Shaurya Malwa · 1 day ago · 2 min read
News › Technical Analysis
Altcoin outlook: ethereum, XRP, bitcoin cash, litecoin, EOS technical analysis
Disclaimer: This article contains technical analysis, which is a methodology for forecasting the direction of prices through the study of past market data, primarily price and volume. The content presented in this article is the opinion of the author. None of the information you read on CryptoSlate should be taken as investment advice. Buying and trading cryptocurrencies should be considered a high-risk activity. Please do your own diligence and consult with a financial advisor before making any investment decisions.
Over the last three weeks, Bitcoin decoupled from the overall crypto market, with the coin’s market cap over 60 percent. In fact, at the time of press, Bitcoin’s dominance is 60.15 percent. Yet, some traders expect major altcoins to begin breaking out to counteract the rise in BTC’s dominance. Technical analysis of the top five altcoins could give a glimpse of when the trend will shift.
Up until now, ethereum has appreciated more than 150 percent since its low in Dec. 14, 2018, when it reached $80 following a precipitous drop from an all-time high of $1,400 on Jan. 13 of the same year.
Now, there are two different patterns with contrasting outcomes forming on ethereum’s weekly chart. One outcome could indicate a continuation of the recent bullish trend while the other suggests a further drop in market valuation:
- There seems to be an ascending triangle developing, which could be at its breakout stage. Previously, ETH went through a fake breakout to then pull back into the triangle and now it appears to be breaking above it once again. The horizontal line at the top of the triangle was drawn along the swing highs, while the rising trend line was drawn along the swing lows. The target of this pattern can be calculated by taking the height of the triangle and adding it to the breakout point.
- Conversely, a rising wedge seems to be forming on the same chart. This is a bearish pattern that begins with a wide bottom and as prices increase it contracts and the trading range narrows. Once the support trendline breaks, a target can be measured by subtracting the height of the triangle from the breakdown point.
On the three-day chart, ether could be about to break the major resistance that it has encountered with the 100-three-day moving average, signaling higher prices. If it is able to break above it, the next resistance level will be determined by the 200-three-day MA, which is currently around $395, and the 100-three-day MA will become a support level. However, if ethereum is not able to breakout and instead falls in price, it could be held by the support trendline or by the 50-three-day MA that sits around $140.
Since the beginning of the year, XRP has staggered within a trading range without any major price movement. It seems like investors have lost interest in this cryptocurrency, even though it rose more than 64,000 percent in the bull market of 2017, from approximately $0.005 to $3.45.
A massive head-and-shoulder (H&S) pattern has been forming on XRP’s weekly chart, which predicts a bullish-to-bearish trend reversal. According to Investopedia, this pattern is considered one of the most reliable trend reversal patterns.
The H&S will be validated if XRP breaks below the “neckline” or support line at $0.28 with significant volume, but it will be invalidated if the price moves above the height of the right shoulder at around $0.78. The target can be calculated by measuring the height between the “head” and the “neckline” and subtracting it from the “neckline.”
On the three-day chart, XRP can be seen trading inside a parallel channel since Dec. 15, 2018. Every time it reaches the top of the channel it reverses to test the bottom of the channel and vice versa.
Now that XRP is trading on the lower side of the parallel channel, it could be expected to move up to the middle or upper side of the channel based on its recent price action. A break above the top of the resistance line could take XRP to new yearly highs while a break below the support line could take it to lower lows.
Since the first week of April, bitcoin cash has moved up around 130 percent. Even after seeing an exponential increase in its market valuation, it seems like there is more room for BCH to go up.
On the weekly chart, a bull flag formed and now it seems to be at its breakout stage. A target is given by adding the height of the flagpole, which is around 52 percent, to the top of the flag sitting around $290. At the time of writing, bitcoin cash is trading at $352, which is very close to the ultimate target given by this pattern.
The resistance and support levels on the three-day chart indicate that BCH already broke a major resistance point that now has been converted into support, which was the $232 level. The next major resistance point is sitting at around $600. BCH would have to first trade above $400 to advance to the next resistance point.
Litecoin has experienced a steady increase in its market valuation since it reached a low of $22 on Dec. 14, 2018. Since then, it has appreciated more than 350 percent. After reaching a high of $100, it failed to break major resistance at $97, after which it pulled back to support at $67.5. LTC has now started inching up again in tandem with BTC.
If LTC is able to break above the $97 resistance level, the next resistance level sits at around $150. Failing to break above the current level could take it back to the $67.5 support level or even the $50 support level.
On the three-day chart, litecoin can be seen trading inside an ascending parallel channel since Dec. 14, 2018. A fake breakout of the channel was triggered on Apr. 3, 2019, but it quickly returned to a trading range within the bottom of the parallel channel.
After bouncing off the lower line of the channel, LTC seems to be fighting the resistance given by the middle line. If it is able to break above the line, then it could go as high as the upper line of the parallel channel. A breakout of this pattern could trigger higher highs, while a break below the channel could take it back to the support levels previously described.
EOS seems to have formed an Adam and Eve bottom from Dec. 2018 to Feb 2019. Following the break of the $2.90 resistance level, EOS has reached the $6 target given by the pattern.
Based on the weekly chart, EOS has formed two consecutive golden crosses between the 7-week MA and the 30-week MA, and the other one between the 7-week MA and the 50-week MA. Investopedia describes a golden cross as one of the most effective patterns to predict an upcoming bull run.
Ideally, the 30-week moving average should also cross above the 50-week moving average as an ultimate confirmation that the pattern has been validated.
On the three-day chart, EOS is trading between the 100-three-day MA—serving as support—and the 200-three-day MA, acting as resistance. A break above resistance could take EOS to higher highs, while a break below support could take it down to test the 50-three-day MA.
While bitcoin has risen over 130 percent since its December low, most altcoins have risen equally, or higher, during the same time span. A different number of indicators are predicting that the top altcoins could soon experience bullish momentum. XRP, however, could have a bearish future based on this technical analysis.
Up until now, nearly all altcoins have lost value relative to bitcoin over the last month. If these cryptocurrencies are able to break the different resistance levels described above, it could trigger a rally that allows them to trade at more favorable rates against BTC.
The overall sentiment of the market, as the charts indicate, is bullish. That said, given the rapid increase in prices, a correction in BTC prices could cause panic and erase newfound gains for the entire market over the short term.
Disclaimer: None of the information above should be construed as investment advice. Trading cryptocurrencies is extremely risky and we advise our readers to only trade what they can afford to lose.