USD pair has broken out of the 20-day EMA since May 10 of this year. Additionally, this pullback has come after a positive divergence on the RSI. Therefore, signs point to a move to $7500 to $8000 at least.
Can we be proven wrong? Yes.
If the bears turn down from any of the above-mentioned resistances and break below $5900, the cryptocurrency will turn negative. Hence, please maintain the stop loss at $5900. We shall trail the stops higher at every available opportunity.
Ethereum turned down from the 20-day EMA on July 03 but the bears could not push it below $450 levels. This shows that the bears are losing strength.
If the bulls can sustain the ETH/USD pair above $490 levels, a rally to $550 followed by a move to $600 is possible. Hence, we retain our buy call proposed in the previous analysis.
As these trades are taken in anticipation of a change in trend, so we recommend to keep the position size small.
Ripple has finally managed to reach the 20-day EMA. The downtrend line 1 is also at this level. Hence, a break out of here should carry the digital currency to $0.56270.
On the downside, the zone between $0.42 to $0.45 will continue to act as a strong support. During the previous fall to $0.45 in April of this year, the XRP/USD pair had traded in a tight range before starting an upwards move.
We expect a similar range bound trading for a few days. Hence, we are not suggesting any trades on it right now.
Bitcoin Cash did not close (UTC time frame) above the 20-day EMA on July 03, hence, our buy call proposed in the previous analysis has not triggered.
The bulls have held the first support at $736, which is a bullish sign. A break out of $838 is likely to extend the pullback to $934 and thereafter to $1,200.
Therefore, we suggest a long position at $850 with the initial stop at $650. We shall quickly raise the stop loss to breakeven or close the position if the BCH/USD pair struggles to break out of $934. This is an aggressive trade, hence, please keep the position size about 40 percent of usual.
If the digital currency fails to break out to the upside within the next couple of days, it might witness another round of selling. A break below $736 will increase the probability of a retest of the June 29 lows of $657.8.
The bulls are trying to hold the $8.484 level on EOS, whereas, the bears are trying to defend the 20-day EMA. Even if the bulls succeed in scaling above the 20-day EMA, they will face another round of selling at the downtrend line.
The EOS/USD pair will become positive if it sustains above the downtrend line for a couple of days.
On the downside, if the virtual currency breaks below $8.484, it can decline to $6.8926 once again. Currently, we don’t find any reliable patterns, hence, we are not suggesting any trades on the pair.
Litecoin is facing resistance at the 20-day EMA. A break out of this level will result in a rally to $102 where the bulls will face a stiff resistance.
The LTC/USD pair will remain weak as long as it trades below the breakdown levels of $107.102.
We expect it to trade in a range and form a base in the next few days before starting a new uptrend. This one has been a huge underperformer; hence, we shall wait for a bottom to form before proposing a trade on it.
Cardano broke above the 20-day EMA on July 02 but could not build on it. However, it has not crashed down either, which is a positive sign.
If the bulls sustain above the 20-day EMA for a couple of days, a rally to $0.23 is possible with a minor resistance at $0.181617.
On the downside, $0.13 will continue to act as a strong support.
We shall recommend a long position on the ADA/USD pair only after it forms a new buy setup. Until then, it is best to remain on the sidelines.
The pullback on Stellar has hit a roadblock at the 20-day EMA. The bears will now try to push it down to the $0.184 levels while the bulls will try to stay above the 20-day EMA.
If the bulls break out and sustain above the 20-day EMA, a move to $0.31 will be on the cards with a minor resistance at $0.245.
However, the buy setup is not reliable. Hence, we suggest waiting for a couple of days before attempting a long position on the XLM/USD pair.
The pullback on IOTA is facing resistance at the downtrend line. However, we like the way the digital currency has held onto its recent gains. This shows that the traders who have purchased at the lows are not keen to cash out of their positions just yet.
A break out above the downtrend line can carry the IOTA/USD pair to the $2 mark with minor resistances at $1.33 and $1.75.
Therefore, we recommend a long position on a close (UTC time frame) above the downtrend line. The stops can be placed below the June 24 lows.
We are trying to buy close to the bottom, hence, the risk is high. Please keep the position size about 40 percent of normal.
The 20-day EMA continues to act as a critical resistance for Tron. The pullback from the June 29 lows is once again facing selling at this mark.
If the bears break below $0.03271480, a retest of the bottom of the range at $0.02382 is probable.
Even if the TRX/USD pair breaks out above the 20-day EMA, it might again face selling at the downtrend line and the $0.52 mark. Therefore, we shall wait for a new buy setup to form before recommending any long positions on the pair.
The market data is provided by the HitBTC exchange. The charts for the analysis are provided by TradingView.