* This is a paid-for, submitted analysis. All the market data is provided by HitBTC exchange.
The cryptocurrencies, which plunged after repeated talks of a bubble and the Chinese crackdown on ICOs are on their way up again. So, will the rally in the digital currencies pick up momentum or will they remain range bound for a few weeks? Should traders who were waiting for lower levels throw in the towel and buy at the current levels or wait?
Let’s see the charts and try to find out.
The pullback in bitcoin is nearing $4546 levels, which is the 78.6% Fibonacci retracement of the fall from $4975 to $2974. The pullback from the lows has been gradual but strong. Numerous attempts by the bears to sink the digital currency have failed.
However, we expect some resistance between $4546 and $4680 levels. If this resistance zone is crossed, the cryptocurrency will retest the highs once again.
Traders who are long from lower levels should book partial profits if they find bitcoin struggling to breakout of the above-mentioned resistance zone.
For the traders who have not initiated long positions, waiting for lower levels, now is not the right time to do so. The risk to reward ratio at the current levels is not attractive. Therefore, they should wait for a pullback to about $4200 or lower to initiate long positions. On a fall, the digital currency has strong support at $4000 and $3500 levels.
The recovery in ethereum is weaker than its senior partner bitcoin. Ethereum has been unable to breakout of the $316.61 levels, which is roughly the midpoint between the 50% and 61.8% Fibonacci retracement levels of the fall from $409.42 to $200.15.
However, the cryptocurrency has formed a bullish ascending triangle pattern, which will complete on a breakout and close above $317. The pattern target of this breakout is $433. The pattern will be invalidated if the digital currency breaks below the uptrend line.
Therefore, traders who have missed out on bitcoin can buy ethereum above $317. The stop loss for this trade can be kept at $275 because a breakdown of $280 can extend the fall to $255 and $240 levels.
Though the pattern targets are way higher, the digital currency is likely to face some resistance at the $344 levels. Therefore, traders should tighten their stop losses if ethereum struggles to breakout of $344.
The recovery in litecoin has been very weak. The pullback could not even reach the 50% Fibonacci retracement levels of the fall from $93.649 to $32.681. This shows lack of buying in the digital currency.
Litecoin has been range bound between $44.160 and $57.729 for the past few days. A breakout of the range can push the digital currency towards its pattern target of $71. Therefore, traders can buy on a breakout above $58 and keep a SL of $50.
On the other hand, if the cryptocurrency fails to breakout of the range, it is likely to fall back towards the $44 levels once again. Therefore, traders should either buy at the lower end of the range or buy after the breakout.
Featured image from Shutterstock.
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