A number of technical indicators are signaling that the entire market is susceptible to a downturn over the next few days, or even hours. Here are different scenarios for Bitcoin, Ethereum, XRP, and Litecoin and where they could be heading next.
In the last five days Bitcoin surged over 13 percent from a low of $7,790 on Oct. 7 to a high of $8,815 on Oct. 11. This $1,025 movement was seen by some of the most prominent analysts in the crypto community as a sign that BTC was up for a further bullish impulse. However, the buying pressure behind it was not significant enough.
Based on its 1-day chart, Bitcoin’s upward momentum was rejected once again by the 200-day moving average. This is the fifth time since Sep. 26 that this moving average is able to act as a barrier containing the price of BTC from reaching higher highs. Even though the 200-day MA is losing its strength increasing the odds for an upswing, the latest price rejection formed an evening star candlestick pattern.
This is considered a bearish reversal formation that occurs at the top of an uptrend. Evening stars are composed of three candlesticks: a long green candle, a short candle, and a red candle. The combination of these three candlesticks indicate that Bitcoin is losing its bullish momentum and is likely to reverse.
Adding to the bearishness, BTC is moving back inside the no-trade zone where it was consolidating over the last two weeks. This area is defined by the $8,600 resistance and the $7,800 support level under the 12-hour chart. Since this cryptocurrency having trouble breaking above the 200-day moving average, a pull back to the support level is likely to happen.
A move down to $7,800 will pose a pivotal point on Bitcoin’s trend. Breaking below this level of support could trigger a steep decline to around $6,900 or $6,300. But, a spike in buy orders around the $7,800 level could allow BTC rebound to $8,600. Such an upswing could have the buying pressure necessary for this crypto to finally break above the 200-day moving average and surge to $9,500 or even $10,000.
After plummeting over 31 percent to reach a low of $153 on Sept. 26, Ethereum has been contained within an ascending parallel channel on its 1-day chart. Since then, every time it reaches the bottom of the channel it bounces off to the middle or the top. But, when it reaches the top it falls back to the middle or the bottom.
At the moment, ETH is trading around the middle line of the ascending parallel channel following its move to the top. Although Ethereum could bounce off this area to make a higher high, it does not seem like it will and a move to the bottom can be expected. This is due to a sell signal presented by the TD sequential indicator (in the form of a green nine) on ETH’s 12-hour chart.
The bearish signal estimates a one to four candlesticks correction that could take this cryptocurrency to test the next levels of support that sit around $177, $169, and $157. Everything will depend on Ethereum’s ability to move below the $184 support.
Nonetheless, a spike in volume could invalidate the bearish outlook given by the TD sequential indicator. If Ethereum is able to gain the $195 level as support, it could try to test the next resistance levels at $207 and $225.
XRP recently reached price levels that have not been seen since 2017 as it moved below $0.22. Based on a series of support and resistance levels, this cryptocurrency is currently trading within a no-trade zone between $0.24 and $0.30. A clear break outside of this range could help determine where XRP is heading next.
Breaking below $0.24 could take this crypto to test the next level of support around $0.198. Conversely, moving above resistance could trigger a spike in buy orders allowing XRP to hit the next level of resistance that sits around $0.38.
When looking at XRP’s 12-hour chart, it seems that it will soon try test the $0.30 resistance level. Under this time frame, this crypto is trading at the bottom of an ascending parallel channel that formed since Sept. 26. If XRP’s price movements continue to be contained within this channel, a rebound to the top could be underway.
It is worth noting that Peter Brand, a renowned technical analysts with over 40-years of trading experience, believes that the recent swing low that XRP made provided “some evidence” that it is bottoming against Bitcoin. Despite the bullish prediction, a report by the Crypto Rating Council concluded that XRP has a high probability of being classified as a security by the U.S. Securities and Exchange Commission. Due to the regulatory uncertainty that surround this cryptocurrency, it may be wiser to wait for an official statement by the Commission before entering a trade because such a ruling could have a strong adverse impact on the price.
On Oct. 9, Litecoin broke out of the no-trade zone where it was trading since Sept. 24. But, the bullish momentum was not supported by the necessary volume to allow a higher push to the $64 resistance level. As a result, LTC retraced below $57.70 and could be signaling a further correction to $53 before the next major move.
Based on the 12-hour chart, a significant price swing could come soon since the Bollinger bands are squeezing. Squeezes are indicative of periods of low volatility and are typically succeeded by periods of high volatility. The longer the squeeze the higher the probability of a strong breakout that defines the direction of the trend.
If Litecoin is able to break below the $53 support level it could test the next levels of support around $49 and $44. Nevertheless, a spike in volume with a clear break above $57.70 could take LTC to $64 or even $71.
Despite the recent bullish impulse seen across the top four cryptocurrencies by market capitalization, the trading volume behind them has been sluggish. The lack of buying pressure has not allowed Bitcoin, Ethereum, XRP and Litecoin to reach higher price levels.
Now, it seems like all of these cryptos, but XRP, could make a swing low during the next few days or hours that triggers some buy orders, subsequently, pushing them higher. But, if volume continues declining and the demand around key support levels is not enough the market could be about to take a downturn into lower lows.Posted In: Technical Analysis, Trading