This following analysis is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.
Bitcoin is leading the charge with a new lifetime high above $5000. The altcoins, however, are lagging behind, as bitcoin’s dominance increases to 53.2%, with a market capitalization of $85 billion, according to coinmarketcap.
So, has the market started to differentiate between the coins? Is it going to be a coin specific move henceforth or is it just that bitcoin is leading ahead and the altcoins will soon follow? Let’s see what do the charts forecast?
We had recommended traders to book partial profits on their long positions in our previous analysis, which were initiated at $4150. We did not book full profits because we expected bitcoin to breakout to new highs and we have been proven correct today. Traders are sitting on huge profits within a short span of time. So, is this a good time to cash in?
The cryptocurrency has broken out with strength. If the bulls manage to sustain above the $5000 levels for three days, it will signal a valid breakout, which is likely to continue higher. The next medium-term target objective on bitcoin is $6197.
As the momentum is clearly in favor of the bulls, we shall continue to hold our remaining 50% positions. However, we shall increase the stops to $4800, just below the low of the breakout bar. If price breaks down below $4800, it will signal a failed breakout, which may start a correction. Until then, we shall continue to trail the stop loss higher to protect our paper profits.
Ethereum has been trading within the range of $278.88 and $316.61. Attempts by the bulls to breakout of this range have been unsuccessful. On four occasions, the bulls have managed to breakout of $317 on an intraday basis, but have not managed a close above the range.
Hence, we believe that a close above the range will start a new uptrend in the cryptocurrency, which can easily carry it to $354 and thereafter to $368 levels.
Therefore, traders can initiate long positions on a breakout and close above $317. The initial stop loss for the trade can be kept at $278, which can be raised later. However, as the cryptocurrency has seen many fake breakouts in the past few days, please keep the allocation size 50% of normal.
Litecoin has struggled to pullback following the fall from $93.649 to $32.681. The pullback ended just above the 38.2% Fibonacci retracement levels, which shows a lack of interest among traders in owning litecoin.
However, for the past few days, the digital currency has been trading within the range of $44.16 and $57.729. After the consolidation, if the bulls manage to breakout above the highs of the range, litecoin is likely to gain momentum and rally to $71 levels, which is its first target.
The stop loss for this trade can be kept at $48, which is just below the low made on August 09. If, however, litecoin fails to breakout above $58, we don’t find any trade setups on it.
* All the market data is provided by the HitBTC exchange.Follow us on Telegram.
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