Analysis: Bitcoin, Ethereum, and Litecoin

Journalist:
Tom Clancy
September 22, 2017

* BTC/USD, ETH/USD and LTC/USD market data is provided by the HitBTC exchange.

The cryptocurrencies are giving back some of their gains of 2017, which is a healthy sign. If they had continued higher, it could have resulted in a bubble-like situation.

Therefore, both the traders and investors should welcome this correction. They should look at the next possible trading opportunities on the cryptocurrencies rather than get caught in the debate whether bitcoin is a bubble or not.

Let’s look at the charts to find buying opportunities on the cryptocurrencies after the recent carnage?

BTC/USD(HitBTC)

First of all, let’s give some historical evidence to show that traders and investors who bought the sharp falls earlier have benefitted immensely. It is not to say that similar gains will be accrued this time as well, but it proves that a fall is not a time to panic. It is a good time to get the buy list ready.

The last major correction, following the sharp rally from $650 to $2969.99 took the digital currency all the way down to the 50% Fibonacci retracement levels. We all know what happened once bitcoin resumed its uptrend.

The recent rally from $1752 to $4975 has retraced to the 61.8% Fibonacci levels. Even if bitcoin was to break this support level, it has support close to $2500 levels from the uptrend line. So, when can long positions be initiated?

During the previous correction, bitcoin had risen sharply after breaking out of the downtrend line in mid-July, as shown above. This time too, we can expect an up move once bitcoin breaks out of the downtrend line and moves above the $4150 levels. However, we shall take it one step at a time.

Above $4150, the cryptocurrency can rally to $4680 levels, above which, a retest of $5000 is likely.

Therefore, instead of panicking, traders should look to buy the cryptocurrency once it confirms a bottom. Until then, long positions should be avoided.

ETH/USD(HitBTC)

Even ethereum had fallen sharply from the highs of $445.50 on June 12 to $129.78 on July 16 which was a 70% fall. Scary? Absolutely, but traders who bought after the downtrend was over were able to ride the rally back to $409.42 levels.

So, a fall is not something to be scared of. Let’s see, when can we buy ethereum again.

The digital currency broke out of the downtrend line on September 18, however, it faced selling at the 50% Fibonacci retracement level of the fall from $409.42 to $200.15. As a result, ethereum has again fallen to the downtrend line. A breakdown below $240 will be negative, which can sink Ethereum back to $200 levels.

There are no buy setups on the cryptocurrency as the price is quoting below both the 20-day exponential moving average (EMA) and the 50-day simple moving average (SMA). A positional buy can be recommended only if Ethereum breaks out and sustains above $312. Until then, we remain neutral on the digital currency.

LTC/USD(HitBTC)

Litecoin has completely retraced its rally from about $40 to $93.649. It is currently taking support on the trendline as shown above. A breakdown from the trendline will sink the digital currency to $38 levels, below which, a fall to the recent lows of $32.681 is likely.

Any pullback is likely to face selling pressure at the downtrend line. We believe that even if litecoin manages to breakout of the downtrend line, it doesn’t qualify as a buy because it has resistance at $56 (from both the moving averages) and $60(previous support, which will now act as a resistance).

Therefore, we remain neutral on litecoin until it breaks out of $60.

Last modified (UTC): September 25, 2017 13:47

Tom Clancy