With the panic set in the cryptocurrency markets, the best move right now may actually be to buy - what do the charts say?
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
The market data is provided by the HitBTC exchange.
Panic has set in the cryptocurrency markets as investors dump their holdings at every opportune moment, fearing even larger losses. Usually, such selling sprees end with a bottom formation. The current sentiment in the crypto space is exactly the opposite to what it was in December 2017.
At the peak of the prices, the belief was that the digital currencies will not fall and even if they do, they will bounce back sharply. Thus, the only logical thing to do was to buy them at the prevailing price or miss the boat. Experts from the crypto industry also fuelled the expectations with their outlandish targets.
Fast forward to today. Most newbie traders who dreamt of big riches in crypto are instead left with huge losses. A return to the all-time highs is a goal that has almost been forgotten.
Many don’t even believe that cryptos can stage a decent pullback. At this point, crypto naysayers are entering to add more fear by forecasting a deeper fall, or worse, a complete collapse in digital currencies.
We did not agree with the prevailing sentiment of traders in December of last year, but were proven correct. Now we believe that the time has come again to move in the opposite direction from that of most traders.
Can we be proven wrong? That is definitely a possibility. Therefore, whenever we advise a long position, we also suggest a stop loss to help protect the capital. We don’t sit and dwell on it whenever our analysis is proven wrong. As traders, we watch the charts, form a new opinion and take the next trade when we find a reliable setup.
So, what do we see on the charts today?
Bitcoin plunged below the $5,910.65 mark on August 14, but only by a small margin. It found support at $5,900.06. Repeated attempts by the bears to break the $5,900 level have failed. This shows that lower levels are attracting buyers, which is a bullish sign.
Currently, the bulls are attempting a pullback that is likely to face resistance in the zone of $6527.77 — $6617.5. After this zone is crossed, the bears might try to defend the downtrend line and the moving averages but we believe that the risk to reward ratio favors entering long positions again.
Why do we keep looking to buy when everyone else is bearish?
The bears have tried four times to break the $6,000 line since February of this year, but have so far failed. The price keeps bouncing off this support. This shows that the buyers are accumulating around the $6,000 mark.
Once the bulls break out of the downtrend line of the descending triangle and the 50-day SMA, it is likely to attract short covering by the bears, which can propel the prices to $8,500 and higher.
Therefore, we suggest entering long positions if the BTC/USD pair sustains above $6,650 for four hours. The stop loss can be kept just below $5,900. Please use 50 percent of the usual allocation size for this trade. We shall add the remaining positions once the pair scales above the 50-day SMA.
The risk to reward ratio is attractive, hence we suggest buying the bounce off the $6,000 level. If our assumption is wrong, the stops will be hit and the positions will be closed with a business loss.
After outperforming the market for the past few months, Ethereum has been hit hard by the bears in the past several days. The selling intensified after the chart broke below the critical support of $400 on August 7.
On August 14, the ETH/USD pair plummeted below the key support of $280 and fell to an intraday low of $249.93.
Currently, the bulls are staging a smart recovery, which is likely to face stiff resistance at the 20-day EMA and at $358. On the downside, if the bears break the $249.93 line, the cryptocurrency can drop to the next support at $200. Although the RSI is oversold, we shall wait for the selling to end before attempting a buy.
Ripple has been a huge underperformer among the larger cryptocurrencies as it has lost more than 90 percent of its value from its intraday high of $3.317, reached on January 4 of this year.
We had been projecting a target of $0.24001 on the XRP/USD pair for the past few days and on August 14 it reached an intraday low of $0.24508.
The RSI is oversold, which points to a probable pullback. The first resistance on the upside will be the 20-day EMA.
We suggest traders wait for the prices to stabilize and turn upwards before attempting a buy.
Bitcoin Cash could not escape the selling pressure on August 13 and it broke below the support of $537.8221 for the first time since November 8 of last year. On August 14, the intraday fall extended to $473.9060.
The pullback from the lows is currently facing resistance at $537.8221. The previous strong support will now act as a resistance. If the BCH/USD pair breaks below $473.9060, it can decline to the next support at $400.
On the other hand, if the bulls quickly push the prices above $538, it will be an indication that the markets have rejected the lower levels and a pullback to the 20-day EMA is probable. We shall wait for a new buy setup to form before suggesting any long positions.
EOS found support close to the critical line at $3.8723 on August 13, when it dropped to an intraday low of $4.1778. The next support below $3.8723 is $3.
The EOS/USD pair has been in such a firm bear grip that the bulls have not been able to break out of the 50-day SMA since June 10. Therefore, if the price sustains above the 50-day SMA for three days, it will indicate a change in trend.
The RSI is deeply oversold, which increases the probability of a pullback. The 20-day EMA will offer a stiff resistance on any bounce from the current levels.
We shall wait for a new buy setup to form before suggesting a long position.
Even in this carnage, Stellar has held the critical support at $0.184. This is a positive sign, which shows a demand at these levels.
The XLM/USD pair has been trading inside the range of $0.184 — $0.25 since August 5. A break out of this range is likely to propel the prices towards the downtrend line at $0.32.
Therefore, we recommend a long position on the pair if the bulls sustain above $0.25 for four hours. The stop loss for the trade can be kept around the $0.18 mark.
As the sentiment is bearish, we suggest initiating the position with only about 50 percent of the usual allocation. Our bullish view will be invalidated if the bears break below $0.18.
We anticipated the bulls to defend the support zone of $48 — $52 and that is what had happened. On August 14, Litecoin declined to an intraday low of $49.466, where buying emerged.
The LTC/USD pair has been in the oversold zone since August 7, but the bulls have not been able to force a meaningful pullback. This shows sustained selling by the bears.
Currently, the bulls are attempting a pullback, which will face resistance at the 20-day EMA. We shall wait for the buyers to return and a bottom to form before proposing a trade on the pair.
Cardano broke below the support of $0.111843 on August 13 and plunged to an intraday low of $0.083192, which is just above our anticipated support level of $0.078215.
The failure of the bulls to defend the $0.13 and $0.111843 lines shows that the sellers have an upper hand. The negative momentum will show signs of waning if the bulls sustain above the downtrend line 2.
The ADA/USD pair will indicate a change in trend if it sustains above $0.13. We might suggest a long position when it’s above $0.15.
The incessant selling dragged Monero to an intraday low of $76.074 on August 14, which is just below our predicted support zone of $78 — $82. If the bears sustain below $76, the next support is way lower at $60.
Currently, the bulls are attempting a pullback, which is likely to face resistance close to the $100 level. The 20-day EMA is also located just above this level at $106.69.
The XMR/USD pair is in a clear downtrend. We shall wait for that to change before recommending any long positions on it.
We expected the bulls to defend the psychological level of $0.5, but the selling dragged IOTA to an intraday low of $0.4037, close to our lower target of $0.38. If the $0.38 level breaks, the fall can extend to $0.3350.
The IOTA/USD pair is in a downtrend but the RSI has entered deep into the oversold territory. Both moving averages are sloping down and the 20-day EMA will act as a stiff resistance on any pullback.
We don’t suggest buying on the first pullback from the lows. It’s better to wait for the pair to confirm a bottom before risking a buy.